On July 2, 2021, the U.S. Supreme Court agreed to hear the appeal in the case of Hughes v. Northwestern University. This case is one of the numerous lawsuits brought under ERISA in the last few years against the 403(b) retirement plans of large universities. This suit, similar to many others, alleges that the plan fiduciaries breached their duties by causing the participants to pay excessive investment and recordkeeping fees. The issue before the Supreme Court is an important one for the parties in fee litigation cases brought against both 403(b) and 401(k) plans: what standard should a court apply to decide whether excessive fee claims against plan fiduciaries should be dismissed or should be allowed to proceed? In the Northwestern case, the lower courts, including the Seventh Circuit, decided to dismiss the claims against the Northwestern fiduciaries. Other circuits, in other cases with similar facts, held for the plaintiffs. In this case, the Department of Labor has weighed in on the side of the plaintiffs. And now the plaintiffs’ appeal will be heard by the Supreme Court in a case that will have significant implications for the wave of fee litigation against retirement plans.
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