US Supreme Court in Cornell case adopts higher bar to dismiss ERISA claims
April 17 (Reuters) - The U.S. Supreme Court on Thursday revived a class action by 28,000 Cornell University employees accusing the Ivy League school's retirement plans of paying excessive fees for recordkeeping and other services.
The court in a unanimous decision, opens new tab penned by Justice Sonia Sotomayor said that plaintiffs in such lawsuits have no obligation to allege that exemptions from the federal law governing employee benefit plans do not apply, because the exemptions are affirmative defenses that must be raised by plans themselves when they move to dismiss lawsuits, resolving a circuit split on the issue.
The justices reversed a ruling by the New York-based 2nd U.S. Circuit Court of Appeals that had dismissed the class action filed against Cornell in 2016.
The 2nd Circuit had agreed with Cornell and three other federal appeals courts that the plaintiffs were required to plead in their lawsuit that the school did not qualify for any statutory exemptions under the Employee Retirement Income Security Act of 1974. At least two other appeals courts have said that plans have the burden of raising exemptions and proving they apply.
ERISA prohibits benefit plans from engaging in transactions with third parties that could cause a conflict of interest or financial harm to participants. A separate provision exempts transactions for necessary services, such as office space and legal and accounting services, "if no more than reasonable compensation is paid."
Sotomayor wrote that Cornell's "proposed approach would require plaintiffs to plead and dispute myriad exceptions before knowing which of them the defendant will seek to invoke. That would be especially illogical here, where several of the exemptions turn on facts one would expect to be in the fiduciary's possession."
Cornell, its lawyers and lawyers for the plaintiffs did not immediately respond to requests for comment.
Justice Samuel Alito concurred with the decision but wrote separately to warn that it could result in more meritless ERISA lawsuits surviving motions to dismiss, exposing benefit plans to the costs of discovery and trial.
"Defendants facing those costs often calculate that it is efficient to settle a case even though they are convinced that they would win if the litigation continued," he wrote. Alito was joined by Justices Clarence Thomas and Brett Kavanaugh.
The plaintiffs who sued Cornell in 2016 claimed the retirement plans engaged in prohibited transactions for recordkeeping and administrative services and paid excessive fees. Cornell claimed that the costs were exempt from ERISA's ban on third-party transactions and the fees paid by the plans were reasonable.
The lawsuit was one of roughly two dozen that were filed beginning in 2016 to accuse colleges and universities of violating ERISA by failing to adequately monitor retirement plans, drop underperforming investments or limit fees.
In a 2022 decision involving Northwestern University, the justices unanimously ruled that offering workers a broad range of choices for their retirement investments does not shield employers from claims that specific options are imprudent because they come with high fees.
Duke, Columbia, the University of Southern California and Washington University in St. Louis have paid as much as $13 million to settle ERISA cases in recent years, while denying wrongdoing.
The case is Cunningham v. Cornell University, U.S. Supreme Court, No. 23-1007.
For the plaintiffs: Xiao Wang of the University of Virginia School of Law Supreme Court Litigation Clinic
For Cornell: Michael Scodro of Mayer Brown
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scottish Sun
5 hours ago
- Scottish Sun
Canelo Alvarez vs Terence Crawford in another twist as UFC boss Dana White says he IS promoting super-fight
DANA WHITE has insisted he WILL promote the Canelo Alvarez vs Terence Crawford fight - marking yet another twist. Canelo is due to defend his undisputed super-middleweight titles against unbeaten American Crawford in September. 3 Dana White insists he will promote Canelo Alvarez vs Terence Crawford Credit: @danawhite And Saudi boxing supremo Turki Alalshikh - the financial backer behind the bout - initially announced that UFC boss White would promote. The super-fight was set for the Las Vegas Raiders' NFL stadium with Netflix on board to broadcast that bout. That was until Alalshikh made a U-turn and claimed Saudi-based Sela would promote and it would instead be on pay-per-view. White was probed on Alalshikh's comments after UFC 316 - but hit back to maintain he will be involved in the fight. READ MORE IN boxing JAKE TO SAY IT Jake Paul blasts Canelo's win over Scull and but says shock bout WILL happen He said: "I'm promoting the fight. I'll let you guys know when it's time to let you guys know." TKO Holdings - who own the UFC and WWE - signed a multi-year partnership to establish a boxing promotion alongside Saudi Arabia's Turki Alalshikh. As well as a UFC-style boxing league, two super-fights were set to be promoted by TKO and White every year. And Canelo's blockbuster against Crawford was due to kickstart the partnership. 3 CASINO SPECIAL - BEST CASINO BONUSES FROM £10 DEPOSITS Then all of a sudden, Alalshikh told Ring Magazine - which he owns - that the date of the bout was set to change. And he was also considering having the bout move to New York or Los Angeles - opposed to the £1.5BILLION, 65,000-seat Raiders Stadium. Three-weight world champion Vasily Lomachenko retires after more than 400 FIGHTS in lengthy video It caused huge confusion with the news the fight would also be under the Riyadh Season banner and on PPV - suggesting White and Netflix were out of the picture. But, White clarified: "Listen, when we're at work in UFC headquarters, I'm in my own little world, man. I don't pay attention to any of that s***. 'I know what's going on, I know what we're doing, I don't really pay attention to that stuff." White has partnered with Alalshikh before having held two events in Riyadh in the past. Canelo, 34, beat William Scull, 32, to regain the 168lb undisputed thrown in early May as part of his four-bout deal with Alalshikh. Meanwhile Crawford, 37, has not fought since moving up to 154lb to win the WBA title against Israil Madrimov, 30, in August 2024. 3 Crawford with Turki Alalshikh and Canelo
Daily Mail
6 hours ago
- Daily Mail
Inside the trailer park house-flipping phenomenon that is earning Americans big bucks
Up to 21 million Americans live in manufactured homes, also known as mobile homes and trailers, and savvy buyers are cashing in on demand for these tiny homes to make big bucks. Byron Sellers, 39, of Tampa, said he has seen an increase in mobile home owners since he started flipping homes in 2018. 'It is cheaper,' he told 'Lots of people are being pushed out (of the main housing market).' Victoria, of New York City, who asked to go by her first name, agreed. She rents her Upstate New York and New Jersey mobile homes for $1,350 a month. That price, for a three bedroom, one bathroom home, is steeply cheaper than even studio rentals in the metropolitan area. 'Everybody wants a mobile home,' she told 'You can even move it.' Both Byron and Victoria got started in the industry after they realized how expensive flipping residential homes was and how much more cost effective trailers are. Byron started flipping homes near the Chicago area after he lost his job in 2016. He and his wife bought their first two mobile homes in March 2018 for a joint price of $4,300 in a trailer park. Within 45 days, their ready-to-live-in trailer sold for $9,500. After putting in $3,000 of renovations into the second one, it sold for $10,000, Byron told Some trailers, they've gotten even cheaper than that. 'I've gotten some for free,' Byron revealed. Since starting their business, they've made a low six figures from flipping homes alone, Byron said. Another $400,000 from mobile home parks and their equity in them. And another $40,000 teaching others how to do what they do. The reason Bryon and his wife, Sharnice, migrated into the mobile home market was because the former had wanted to get into real estate for a long time, but multi-family homes were largely outside his budget. He first heard of mobile home flipping while driving for a rideshare company and listening to a podcast to pass the time. He shared it with Sharnice and the rest is history. Victoria agreed that sometimes landlords are just want something to move fast, so they'll hand it off for free. So far, the New York mogul has gotten two mobile homes for free. Victoria has made around $80,000 doing the same, and put roughly $30,000 into the renovations of her seven homes - three of which she still owns and rents out. Victoria says she sees a lot of Latinos snapping up hers and they're mainly upper lower and middle class families. Meanwhile Byron and Sharnice have found that many of their buyers are usually within the $20,000 to $40,000 salary range, typically between the ages of 30 and 69 and are white or Hispanic. 'You have a bigger buyer pool of cash buyers,' Byron told But not every mobile home is a steal. Since moving to Tampa, Byron has seen some trailers for the prices of starter homes. And some parks even have pools, pickleball courts, and convenience stores. Those areas, however, are typically geared toward those in retirement and typically go more than $100,000. Even without those perks, living in a mobile home can be a cost-effective strategy for those pinching pennies but looking for an affordable home solution. Trailers typically run for $50,000 to $100,000 cheaper than a traditional home, Byron said, and there are no Homeowner Association fees to pay. After purchasing the home, if buyers live in a park, they will have to pay to lease the land. On top of that, mobile homes are classified as property, like cars are, so insurance prices and property taxes are much lower than standard homes. However, unlike homes, they don't retain their value. But for those willing to invest time and money into renovating them, they can make plenty of money doing it. They 'don't depreciate' as much as people might warn you, Victoria told Byron recently acquired a trailer for around $85,000, after fixing the septic tank and putting in $40,000 of work into it, he and his wife sold it for $212,000. Another one, which was move-in-ready, he spent $200 for a cleaning crew and turned the property around and sold it for $7,000. He got the trailer for free as someone was being evicted, he said. On average he puts anywhere between $3,000 to $20,000 into the renovation and hopes to sell it for three times the price he put into it. Since moving to Tampa, as it is a harder market, the couple hopes to net at least 50 percent more than what they paid. 'After the hurricanes, it's harder,' Byron told 'The market has slowed down.' However, people are 'still buying' and he doesn't foresee the market ever becoming obsolete. 'It's a niche market,' he admitted. 'I just see the future of them. People are going to need affordable housing.' The most Victoria has ever spent on a renovation was $6,000, spending less than that on average. When she redoes a home, she focuses on the bathroom and kitchen, as she says those are the most eye-catching to potential buyers.
Daily Mail
6 hours ago
- Daily Mail
Wall Street titan slams Trump's mega-bill
Billionaire Ken Griffin has sided with Elon Musk in his attack on Donald Trump's 'Big Beautiful Bill'. The Citadel CEO warned the act will 'add several trillion dollars' to the national debt, which will soon surpass $37 trillion. Unlike Musk, who called the bill a ' disgusting abomination,' Griffin criticized the legislation in more conciliatory terms. 'The bill will unquestionably add several trillion dollars,' Griffin said Thursday at the 2025 Forbes Iconoclast Summit in New York City. 'The challenge with the legislation is there's not enough tough decisions... around how we're going to put our fiscal house in order.' Griffin made his concerns known about runaway government spending after the Congressional Budget Office estimated the GOP budget bill would add $2.4 trillion to the deficit over the next 10 years. Much of this comes down to the bill's extension of the 2017 Trump tax cuts, which will decrease the revenue coming into the government. Griffin, who voted for Trump in the 2024 election, did not say he disagreed with the extension of the prior tax cuts. But he did take issue with even more tax relief for businesses. 'The continued reduction in tax rates for small and medium enterprise businesses; I'm not sure what we're going to achieve with that,' said Griffin, who is estimated to have a net worth of $44.5 billion. Griffin cast the bill, which is still winding its way through the Senate, as poorly thought out and dangerous to the nation's finances. 'You cannot run deficits of 6 or 7 percent [higher than GDP] at full employment after years of growth. That's just fiscally irresponsible,' said Griffin, who is worth $44.5 billion. 'There are a lot of question marks in the bill as to why we're continuing to increase our tax cuts when we have a fiscal deficit of this magnitude,' he added. approached Griffin's team and the White House for comment. Griffin also warned that if America's leaders fail to reign in spending, they risk a total collapse of US bond markets. Last week, JPMorgan Chase CEO Jamie Dimon sounded a similar alarm , predicting that at some point, investors will lose confidence in the US government's ability to service its debt. 'US default prices are probably the same as Italy or Greece,' Griffin said in reference to credit default swap markets where investors can bet on countries failing to meet their debt obligations. The consequences of a default - i.e. the country running out of money to pay its bills - would be 'catastrophic' for the US and the global economy, former Treasury Secretary Janet Yellen has said. The stock market would almost certainly crash in such a scenario, with investors around the world coming to the understanding that the US - thought to be the most stable government in the world - could not fulfill its financial obligations for the first time in its nearly 250 years of existence. Back in April, when Trump unveiled and quickly paused his wide scale Liberation Day tariffs, multiple reports suggested that his U-turn was prompted by the major sell off in US bonds. Trump appeared to acknowledge this market turmoil at the time, saying: 'People were getting a little bit yippy, a little bit out of line.' Griffin didn't limit his criticisms of the administration to uncertainty on US debt or the big beautiful bill, which Trump wants passed by the Fourth of July. He also slammed the president for his ongoing trade policy, largely governed by historically-high tariffs. He said the tariffs have 'really taken their toll already on our economy' and have called 'into question American exceptionalism.' His firm Citadel has already cut its estimate for US economic growth by about half since Trump took office in January. As a parting shot at the president, Griffin decried Trump's decision to tear into Walmart CEO Doug McMillon for warning customers that the big-box retailer may have to increase prices thanks to tariffs. 'Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain. Walmart made BILLIONS OF DOLLARS last year, far more than expected. Between Walmart and China they should, as is said, 'EAT THE TARIFFS,' and not charge valued customers ANYTHING, Trump posted to Truth Social in May.
