Cates v. The Trustees of Columbia University in the City of New York

Background

The plaintiffs were employees and former employees of Columbia University who participated in the Retirement Plan for Officers of Columbia University and the Columbia University Voluntary Retirement Savings Plan. They brought claims under the Employee Retirement Income Security Act of 1974, a federal law governing employee benefit plans, alleging that the Trustees breached their fiduciary duty of prudence.

The plaintiffs alleged that the Trustees incurred excessive administrative and recordkeeping fees and failed to prudently select, monitor, and evaluate investment options. The challenged investments included the CREF Stock Account and the TIAA Real Estate Account. The plans offered 116 investment options and had billions of dollars in net assets as of December 31, 2017.

The Trustees moved for summary judgment, which asks the court to decide a claim without a trial when no genuine dispute over a fact could affect the result. The Trustees also moved to exclude the plaintiffs’ experts Ty Minnich, Al Otto, Wendy Dominguez, and Gerald Buetow. Magistrate Judge Stewart D. Aaron recommended denying all of those motions. The Trustees filed objections to the recommendation.

Summary-Judgment Ruling

Judge Daniels adopted Magistrate Judge Aaron’s report in full and overruled the Trustees’ objections. The court held that genuine disputes of material fact existed concerning the recordkeeping-fee claim.

The plaintiffs argued that Columbia acted imprudently by failing to evaluate or negotiate recordkeeping fees on a per-participant basis, failing to conduct competitive bidding earlier, and failing to consolidate the plans’ recordkeepers. The court found factual disputes about whether Columbia used an appropriate process to evaluate consolidation, whether consolidating with TIAA or another provider would have reduced fees, and whether Columbia’s failure to conduct an earlier competitive bidding process caused losses to the plans. The court cited evidence that TIAA later reduced its fee by more than 50 percent per participant and Vanguard later reduced its fee by more than 25 percent per participant after Columbia conducted an information-gathering process in late 2017 or early 2018.

The court also found factual disputes concerning the investment-monitoring claim. Those disputes included the appropriate benchmarks for evaluating the CREF Stock Account and TIAA Real Estate Account, whether the investments were underperforming when the plaintiffs claimed they should have been removed, and whether a prudent fiduciary would have removed them earlier.

Expert Motions

The court applied Federal Rule of Evidence 702, which governs when expert testimony is admissible. It explained that alleged weaknesses in the experts’ methods or opinions generally went to the weight of the testimony—the importance the factfinder should give it—rather than admissibility.

The court therefore denied the Trustees’ motions to exclude Minnich and Otto concerning recordkeeping fees. It also denied the motions to exclude Dominguez and Buetow concerning investment monitoring. The court’s conclusion states that these expert-exclusion motions were denied without prejudice.

Disposition

The Trustees’ objections were overruled, Magistrate Judge Aaron’s report was adopted, and the Trustees’ motion for summary judgment was denied. The Trustees’ motions to exclude certain plaintiffs’ experts were denied without prejudice. The opinion does not decide the ultimate merits of the plaintiffs’ claims; it concludes that factual disputes prevent summary judgment.