Sacerdote v. New York University

Background

Plaintiffs brought this action against New York University (NYU) concerning two retirement plans governed by the Employee Retirement Income Security Act (ERISA). The case had previously involved a bench trial, a judgment in NYU’s favor on the remaining claims, post-trial motions, and an appeal.

In 2017, plaintiffs sought permission to add seventeen individual members of the Retirement Plan Committee as defendants and to replead certain claims. Judge Katherine B. Forrest denied permission to add the defendants and deferred consideration of the request to replead dismissed claims. The Second Circuit later held that Judge Forrest had applied the wrong legal standard when denying leave to amend, vacated that denial, and remanded plaintiffs’ amendment request for consideration under the correct standard. The Second Circuit also vacated the denial of post-trial motions seeking findings specific to two Committee members, Margaret Meagher and Nancy Sanchez.

NYU’s objections

After Magistrate Judge Valerie Figueredo granted plaintiffs leave to file a second amended complaint, NYU objected under Federal Rule of Civil Procedure 72(a) and moved to vacate that order. Rule 72(a) permits a district judge to modify or set aside a magistrate judge’s order on a non-dispositive matter if the order is clearly erroneous or contrary to law.

NYU argued that the order improperly revived plaintiffs’ recordkeeping claim, identified as Count III, and investment-retention claim, identified as Count V, even though plaintiffs had already tried and lost those claims. NYU also argued that the proposed amendments were futile, that claim-preclusion and issue-preclusion doctrines barred the amendments, that plaintiffs could not adequately plead fiduciary-duty claims against the individual defendants, and that allowing amendment would unfairly prejudice NYU through additional discovery and litigation.

Plaintiffs argued that the proposed amendments did not seek to retry the previously tried claims against NYU. Instead, plaintiffs said they sought to reallege those claims to obtain injunctive relief against Meagher and Sanchez individually, consistently with the Second Circuit’s decision.

Court’s analysis

Judge Torres rejected NYU’s characterization of the earlier appellate decision and Magistrate Judge Figueredo’s order. She explained that the Second Circuit had held that the denial of leave to amend was based on the wrong legal standard and had stated that, if Meagher and Sanchez had been named as defendants, the district court would have needed to make findings about each person’s individual fiduciary duties after trial.

Judge Torres concluded that the order did not revive or reinstate Counts III and V based on dicta, as NYU argued. She found that the order was grounded in the Second Circuit’s decision and that she was not left with a firm conviction that Magistrate Judge Figueredo had made a mistake.

The court also rejected NYU’s other objections. It treated NYU’s claim-preclusion and issue-preclusion arguments as duplicative of its principal objection. It declined to review NYU’s argument about whether plaintiffs could establish a breach or loss because Magistrate Judge Figueredo’s order had not addressed that issue. The court found that NYU’s arguments about the individual defendants’ authority repeated arguments already presented to the magistrate judge and did not establish that the order was contrary to law. Finally, the court found no clear error in the finding that amendment would not cause NYU undue prejudice.

Disposition

Judge Torres overruled NYU’s objections and denied NYU’s request to vacate Magistrate Judge Figueredo’s order. The court directed plaintiffs to file their second amended complaint by August 15, 2023, and directed the Clerk of Court to terminate NYU’s motion at ECF No. 442.