Supreme Court hears Cornell's 403(b) excessive fees case: Did it open the floodgates for more suits?

U.S. Supreme Court courtroom in Washington, D.C. Credit: Carol M. Highsmith/Library of Congress via Wikimedia Commons

The US Supreme Court on Wednesday heard oral arguments over Cornell University’s 403(b) retirement plan lawsuit, Cunningham et al. v. Cornell University, et al., giving the justices a chance to clarify what employees challenging recordkeeping fees must allege to advance their claims. The decision will resolve a split among circuit courts over Employee Retirement Income Security Act standards – and ultimately dictate how easy or difficult it is for workers to argue that retirement plans violate ERISA rules.

“The Supreme Court agreed to hear the case to resolve a conflict among the federal courts of appeals regarding the pleading standard for an ERISA ‘prohibited transaction’ claim,” said Jerome Schlichter, a lawyer for the plaintiffs who is a pioneer in legal action against 401(k) and 403(b) plan sponsors on behalf of retirees and savers.