The University of Miami has agreed to pay $1.85 million to settle a proposed class action suit brought by its current and former employees over what they say are exorbitant fees and poorly performing investment options in the school’s retirement plan, according to a filing in Miami federal court.
Apart from the $1.85 million, the employees are also asking Judge Darrin P. Gayles to approve a deal that would require certain protections of the university’s $1 billion retirement plan, which is composed of five different plans for the more than 20,000 participants, according to the preliminary settlement filed Nov. 23 in the U.S. District Court for the Southern District of Florida. Bloomberg Law and Law 360 first reported the settlement.
These protections would include “only prudent investments” in the plan, freezing certain fees for three years after the effective settlement date and put the plans’ record-keeping services up for bid, the filing read.
Fidelity or TIAA-CREF, or both, serve or have served as the plan’s administrator, according to the court filing.
The plaintiffs first sued UM in April 2020 alleging the university violated the Employee Retirement Income Security Act of 1974 (ERISA), contending plan participants had to pay excessive administrative and record-keeping fees. Participants had paid over $100 per year for six years, the suit says.
In a statement, UM said, “Although the University has agreed to resolve the matter, it continues to believe that the claims and allegations in the lawsuit are unfounded, and the settlement involves no admission of liability or wrongdoing on behalf of the University or any University employee.”
In an email sent to faculty and staff dated Nov. 24, UM said it “denies any wrongdoing but agreed to settle this case to avoid the high cost of legal fees and to remain focused on its mission to transform lives through education...”
If the settlement is approved by the court, UM said in its email, plan participants “may receive an average payment of less than $50.”
The attorneys for the plaintiffs did not respond to a request for comment. The plaintiffs are represented by Brandon Hill and Luis Cabassa of Wenzel Fenton Cabassa PA, Chad Justice of Justice for Justice LLC and Michael McKay of McKay Law LLC.
The university also said the settlement approval and payment process would be described in correspondence by the end of March 2022.