Supreme Court denies USC petition for ERISA case


The U.S. Supreme Court refused to hear USC’s petition regarding whether  or not the University can settle a retirement dispute outside the court in February. With the denial, the case will default to a lower court decision that the dispute can be handled in court.

Nine current and former University employees will be able to settle their case against USC retirement plans in court, despite signed arbitration agreements from some employees that required them to handle individual disputes in private meetings.

The decision reaffirms a ruling in July by the United States Ninth Circuit Court of Appeals in San Francisco. The ruling stated that the arbitration agreements employees signed did not require employees to handle their disputes outside of court because they brought the claims on their own behalves. Previously, the Los Angeles district judge also ruled against handling the case through arbitration.

“The panel concluded that the dispute fell outside the scope of the arbitration agreements because the parties consented only to arbitrate claims brought on their own behalf, and the employees’ claims were brought on behalf of the [Employee Retirement Income Security Act] plans,” the opinion from the appeals court read. 

The American Association of Retired Persons submitted an amicus curiae brief, a piece written by a person or group who are not party to the case but would like to influence the court decision. The brief urged the ninth circuit court to uphold the Los Angeles court’s decision to deny arbitration.

“AARP and the AARP Foundation are gratified that the appeals court’s ruling remains the law of the land in this circuit,” AARP vice president for litigation Dean Graybill wrote in a statement to the Daily Trojan. “Congress in ERISA intended to give pension plan members ready access to the courts for claimed breaches of fiduciary duty, and the Ninth Circuit’s opinion preserves that access.” 

The lawsuit originally filed against the University in 2016 states that changes made that March removed one of USC’s four recordkeepers and cut its investment options for employees and retirees from 340 to 34. Jerry Schlichter, the lawyer representing the nine current and former USC employees, said the University allegedly charged employees excessive fees as part of their retirement plans and allowed investment firms with low performance histories to be included as options in their plans. 

“The employer, USC, has the obligation to work [for] the sole benefit of the employees and retirees,” Schlichter said. “It is held to the standard of an expert in the financial world because they’re investing very substantial sums and are charged with knowing what fees should be charged. 

The University, which is represented by the Gibson Dunn law firm, did not respond to multiple requests for comment. 

Law firm Schlichter, Bogard & Denton represents the USC employees and retirees and is involved in similar cases against Northwestern University, Cornell University and Columbia University among others. 

“What we have found is that some, but certainly not all universities, have operated for decades as if they’re not covered by the law that requires them to act for the sole benefit of their employees,” Schlichter said.  

Following the Supreme Court’s denial, the lawsuit will now proceed through the Los Angeles court system. Schlichter said the goal of the suit is to compensate past employees and retirees for alleged excessive fees and losses from investment firms that shouldn’t have been included in the plan. He said the law firm will work to determine the amount of compensation past employees and retirees should receive.