Compass Lexecon Client New York University Prevails in ERISA Class Action Trial

Court Relies on Testimony of Compass Lexecon Experts Professor Daniel R. Fischel and Dr. Adel Turki

Plaintiffs in this litigation claimed that New York University paid excessive recordkeeping fees and made imprudent investments in its employee retirement plans, thereby failing to fulfill certain fiduciary obligations under ERISA and resulting in losses of more than $358 million. After a multi-week bench trial, Judge Katherine B. Forrest rejected Plaintiffs' claims in their entirety and ruled in favor of Compass Lexecon client New York University on all claims in Sacerdote et al. v. New York University (SDNY, 7/31/18). The trial was closely watched as this was the first of many similar ERISA class actions filed recently against elite university-employers to proceed to trial.

Compass Lexecon's President Professor Daniel R. Fischel was retained by New York University to provide expert testimony concerning the performance of the CREF Stock Account and TIAA Real Estate Account from an economic perspective in response to Plaintiffs' claims concerning the prudence of those investment options. The Court agreed with Professor Fischel's conclusions that the performance of the CREF Stock Account and TIAA Real Estate Account was consistent with each investment option's risk profile and costs of providing liquidity and other services. In particular, the Court stated that it "credits and relies" on Professor Fischel's "thoughtful analysis regarding the objective performance" of the New York University investments. The Court also discounted the testimony of Plaintiffs' expert concerning the performance of the CREF Stock Account and TIAA Real Estate Account based on Professor Fischel's testimony. Moreover, Judge Forrest described Professor Fischel as "knowledgeable, reasonable, and consistent" and "highly credible" and noted his "significant expertise in various relevant areas."

Dr. Adel Turki was retained by New York University to provide expert rebuttal testimony concerning the alleged damages from alleged excessive recordkeeping fees calculated by Plaintiffs' expert. The Court agreed with Dr. Turki's conclusion that Plaintiffs' expert's alleged damages calculation was obviously flawed and based on improper economic analysis and agreed with all of the corrections proposed by Dr. Turki. The Court also relied on Dr. Turki's analysis in concluding that Plaintiffs failed to establish any damages from alleged excessive recordkeeping fees. Moreover, Judge Forrest described Dr. Turki as "highly credible" and noted his "extensive experience as a damages rebuttal expert in ERISA matters."

Professor Fischel was assisted by a team in Compass Lexecon's Chicago office that included David Ross, Constance Kelly and Andrew Linde. Dr. Turki was assisted by a team in Compass Lexecon's New York office that included Michael Kwak and Nicholas Fasano.

Compass Lexecon worked closely with counsel from DLA Piper including Mark Muedeking, Ian C. Taylor, Jennifer K. Squillario, Harry P. Rudo and Evan D. Parness who successfully represented New York University.