Virus Derails Cornell Retirement Plan Trial For Now

By Kevin Stawicki
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Law360 (May 22, 2020, 1:53 PM EDT) -- Workers accusing Cornell University of saddling their retirement plans with unreasonable record-keeping fees will have to wait an "unknowable amount of time" before they can take their remaining claims to trial due to the coronavirus pandemic, a New York federal judge has ruled.

U.S. District Judge P. Kevin Castel gave the university and the class of 28,000 workers three weeks to decide whether to waive the trial, proceed to a trial before a magistrate judge or settle the remaining claims after a bulk of the Employee Retirement Income Security Act case was trimmed in September.

"In ways that should be self-evident, the COVID-19 pandemic will affect civil jury trials in this district for a considerable and presently unknowable amount of time to come," Judge Castel wrote in the May 20 order. "When trials do resume, priority will be given to criminal cases with detained defendants."

"We will comply with the court's order and expect that there will be a trial," Jerome J. Schlichter of Schlichter Bogard & Denton LLP, who represents the workers, told Law360.

Counsel and representatives for Cornell declined to comment.

The trial, which had been scheduled for May 4, was set to determine whether Cornell retirement plans can hold certain defendants personally liable for losses to the plan. Judge Castel granted the trial on the limited claim for monetary damages against the fiduciaries in 2018, finding that the relief sought was "legal in nature" while recognizing that courts are split on whether claims for compensatory damages for fiduciary violations require a jury trial.

"ERISA does not expressly permit or require that claims brought for a breach of the fiduciary duties outlined in section 404(a) be tried to a jury," Judge Castel wrote in 2018.

In granting the trial, Judge Castel referenced a case involving similar claims by workers against New York University in which a judge declined to order a jury trial. Those workers have since appealed that order to the Second Circuit, saying they were wrongly denied a trial by jury.

A ruling in that case could clarify whether fiduciary-breach claims under ERISA seeking to hold fiduciaries personally liable can proceed before a jury. In an amicus brief to the appeals court in 2019, a group of law professors said a jury trial in that case is required under the Seventh Amendment because the personal liability for damages "is a classical form of legal relief."

The workers in the current case originally sued Cornell and its retirement committee in 2016, alleging they flouted their duties under ERISA by mismanaging the university's retirement plan.

In 2019, Judge Castel certified a class of roughly 28,000 current and former Cornell workers, and although the school attempted to overturn the decision, the Second Circuit declined to touch the challenge. However, in September, the judge partially granted motions for summary judgment from the defendants, tossing the bulk of the claims in the case.

In December, the workers asked the judge to reconsider the decision in regard to the record-keeping allegations, contending they had new evidence.

But Cornell opposed the motion, calling their claim of new evidence "fanciful."

The workers are represented by Jerome J. Schlichter, Andrew D. Schlichter, Joel Rohlf and Scott Apking of Schlichter Bogard & Denton LLP.

The Cornell defendants are represented by Nancy G. Ross, Brian D. Netter, Samuel P. Myler, Jean-Marie L. Atamian, Michelle N. Webster and Ankur Mandhania of Mayer Brown LLP.

The case is Cunningham et al. v. Cornell University et al., case number 1:16-cv-06525, in the U.S. District Court for the Southern District of New York.

--Additional reporting by Emily Brill and Danielle Nichole Smith. Editing by Jack Karp.

For a reprint of this article, please contact reprints@law360.com.

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Case Information

Case Title

Cunningham v. Cornell University et al


Case Number

1:16-cv-06525

Court

New York Southern

Nature of Suit

Labor: E.R.I.S.A.

Judge

P. Kevin Castel

Date Filed

August 17, 2016

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