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File / Jaime Danies

The lawsuit requests that the University add $100 million to its employees’ retirement accounts.

An anonymous Columbia employee has initiated a $100-million class action lawsuit against the University, alleging mismanagement of funds in the retirement plans Columbia offers to its employees.

Columbia is already dealing with several other high-profile legal disputes. Its ongoing efforts to prevent graduate students from unionizing are currently stalled before the National Labor Relations Board; a former employee of the University Chaplain’s office has brought complaints of discrimination to New York City’s Commission on Human Rights; and Columbia is currently tied for the second most Title IX complaints among American universities.

Columbia maintains a general policy of not commenting on pending litigation, but has stated that it is proud of the retirement benefits it offers.

The lawsuit, which was filed in the federal district court for the Southern District of New York, requests that the University add at least $100 million to its employees’ retirement accounts to make up for allegedly overcharging retirees on investment fees and recordkeeping. Since August, eight other prominent universities have been targeted with similar lawsuits, and private sector firms like Lockheed Martin have already settled claims of retirement fund mismanagement for $62 million.

Lawyers familiar with this kind of litigation said that the case could drag on for years if no settlement is reached. If the university does lose, massive potential payouts may draw on the University’s fiscal resources at a time when central administration costs are already growing.

The lawsuit accuses Columbia of two major breaches of its legal responsibility to safeguard its retirees’ money. The first allegation is that Columbia hired two firms to keep records, and in doing so spent more money than it needed to; the second is that Columbia offered plans that included investments associated with higher fees than a large institution would generally pay.

While the University may settle the case if it goes to trial, a loss could force Columbia to reimburse its retirees for hundreds of millions. Gretchen Harders, a lawyer with New York law firm Epstein Becker & Green’s employee benefits practice, said that the costs of a judgement against Columbia could be as high as $480 million—10 percent of the $4.8 billion in retirement investments targeted in the lawsuit. In this scenario, Columbia would also be expected to reimburse the plaintiffs’ legal fees.

Harders said that even if the allegations were true, the case hinged on whether Columbia had a process in place for scrutinizing decisions about investments.

“The way that the courts have come out in looking at these cases, it’s all about the process,” Harders said. “You can maybe make the wrong decision, but [you’re not liable] as long as you’ve engaged in a prudent process. If they did not meet frequently, that will create a risk for Columbia in terms of defending decisions they made.”

The lawsuit, which was filed in August, is still in its earliest stages. Columbia may file a motion to immediately dismiss the case or seek to gather more information and conduct interviews, after which it could file another motion to resolve the case without trial.

But Wilma Liebman, a former chair of the National Labor Relations Board, said that it could be a long time before the case moves to the next stage, and potentially years before it is settled.

“A trial date could certainly be down the road,” Liebman said. “Let’s just put it this way: It’s not quick and it’s not cheap.” | @columbiaspec

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