Clinic Argues Employee Retirement Fees Case at Supreme Court

The Supreme Court Litigation Clinic at the University of Virginia School of Law returned to the court Wednesday in a case that may determine whether plaintiffs have wider latitude to state claims alleging violations of the Employee Retirement Income Security Act.

Professor Xiao Wang, the clinic’s director, made his first-ever oral argument at the high court in Cunningham v. Cornell University, one of three UVA Law clinic cases the justices agreed to hear during this term.

Wang likened his time before the justices to what a quarterback must feel like when he takes the field for the first time in the Super Bowl.

“At first, you feel like you can’t even complete the simplest pass because you’re so jittery,” he said. “But then, just like the Super Bowl, everything settles down and you get into it, and you treat it like just another day at the — very nice, incredibly beautiful, high-pressure — office.”

The petitioners in the case Wang argued are current and former Cornell employees who participated in the university’s two retirement plans. They allege that Cornell and its fiduciaries failed to employ adequate processes for monitoring the plans, resulting in the retention of underperforming investment options and the payment of excessive fees, and engaged in transactions that are barred by ERISA, a federal law passed to protect retirement benefits.

Although the workers pointed to such transactions in their complaint, the U.S. Court of Appeals for the Second Circuit rejected their legal claim, ruling that their allegations were insufficient to survive dismissal. The Eighth and Ninth Circuits have held differently in other cases, presenting a circuit split that the Supreme Court could resolve.

The question before the justices is whether a plaintiff can state a claim by alleging that a plan fiduciary engaged in a transaction constituting a furnishing of goods, services or facilities between the plan and a party in interest, or whether a plaintiff must plead and prove additional elements and facts not contained in the provision’s text.

Wang said clinic students returned to Charlottesville during winter break just two days after the new year to write and file a reply brief for Cunningham before a Jan. 10 deadline. The brief argues that Cornell’s arguments lack merit and that their reading of ERISA conflicts with precedent, flouts the statutory text and is inconsistent with the law’s structure.

Wang mooted with faculty, students and a public interest law firm before visiting Georgetown University’s Supreme Court Institute and the U.S. Solicitor General’s Office for more mooting. The federal government shares the clinic’s position and split time for oral argument.

“What it comes down to is we think that our clients paid way too much for retirement plan fees,” Wang said, “and the question is should they be able to bring their case, and if they can bring their case, then at the first stage, who should explain why those fees were the way they were? Should it be Cornell, who entered into these arrangements, or should it be our clients?”

He said that even ERISA experts would readily concede that the statute is one of the most complicated Congress has written. Wang said he’s hopeful the court’s familiarity with the law — the justices hear an ERISA case roughly every term or every other team, he noted — and precedent should bolster the clinic’s position.

“I think they’ve shown a very careful approach to trying to understand what types of cases should be able to go forward and which should not. So, consistent with their understanding, we tried in our case to emphasize the statutory text and to show how all those things come together to present a coherent theory in favor of our client,” Wang said about his strategy.

Following his debut before the court, Wang said two things surprised him most about the experience: how the justices communicate to each other through questioning and how physically close he was to their dais.

“Honestly, I think if I had just stuck out my hand, there’s a chance that our fingertips would’ve touched,” he said.

In February, the court will hear another clinic case, Ames v. Ohio Department of Social Services, which involves an employment discrimination claim under Title VII of the Civil Rights Act of 1964.

The day before, Perttu v. Richards, a matter relating to the Prison Litigation Reform Act, will be on the court’s docket. That case involves a client of UVA Law’s Appellate Litigation Clinic.

Launched in 2006, the yearlong Supreme Court Litigation Clinic introduces third-year students to all aspects of current U.S. Supreme Court practice through live cases. Ames and Cunningham are the clinic’s 19th and 20th cases before the court.