GWU Lawsuit Over Two Retirement Plans Dismissed

U.S. District Court Judge John D. Bates of the U.S. District Court for the District of Columbia has dismissed a lawsuit alleging fiduciary breaches by George Washington University (GWU), finding the plaintiff had previously waived her right to file such a suit.

GWU argued that Melissa Stanley lacks standing to sue because she signed a general release of claims against the university. Stanley responded that her claims fall into an express exclusion in the general release preserving claims for vested benefits under her retirement plan. The court found that Stanley released her fiduciary breach claims against GWU under the terms of the release.

According to the court opinion, in 2016, for reasons unrelated to the present suit, Stanley entered a confidential settlement agreement with the university in return for valuable consideration.

The agreement states in part: “Ms. Stanley, on behalf of herself and anyone who might claim through her, hereby forever releases . . . the George Washington University . . . from any and all claims . . . of any nature whatsoever . . . (collectively, “Claims”), which Ms. Stanley has or may have or which may hereafter accrue or which may be asserted by another on her behalf, arising prior to her execution of this Agreement. This release includes, without limitation . . . Claims for violation of any federal . . . statute . . . including but not limited to Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family Medical Leave Act, the D.C. Family and Medical Leave Act, the Genetic Information Nondiscrimination Act of 2008, and the D.C. Human Rights Act. It is expressly understood that this is a GENERAL RELEASE, and is intended to release claims to the fullest extent permitted by law. Excluded from this General Release is an action by Ms. Stanley to enforce the terms of this Agreement, claims for vested benefits under employee benefit plans, claims that arise after Ms. Stanley signs this Agreement, any right Ms. Stanley has to file a charge with a government agency (although she releases and waives, and agrees not to seek or accept, any monetary payment or other individual relief in connection with any such charge) and any other claim which cannot be released by private agreement as a matter of law.”

Approximately two years after entering the Agreement, Stanley brought a putative class action against GWU under Employee Retirement Income Security Act (ERISA) Sections 502(a)(2) and (a)(3). The complaint alleges that GW breached its fiduciary duties to participants by: causing participants to pay unreasonable recordkeeping and administrative fees; imprudently offering unreasonably expensive and underperforming investment options; imprudently obtaining services from investment funds that required the university to offer participants the funds’ proprietary investment products; and improperly retaining multiple recordkeepers to administer the plans when prudent fiduciaries would have used only one recordkeeper.

GWU moved to dismiss, arguing that Stanley lacks standing because she has released her claims under the terms of the settlement agreement. In opposition, Stanley contended her claims fall into the exclusion in the release preserving “claims for vested benefits under employee benefit plans.” The court previously ordered both parties to submit supplemental briefing on this and other standing questions.

Bates cited case law that says, “Where the language [of a release] is clear and unambiguous, its plain language is relied upon in determining the parties’ intention,” and “the effect of the release can be determined as a matter of law.”

GWU argued that the broad language releasing all claims alleging violations of “any federal . . . statute” plainly covers Stanley’s fiduciary breach claims under ERISA Sections 502(a)(2) and (a)(3). And it argued the exclusion in the release preserving “claims for vested benefits under employee benefit plans” does not apply because that language refers to Section 502(a)(1)(B) claims for vested benefits arising under the terms of the ERISA-governed plans—claims that Stanley concedes she does not bring. Stanley responded first that the clause generally releasing federal claims does not cover ERISA claims because it does not expressly mention ERISA. In addition, she said the carve-out for “claims for vested benefits” plainly preserves fiduciary breach claims brought under ERISA sections 502(a)(2) and (a)(3).

But, Bates found that Stanley has released her claims under the agreement and thus lacks standing to sue. As an initial matter, he says, Stanley’s ERISA claims plainly fall within the language releasing “any and all claims” “for violation of any federal . . . statute.” And in the very next clause, the release goes on to say that “[i]t is expressly understood that this is a GENERAL RELEASE, and is intended to release claims to the fullest extent permitted by law.” Bates says, “The law is clear that a broad and unambiguous release need not list every conceivable cause of action that might come within its terms.”

Bates also ruled that the exclusion in the agreement cannot be read as expansively as Stanley suggested. By its terms, the release carves out only claims for benefits “under employee benefit plans.” Bates points out that the common legal usage of the term “under” is pursuant to, in accordance with, or as authorized or provided by, citing the 1999 case of Davis ex rel. LaShonda D. v. Monroe Cty. Bd. of Educ. Also, quoting 43 Words and Phrases 149–152 (1969), Bates says cases have defined the term “under” as “indicating subjection, guidance or control, and meaning ‘by authority of,’” or “‘by and through the authority of’.” Understood in the context of ERISA, “claims . . . under employee benefit plans” plainly refer to contractual, or “plan-based,” claims of the kind that typically are brought pursuant to ERISA Section 502(a)(1)(B), Bates says. “Indeed, in at least two cases involving similar general releases, a carve-out for claims ‘under the plan’ was interpreted as saving contractual, but not fiduciary breach, claims,” Bates wrote in his opinion.

Because Stanley’s fiduciary breach claims concededly arise under rights conferred by ERISA, not “under [her] employee benefit plans,” Bates continues, they fall outside the plain language of the exclusion in the General Release.

Bates granted GWU’s motion to dismiss the complaint for lack of subject matter jurisdiction.