What the University of Chicago may have seen as a small win in the lawsuit alleging fiduciary violations of the Employee Retirement Income Security Act (ERISA) in the administration of its 403(b) plans was short-lived, based on a new federal district court decision.

The original case alleged violations for both the University of Chicago Retirement Income Plan for Employees (ERIP), a plan for faculty and staff members, and the University of Chicago Contributory Retirement Plan (CRP), a plan for non-academic employees. In addition to various counts regarding excessive fees, the complaint accused the university of approving a TIAA loan program that required excessive collateral as security for repayment of the loan, charged grossly excessive fees for administration of the loan, and violated U.S. Department of Labor (DOL) rules for participant loan programs.

However, last fall, U.S. Chief District Court Judge Ruben Castillo dismissed claims related to the CRP and the TIAA loan program because the plaintiffs were not participants in the CRP plan nor did they participate in the TIAA loan program. The judge also at the time dismissed the claims for failure in the duty of loyalty under ERISA, saying the plaintiffs did not show that the defendant engaged in any self-dealing or failure to communicate material information.

The plaintiffs filed an amended complaint, introducing Walter R. James as a plaintiff. James participated in the CRP and invested in funds challenged by the complaint. He alleged breaches of fiduciary duty by the defendant related to the selection and retention and failure to monitor CRP investments. However, University of Chicago moved to dismiss James’ claims, saying he failed to allege an injury-in-fact. The defendant says an independent calculation showed James “may have paid approximately $37 per year” in recordkeeping and administrative fees. It argues that this is not excessive or unreasonable based on the plaintiffs’ allegation that the industry benchmark for these fees is $35 per year.

Castillo disagreed. “Accepting as true the allegations that CRP incurs excessive administrative expenses and Defendant failed to monitor CRP’s investment offerings, coupled with the allegations James is a CRP participant and has suffered direct economic loss, the Court concludes that James sufficiently alleges as to Count I that he personally suffered and injury-in-fact in the form of a concrete and particularized ‘direct economic loss’ due to Defendant’s alleged conduct,” he wrote in his latest opinion.

The plaintiffs argued that the University of Chicago’s calculation of fees James “may have paid” does not account for the fact that each participant pays a different amount of administrative fees, and that each participant is invested in a wide variety of funds, not just the funds on which the university based its calculation.

“Defendant’s independent calculation merely underscores a factual dispute concerning the amount of administrative fees that James paid, which is a point of contention the Court cannot resolve on a motion to dismiss,” Castillo wrote.