Keeping the 401(k) Boogey Man Away:
A Conversation with THE 401(k) Litigator Jerry Schlichter
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The podcast series where employers find candid, in-depth interviews with industry experts, new best practices and valuable perspectives on current events.
Recap, highlights, and my thoughts
For some of our listeners Jerry requires no introduction, but if you are not familiar Jerry and his firm Schlichter Bogart & Denton they have been the driving force behind many of the headline grabbing 401(k) lawsuits over the past decade.
As you will hear, his firm has successfully garnered several multi-million dollar settlements, argued a 401(k) case in front of the US Supreme Court and has recently filed several more lawsuits against some very prominent universities.
In part 1 of our conversation we discuss the origins of 401(k) litigation against employers, the “bet the farm” decision he made with his firm, why they turn down certain cases, why some cases succeed and others don’t, an important beacon for plan fiduciaries to follow and much more. What clearly comes through is that Jerry has a tremendous passion for retirement plan participants, he is very knowledgable about how retirement plans work and has strong opinions on what employers should and should not be doing if they don’t want to run into him or his firm in the future!
In part 2 we pick up right where we left off and finish the conversation around whether Jerry feels some of the strategies employers and plan fiduciaries use to determine the reasonableness of plan fees are effective. Then we wade into some waters were Jerry uses some pretty clear and strong words to describe a few practices he sees in the market. Right or wrong, his comments will keep you on the edge of your seat. I also give Jerry a chance to address some of his critics, tell us whether he plans to ride off into the sunset in the near future and share a key concept in closing that should provide some comfort to employers.
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Sincerely Your Host,
Rick Unser
Guest Bio
Jerry Schlichter, Founding and Managing Partner of Schlichter, Bogard & Denton, pioneered Employee Retirement Income Security Act (ERISA) excessive fee litigation and has represented employees and retirees in 20 401(k) excessive fee cases.
In recent rankings of the most influential people in the 401(k) industry by 401kwire.com, Schlichter has repeatedly ranked in the top 5. This is in recognition of his accomplishments with numerous nationwide class actions brought on behalf of employees and retirees in large, corporate 401(k) plans, alleging excessive fees and conflicts of interest that reduce employees’ and retirees’ retirement assets.
In 2006, after a year and nine months of investigation into the industry, he and his firm filed his first in a series of cases on behalf of employees and retirees. At that time, no case had ever been brought alleging excessive fees in a 401(k) plan, despite the 401(k) having become America’s de facto retirement system, and there being over 500,000 plans in America. In addition, the Department of Labor had never brought a case for excessive fees in a 401(k) plan.
Since that time his firm has reached precedent setting settlements in over a dozen cases, on behalf of 401(k) plan employees and retirees representing over 1.5 million workers and retirees. These settlements have not only included monetary recoveries for the workers and retirees, but each has also included provisions going forward to reform the plans and to ensure that fees will be reasonable in the future.
Schlichter and his firm have been referred to by federal judges as “preeminent “in the field of 401(k) fee litigation; as demonstrating “extraordinary skill and determination”; as making “a significant, national contribution,” having “educated plan administrators, the Department of Labor, <and> the courts” about fees and fiduciary obligations; and he has been referred to by federal judges as a “private attorney general,” causing fees to come down in the entire 401(k) industry.
He has also been referred to as the “Lone Ranger” of 401(k) plans in the NY Times, and the term “Schlichterized” has been used to describe being sued by his firm.
The common elements of these cases are claims that the plan sponsors breached their fiduciary duties under ERISA by allowing excessive administrative fees; failure to remove imprudent investment options; and conflicts of interest.
Schlichter and his firm won the first and only full trial of a 401(k) excessive fee claim in the country in Tussey v. ABB, Inc.
Schlichter and his firm achieved the two largest settlements of excessive fee cases on behalf of employees and retirees in a 401(k) plan - Abbott v. Lockheed Martin, and Spano v. Boeing.
He currently has pending 401(k) excessive fee cases on behalf of employees and retirees of Oracle, Chevron, and Anthem, Northrop Grumman and other companies.
He and his firm also recently brought excessive fee suits, which are the first of their kind, against 12 major universities with 403(b) plans.
Schlichter’s Tibble v. Edison case is the first and only 401(k) excessive fee case to be argued before the U.S. Supreme Court. On May 18, 2015, he won a landmark unanimous 9-0 decision in Tibble v. Edison, which stated that plan sponsors have a continuing duty to monitor investments in retirement plans and a duty to decide whether or not to keep them in the plan, which gives employees much broader protections under the law from poor investment choices by employers. The AARP and the Solicitor General wrote supporting briefs for his clients, and the Mutual Fund Industry Trade Group wrote a supporting brief for the Defendant, all parties agreeing that the result would affect every 401(k) plan in America.
Schlichter’s career also includes his work representing individuals. He obtained a verdict of $27 million for the widow and 3 minor children of a St. Louis firefighter against Survivair, Inc. for a defective breathing apparatus that caused the firefighter's death. This $27 million verdict was the highest jury verdict in Missouri in that year and one of the highest in the United States. Ultimately, after appeals which he defeated at all levels, the family received the entire amount plus interest for a total of $40.4 million.
He has also obtained multiple precedent-setting judgments on behalf of injured railroad employees and successfully handled cases resulting in increasing safety in the railroad industry.
Schlichter has also been a strong advocate for civil rights. He represented a class of African-American and Hispanic employment applicants for employment discrimination in Mister v. Illinois Central Gulf Railroad, and fought the case for 13 years. He prevailed in the case when he obtained an extraordinary Seventh Circuit Court of Appeals decision in which the court stated: "One could not imagine a stronger case of discrimination short of an announcement of it." This resulted in a $10 million settlement for the group. In the Mister case, the U.S. District Court judge stated: "The Court is unaware of any comparable achievement of public good by a private lawyer in the face of such obstacles and enormous demand of resources and finances." The Court added “In essence, it is an example of advocacy at its highest and noblest purpose, and Class Counsel accomplished a great public good.”
He also represented a nationwide class of women employees and applicants at Rent-A-Center for gender discrimination and obtained a settlement of $47.5 million and transformation of the company’s hiring practices. This was the second highest recovery in an employment discrimination case for women in the U.S. “I have never seen an effort like that effort put forth . . . it’s beyond an extraordinary effort, an amazing, amazing result.” - United States District Court, Wilfong v. Rent-A-Center.
He is deeply involved in community initiatives in St. Louis and has been repeatedly recognized for his efforts. He and his wife founded Mentor St. Louis, Inc., a not-for-profit organization which places adult mentors in the lives of minority elementary students, in underserved areas, in the St. Louis Public Schools. It has become the largest volunteer program in the St. Louis Public Schools and has been nationally recognized.
He also successfully initiated and spearheaded the passage of a law, "The Missouri State Historic Tax Credit," which has been widely acknowledged for its role in revitalizing the urban core of St. Louis, which has produced over $9 billion in economic development in Missouri, and which is the national model for legislation aimed at revitalizing older communities.
Schlichter has received numerous awards, such as the Levee Stone Award and "What's Right with the Region Award" for the Historic Tax Credit, Mentor St. Louis, and his contributions to revitalizing the City of St. Louis.
He was honored with the prestigious St. Louis Award, given to a person who has accomplished great benefit to St. Louis.
He spearheaded the founding and development of another St. Louis non-profit, Arch Grants, which is a global competition for startup businesses in which winning entrepreneurs come to St. Louis, receive $50,000 without taking equity, and a broad package of support services including business mentoring and free legal, accounting, and marketing services. Arch Grants has provided $50,000 grants to 114 startup companies since its founding in 2012, and has been the subject of numerous articles nationally, describing its success in building entrepreneurial businesses in St. Louis
Schlichter graduated in 3 years from the University of Illinois with a B.S. in Business Administration with honors, and from UCLA Law School where he was Associate Editor of UCLA Law Review.
Jerry has spoken at national seminars on employee rights and complex litigation. He has taught trial techniques as an adjunct professor at Washington University School of Law.
He is a member of the California, Missouri and Illinois Bars.
He is Chair of the Board of Arch Grants and Co-Chair of the Economic Development Committee of Downtown St. Louis, Inc., and a member of the National Entrepreneurship Council of Washington University in St. Louis.
