A lawsuit filed by Cornell employees, which alleges the University mismanaged their retirement plans, was sent back to the district court for further review after a ruling by the Second Circuit Court of Appeals on Oct. 17. The case previously made it all the way to the Supreme Court, which sent one specific claim back to the lower courts for further review.
The five named plaintiffs in the case titled Cunningham v. Cornell represent a class of around 30,000 former and current Cornell employees who filed a complaint in 2016. They lodged a series of claims against Cornell, including that the University failed to monitor investment performance, incurred excessive recordkeeping fees and engaged in prohibited transactions. These allegations, if found to be true, would violate the Employee Retirement Income Security Act.
ERISA, passed in 1974, “sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans,” according to the Department of Labor.
After nine years of briefings and hearings that went through the lower courts and up to the Supreme Court, the case was sent back to the District Court, where the final outstanding claim regarding prohibited transactions conducted by the University will be evaluated. Currently, there is no definite time frame as to when the claim will be heard in the District Court.
During the first stage of the case in 2018, the District Court for the Southern District of New York granted summary judgment on most claims, meaning that the judge ruled in favor of the University before a formal trial. This decision was reaffirmed by the Second Circuit in 2023.
The Supreme Court, however, had a different answer. In a unanimous ruling issued in April 2025, the justices sided with the plaintiffs, making it far easier for employees to file ERISA violation claims against their employers and sending one of the plaintiff’s claims back to the Second Circuit Court for review. The claim involved prohibited transactions between the University and a party of interest in regards to pension plans.
The Second Circuit Court requested briefs from the plaintiffs and the defense on how the case should proceed. The University argued that the case should be settled where it was, citing concerns that sending it back to the district court would be a “colossal waste of resources,” according to its docket sent to the Second Circuit Court.
However, the plaintiffs supported the return of the case to the district court, which could grant them a trial by jury.
In the U.S Federal Court system, district courts are the initial courts where a trial is held and the decision of the court is voiced by a panel of jurors. If an appeal is made, however, the case continues to an appellate court. A case in an appellate court faces a panel of judges, who determine if the correct ruling was reached based on the same evidence entered in the district trial.
The Second Circuit Court agreed with the plaintiffs, sending the case back to the district court on Oct. 17. However, questions remain about the manner in which the case will be resolved.
There are three possible next steps that the district court will evaluate, according to Sean Soyars, an attorney for the plaintiffs. The judge may either request another summary judgment briefing, ask for further evidence or send it to a trial by jury.
“The next steps [for the plaintiff] are to suggest [to] the District Court that there should be a trial on the prohibited transaction claim based on the evidence that Cornell’s record-keeping arrangements were not reasonable and that the plan overpaid excessive fees as a result,” Soyars said.
The University, however, maintains that there was no evidence of an ERISA violation.
“The evidence in the record shows that there is no merit to the prohibited-transaction claim. Plaintiffs’ effort to seek further evidence, even if the district court re-opens discovery, will not change that,” a Cornell spokesperson wrote to The Sun.
Coral Platt is a member of the Class of 2029 in the College of Arts and Sciences. She is a contributor for the News department and can be reached at csp94@cornell.edu.
