White Plains, New York — A recent jury verdict has awarded $38.8 million to participants of a 401(k) plan managed by Pentegra Services Inc., marking a significant moment for plaintiffs under the federal Employee Retirement Income Security Act (ERISA). This ruling allows participants an opportunity to take their fiduciary breach claims to a jury, a rarity in ERISA cases.
On April 23, an eight-member jury unanimously found that Pentegra and the plan’s board of directors failed their fiduciary responsibilities by imposing excessive administrative fees on the retirement plan, which serves roughly 26,000 employees across various financial institutions and manages $2.1 billion in assets. The case was argued in the U.S. District Court for the Southern District of New York over the course of a week.
The verdict stands out not only for its size but also as a landmark case in the Second Circuit, where courts have been deliberating the rights of plaintiffs to have jury trials in fiduciary breach cases. This ruling is the first of its kind to provide direct monetary compensation to plaintiffs in an ERISA case, potentially paving the way for more workers and retirees to present similar claims to juries rather than only judges.
Evan Schwartz, a plaintiffs’ attorney and founder of Schwartz, Conroy & Hack, PC, emphasized the importance of such results for future litigants. “Lawyers on my side should be working hard for jury trials every time,” Schwartz remarked. “This decision reflects the commitment of jurors to uphold justice.”
Nathan Stump, representing the plaintiffs, described the verdict as a “hard-fought victory,” reinforcing the role of the jury in revealing conflicts of interest and breaches in fiduciary duty within complex ERISA cases. According to Stump, this outcome serves as a significant statement for employees and retirees nationwide.
While traditionally, jury trials in ERISA cases have been uncommon, this particular case indicates a shift. Many courts have typically preferred to handle ERISA class actions through judge-only trials, as they often seek equitable remedies rather than monetary damages. Instances of judges affirming jury trial requests in ERISA cases have been limited, making this case a rare occurrence in the Second Circuit.
Legal experts note that the ruling highlights a unique opportunity for plaintiffs within this jurisdiction. Nancy Ross, a partner at Mayer Brown LLP, noted that the precedent might inspire other plaintiffs to push for jury trials in similar cases, especially given the lack of uniformity in decisions across different regions.
Legal analysts also point to a recent case involving Yale University, where a jury found the institution in breach of its fiduciary duties regarding administrative fees. However, jurors opted not to award damages, concluding that the failures did not result in harm to participants. The case is currently under appeal, and the outcome may influence future litigation strategies.
Discussions in the legal community suggest that this issue may eventually reach the Supreme Court, particularly if inconsistencies persist among lower courts regarding jury trials under ERISA. Scholars argue that clarifying the availability of such trials could provide essential guidance for how similar cases are prosecuted in the future.
Plaintiffs assert that the Seventh Amendment affords participants and beneficiaries the right to a jury trial when seeking monetary compensation, leaving non-monetary remedies for judges. The presiding judge in the Pentegra case, Philip M. Halpern, is still determining whether the plaintiffs are entitled to further plan changes or other court orders related to fiduciaries.
Pentegra, represented by the Groom Law Group during the trial, expressed disappointment with the jury’s verdict and is exploring its legal options moving forward. A spokesperson for the firm indicated that the litigation would not deter their mission to deliver compliant plan solutions to their clients.
The case is Khan v. Board of Directors of Pentegra Defined Contribution Plan, S.D.N.Y., No. 7:20-cv-07561, with the jury verdict rendered on April 23, 2025.
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