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Northrop Grumman Corp. agreed to pay nearly $16.8 million to settle a decade-old lawsuit challenging the administrative fees associated with the company’s 401(k) plans ( In re Northrop Grumman Corp. ERISA Litig. , C.D. Cal., No. 2:06-cv-06213-AB-JC, motion for settlement approval filed 6/12/17 ).
The deal, announced in court papers filed June 12, resolves claims by a class of more than 100,000 people who participated in Northrop’s retirement plans between 2000 and 2009. The lawsuit accused Northrop of forcing 401(k) plan participants to pay excessive administrative fees—some of which went directly to Northrop.
This is the latest multimillion-dollar settlement over 401(k) plan fees to be negotiated by St. Louis-based Schlichter Bogard & Denton. The firm has struck similar deals with Boeing Co. ($57M), Lockheed Martin Corp. ($62M), and Novant Health Inc. ($32M). In 2016, the firm made headlines by filing proposed class actions challenging the retirement plans of 12 prominent American universities, including Yale, NYU, Vanderbilt, and Cornell. This litigation effort has seen early success, with judges refusing to dismiss the cases against Emory University and Duke.
The case against Northrop is pending in the U.S. District Court for the Central District of California, which must approve the deal before it becomes final. That court is home to another 401(k) lawsuit against Northrop, which involves fees paid since 2010 and isn’t affected by this settlement. The workers bringing that lawsuit are also represented by Schlichter Bogard, as are the employees in cases against the University of Southern California and Edison International, also filed in that court.
Jerry Schlichter, senior partner with Schlichter Bogard and counsel for the Northrop Grumman workers, said the settlement is the culmination of more than 10 years of litigation.
“This case has been pending for 10-and-a-half years, and it’s been to the Ninth Circuit court of appeals and back, and we’re pleased that it’s come to an end for the employees and retirees. They’ll be compensated for their losses through May of 2009,” Schlichter told Bloomberg BNA June 12.
The settlement was reached in principle five days after the parties began a trial before Judge André Birotte Jr. in March 2017, according to court filings. The deal authorizes Schlichter Bogard to seek one-third of the settlement amount—$5.8 million—as attorneys’ fees.
A spokesman for Northrop said the company is proud of its retirement plans.
“We take pride in our benefit plans, how we manage them and how they perform,” Tim Paynter, vice president of strategic communications for Northrop told Bloomberg BNA in an email. “We believe the administration of our plans is fully consistent with applicable legal requirements. After years of litigation, we are pleased to have agreed to a settlement that will resolve this matter and benefit our plan participants.”
Mayer Brown LLP represents Northrop.
To contact the reporter on this story: Jacklyn Wille in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Text of the motion for settlement approval is at http://bloomberglaw.com/public/document/Shirley_Waldbuesser_et_al_v_Northrop_Grumman_Corporation_et_al_Do/4?doc_id=X1Q6NSEICVO2&imagename=763-1.pdf.
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