This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.
Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
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 jwille@bna.com
To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.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.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)