The ruling is a significant victory for 401(k) investors whether or not they were in the Lockheed plan. It means that those employees and retirees who lose money from funds that are mismanaged in a 401(k) Plan can proceed as a group not just individually.
St. Louis, Missouri (PRWEB) August 09, 2013
On August 7, 2013, the Seventh Circuit Court of Appeals handed down its decision in Abbott v. Lockheed Martin, unanimously overturning an earlier denial of class certification in a case concerning one of the country’s largest 401(k) plans. Judge Diane Wood, writing for a panel of Judges, ruled that a class could be certified consisting of Lockheed Martin employees and their beneficiaries who invested in the Lockheed Martin 401(k) Plans’ stable value fund between September 11, 2000 and September 30, 2006 and whose investments underperformed the Hueler FirstSource Index.
Schlichter, Bogard & Denton, LLP attorneys argued that the stable value fund was imprudently managed in violation of ERISA because the investments were mainly money market short-term investments with lower returns unlike properly structured stable value investments. The Court stated that Lockheed’s own documents acknowledged that the stable value fund would “not beat inflation by a sufficient margin to provide a meaningful retirement asset.”
According to the firm’s founding partner, Jerome Schlichter, who is handling the case, "the ruling is a significant victory for 401(k) investors whether or not they were in the Lockheed plan. It means that those employees and retirees who lose money from funds that are mismanaged in a 401(k) Plan can proceed as a group not just individually.” Mr. Schlichter also stated, “Importantly the Court of Appeals also rejected Lockheed’s contention that our claim involves just a mislabeling of the Stable Value Fund rather than outright mismanagement. Lockheed now is faced with the reality that there will be a trial of this claim which involves massive losses to the employees and retirees.” It reflects an acknowledgment by courts that employers are responsible for the investments they put in their plan and that, if they know — or should know — there is a problem, they cannot ignore it. By certifying the class, the case can proceed for all the plan participants who suffered losses by investing in the stable value fund.
In 2006, the Lockheed case was one of a number of cases filed by Schlichter, Bogard & Denton which launched the field of 401(k) fiduciary breach litigation for excessive fees. After years of litigation, Schlichter, Bogard, & Denton, has recently won nearly $50 million from ABB and Fidelity for the benefit of participants in ABB’s 401(k) plan after litigating the first full trial of a 401(k) excessive fee claim in the country. Tussey v. ABB, Case No. 06-4305 (W.D.Mo.). The firm has also settled cases on behalf of participants in the 401(k) plans of Cigna, Caterpillar, General Dynamics, Kraft Foods, and Bechtel totaling over $90 million. Nolte v. Cigna, Case No. 07-2046 (C.D.Ill.); Martin v. Caterpillar, Case No. 07-1009 (C.D.Ill.); Will v. General Dynamics, Case No. 06-698 (S.D.Ill.); Kanawi v. Bechtel, Case No. 06-5566 (N.D.Ca.); George v. Kraft Foods, Case Nos. 07-1713 & 08-3799 (N.D.Ill.). The $35 million Cigna 401(k) plan settlement, which was reached recently, represents the largest settlement ever for 401(k) plan investors.
About Schlichter, Bogard & Denton, LLP
Schlichter, Bogard & Denton, LLP is a unique national law firm that represents individuals, including 401(k) plan investors, whose plans suffer from excessive fees or imprudent investment options. Our attorneys are dedicated to helping employees and retirees secure the retirement benefits they deserve. If you have any questions about the fees and investments in your 401(k) or 403(b) plan, please contact Schlichter, Bogard & Denton, LLP toll-free at (800) 873-5297 for a free review of your plan.
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