On February 20, 2015, the parties in Abbott, et al. v. Lockheed Martin Corporation, et al., No. 06-cv-701-MJR-DGW, filed their joint motion for preliminary approval of a class action settlement. Plaintiffs’ counsel touted the proposed settlement as the “the largest ever for a case of this nature.” (Plaintiffs’ Memorandum in Support of Joint Motion for Preliminary Approval of Settlement at 1).
The lawsuit, pending in the United States District Court for the Southern District of Illinois, alleges fiduciary breaches of ERISA and prohibited transactions relating to fees and expenses paid from assets of two 401(k) plans sponsored by Lockheed Martin. The suit also asserts that plan fiduciaries improperly managed company stock funds and a stable value fund.
If approved by the court, defendants would pay $62 million into a settlement account. In addition, defendants have agreed to, inter alia, implement competitive bidding for recordkeeping services provided to the plans and to offer plan participants investment share classes with the lowest expense ratio with certain caveats.
Based on the plaintiffs’ briefing in support of the joint motion, class counsel will request not more than one-third ($20,666,667) of the $62 million cash settlement fund and costs of not more than $1,850,000.
The terms of the proposed settlement will be reviewed by an independent fiduciary pursuant to Department of Labor Prohibited Transaction Class Exemption 2003-39.
The lawsuit was commenced more than eight years ago and decisions of the district court have been appealed multiple times. The settlement agreement with its exhibits, including Exhibit 3 (the proposed notice to class members), can be reviewed here.
It is the author’s opinion that the proposed settlement is likely to be approved by the court.