In Abbott v. Lockheed Martin, AARP is urging the U.S. Court of Appeals for the Seventh Circuit to find that the case is appropriate to be litigated as a class action.
Background
In 2006, five employees who participated in two of Lockheed Martin's 401(k) plans brought suit on behalf of a proposed class of similarly situated employees, alleging that plan fiduciaries breached their duties with respect to plan investments when they allegedly paid excessive service provider fees and offered imprudent investment options in violation of the federal Employee Retirement Income Security Act (ERISA), the main law overseeing employee benefits.
The federal district court for the Southern District of Illinois allowed a certified class to go forward. Lockheed Martin appealed to the Seventh Circuit, seeking review of the class certification, and a three-judge panel vacated the certification for part of the class. Participants asked for review by the full court.
Class actions are an important way to change corporatewide practices in a single procedure. For people whose individual claims may be relatively small — but which may aggregate to massive ill-gotten gains — it can often be the only way to vindicate rights. In the case of investor rights, class actions are important because they may be the only way to justify the time and expense and attract the expertise needed to prove the often-complicated claims that are brought.
AARP’s friend-of-the-court brief supporting full court review was filed by AARP Foundation Litigation attorneys and focused on three areas. First, the brief included data measuring the amount of money currently held in 401(k) plans, as well as its importance to individuals’ retirement income. The second area suggested to the court that it should adopt an interpretation of its past decisions that takes a balanced approach to class certification requirements so that participants can bring ERISA actions to vindicate their rights. Third, the brief discussed the Department of Labor’s lack of resources to oversee the $3.5 trillion in 401(k) plan assets.
What’s at Stake
Class action lawsuits are a critical vehicle for vindicating the rights of older people when litigating their rights under ERISA. If the court unreasonably narrows the instances in which class certification will be permitted, then the ability of plaintiffs to litigate their ERISA claims for breach of fiduciary duties will be thwarted, primarily because of the expense and difficulty of litigation.
Case Status
Abbott v. Lockheed Martin is before the U.S. Court of Appeals for the Seventh Circuit on a request for full court review.
