The U.S. Supreme Court refused a Lockheed Martin attempt to block a class action lawsuit claiming breach of fiduciary duty by managers of the company's 401(k) plan.
The Supreme Court let stand an August decision by the U.S. 7th Circuit Court of Appeals allowing the case, Abbott v. Lockheed Martin Corp., to proceed on behalf of more than 100,000 employees and retirees of the aircraft maker. The 7th Circuit, based in Chicago, had reversed a decision denying certification of the class.
The case, which has wound its way through the court system since it was filed in 2006, claims retirees and employees who participate in the plan were harmed because of high fees and bad investments management.
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It claims an investment designated as conservative was too conservative and did not generate enough return on investment.
The Lockheed Martin 401(k) plan has $20 billion in assets and is the fifth largest in the U.S. The company is based in Bethesda, Md., but the case will be heard in Illinois where it was originally filed.
The lawyer whose represents the employees in the case spoke about the importance of the case after the 7th Circuit made its ruling.
"It puts fiduciaries on notice that they have to take their obligations seriously," said Jerry Schlichter of Schlichter, Bogard & Denton in St. Louis. "And if they don't meet the fiduciary standards, which are very high standards, they are going to be held liable."
Schilchter's firm has represented employees in several high profile retirement plan cases, including one against Boeing Corp. Last week, the 7th Circuit allowed a class action suit claiming poor investment decisions and excessive fees by Boeing to proceed.
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