Appeals Court Revives Pension Case Against Northrop Grumman

The U.S. Court of Appeals for the 9th Circuit has revived a proposed class action lawsuit, accusing Northrop Grumman of misinforming pension participants about their benefits.

The appeals court on Thursday overruled a California federal court’s dismissal of the case and returned it to the district court level.  

The three-judge appellate court panel reversed and remanded decisions made in the U.S. District Court for the Central District of California. The appeals court decided earlier district court rulings were wrong and that the retirees who brought the case had adequately alleged that they had received inaccurate benefit statements.  

The retirees, “adequately alleged facts that, if proved, triggered the duty to provide pension benefit statements, and … stated a viable ERISA claim by alleging that the plan administrator provided substantially inaccurate pension benefit statements,” wrote Judge Morgan Christen, in the court of appeals opinion.

The court of appeals denied the argument presented by Northrop Grumman’s administrative committee—designated administrator of the pension plan—claiming there were no remedies available for the Employee Retirement Income Security Act violations alleged by plaintiffs Stephen and Laura Bafford and Evelyn Wilson.  

However, Christen wrote for the appeals court that the law’s text, “broadly permits the imposition of penalties,” for failing to meet certain requirements.

Wilson and Steven Bafford were participants with vested retirement balances in the Northrop Grumman Pension Plan who started to accrue retirement assets upon their employment at the Grumman Corporation in the 1980s. Laura Bafford is Stephen Bafford’s wife and the beneficiary of his pension under the plan.

Wilson retired in 2014 and Bafford in 2016.

This is the second time the 9^thCircuit Court of Appeals has resurrected the case.

The initial lawsuit was filed in 2018. The proposed class action lawsuit claimed Northrop Grumman and Hewitt Associates LLC, which is now known as Alight Solutions breached their fiduciary duties under ERISA. Alight was dismissed from the case in 2022 and was not involved in the appeal.

In the original complaint, accusers claimed they never received pension benefit statements or notices informing them how they could obtain such statements, and also alleged they received inaccurate statements of their retirement benefits in response to their written requests, explains Christen, in the recent appeal’s court opinion. 

The complaint alleged Alight breached their fiduciary duty by sending to plan participants inaccurate estimates of worker’s pension benefits, and targeted the Northrop Grumman administrative committee for the plan, accusing it of ERISA breach by not adequately monitoring Alight.

In 2019, the district court granted the plan committee’s motion to dismiss. The appeals court affirmed the district court’s dismissal of the complainants fiduciary duty claim, reversed dismissal of state law claims, vacated dismissal of the ERISA disclosure claims and remanded with instructions to allow plaintiffs to file an amended complaint.

On return to the district court, plaintiffs filed a second amended complaint realleging their state-law claims and their claims against the committee for violations of ERISA’s disclosure provision.

Following the refiling, the district court narrowed the complainant’s allegations, dismissing one of the claims with prejudice. The court dismissed the accuser’s other claims with leave to amend, wrote Christen.

When the complainants filed a third amended complaint the court ordered them to file an amended complaint removing previously rejected allegations. The court ultimately “struck,” their fourth amended complaint because it continued to allege that plaintiffs received inaccurate pension benefit statements and because plaintiffs’ allegations were overbroad, Christen wrote.

Instead of filing another amended complaint, plaintiffs requested entry of final judgment and filed this appeal, according to Christen. The appeal was argued and submitted October 17, 2023.

The case is Stephen Bafford et al. v. Administrative Committee of the Northrop Grumman Pension Plan et al.

U.S. Circuit Judges Christen, Roopali H. Desai and Anthony D. Johnstone made up the panel for the 9^th Circuit.

Northrop Grumman is represented by attorneys with the law firm Mayer Brown LLP. The retirees are represented by attorneys with the law offices of Kantor & Kantor LLP and Renaker Scott LLP.

Neither representatives of lawyers for the plaintiffs nor Northrop Grumman responded to requests for comment on the lawsuit.