The U.S. Supreme Court this week denied a petition by the company to review a 7th U.S. Circuit Court of Appeals decision allowing for class certification.
In the case of Abbott v. Lockheed Martin, the 7th Circuit reversed a district court ruling denying class certification on the claim that Lockheed Martin mismanaged the stable value fund offered in two defined contribution plans (see “Court Reverses Ruling on Denial of Class Certification”). The appellate court noted that in denying class certification, the U.S. District Court for the Southern District of Illinois was concerned that the reference in the class definition to the Hueler Index improperly prejudged the merits of the stable value fund claim. The District Court appears to have assumed that accepting the class definition also required it to accept the conclusion that the fund was mismanaged because it underperformed relative to the Hueler Index.
However, the appellate court noted, plaintiffs are not arguing that the fund was imprudently managed in violation of the Employee Retirement Income Security Act (ERISA) because it did not match or outperform the Hueler Index; rather, the court said, they allege that it was imprudently managed because its mix of investments was not structured to allow the fund to beat inflation and therefore that it could not serve as a prudent retirement investment for Lockheed employees. The appellate court explained that if the plaintiffs prevail on their claim, they may offer the Hueler Index as one basis for calculating damages, but the reference to the Hueler Index in the class definition in no way binds the District Court to use it as the damages measure should the plaintiffs prevail. “If the court concludes that a different measure would be better, it is free to use one,” the appellate court wrote in its opinion.
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