The U.S. Supreme Court declined to hear an appeal of a 7th U.S. Circuit Court of Appeals decision to allow class action status by Lockheed 401(k) participants. The plaintiffs, who were represented by Jerome Schlichter, were able to win class action status by splitting the classes into those who invested in the same funds, overcoming the 7th Circuit’s Spano decision. At issue was their contention that offering only a short-term stable value fund which failed to beat its benchmark, barely edging out the inflation rate, “amounted to imprudent management and violated Lockheed’s duty to manage the Plan ‘with care, skill, prudence, and diligence under the circumstances,’” the court noted in remanding the case back to the lower court for further proceedings.
According to attorney Schlichter, “this will be the second case in the history of excessive fee cases to go to full trial.” The lower court decision, according to FRA PlanTool’s Thomas Clark, is “wind in the sails of potential class action suits over underperforming funds.”
