Court of Appeals Allows Broad Definition of “Class” in ERISA Class Action Lawsuit

The 7th Circuit Court of Appeals recently held that a broadly defined class of participants could proceed in Abbott v. Lockheed Martin.

Among other claims, the participants allege that their 401(k) plan’s stable value fund (SVF) was mismanaged because of its claimed excessive investment in money market funds. The participants appear to focus on the label of the fund and how the investment performed compared to the Hueler Index (which tracks comparative SVF performance) rather than the specific provisions and disclosures of the plan. In determining who was included in the lawsuit, participation in the class was based on whether the individual’s investment in the stable value fund underperformed compared to the Hueler Index.

The 7th Circuit Court of Appeals held that the reference to the Hueler Index when defining the class was permissible. The Court stated that although the reference to the Hueler Index was appropriate for determining the class, it did not bind the district court to use it as a determiner of liability or the damages measure if liability was found.

Thus, plans may face a class of participants that are determined based upon a different damages measure than the court ultimately uses to decide the merits of the case. The case may indicate courts’ willingness to consider more class action litigation in 401(k) fiduciary/investment cases.

ERIC members and trial members can read more here.

A joint amicus brief is available here.
The 7th Circuit Court of Appeals decision is available here.