FOLLOW US

A closely watched retirement benefits battle ended not with a bang, but with a judicial signature.

A federal judge in Virginia on Thursday formally dismissed an Employee Retirement Income Security Act case against Northrop Grumman Corp., marking the final step in what plaintiffs had positioned as a challenge to how the defense giant handled forfeited 401(k) funds.

The ruling caps what can now be described as the Northrop Grumman 401(k) Suit Dropping, following a series of earlier setbacks for the workers and a settlement of the lone remaining claim.

Court Signs Off on Dismissal With Prejudice

U.S. District Judge Anthony J. Trenga approved a stipulation of dismissal with prejudice, effectively closing the case brought by a proposed class of Northrop employees participating in the company’s savings plan.

The dismissal came after the parties resolved the final surviving issue — a statutory penalties claim under ERISA — in anticipation of a potential appeal to the Fourth Circuit. That appeal would have challenged Judge Trenga’s December decision that had already wiped out most of the lawsuit’s core allegations.

With the remaining claim voluntarily dropped, the case now exits the courtroom entirely.

Allegations Over 401(k) Forfeitures

The lawsuit, filed in March by former employees Laura Garner and Lawrence Adams, accused the Falls Church, Virginia-based aerospace and defense contractor of placing corporate interests ahead of retirement plan participants.

At the heart of the dispute was how Northrop Grumman used forfeited assets within its Northrop Grumman Savings Plan. The plaintiffs alleged the company redirected those forfeitures to reduce its own contributions, rather than applying them to lower or eliminate administrative costs borne by plan beneficiaries.

They framed the practice as a breach of fiduciary duty under ERISA — a statute designed to safeguard employee retirement benefits — and alleged prohibited transactions and a failure to properly monitor plan management.

But in December, Judge Trenga concluded those claims did not plausibly state a violation of federal benefits law. He dismissed the fiduciary breach and related claims, leaving standing only one narrower allegation: that Northrop Grumman failed to provide certain requested plan information, potentially triggering ERISA statutory penalties.

Final Claim Quietly Resolved

That last remaining issue — which Northrop had not initially sought to dismiss — was ultimately resolved by agreement.

According to Thursday’s order, both sides stipulated to dismiss the statutory penalties claim without any award of fees or costs to counsel for either party. With that, the litigation formally ended.

The conclusion underscores how complex retirement-plan disputes can hinge on technical interpretations of federal law. What began as a broad accusation over millions in forfeited 401(k) dollars narrowed to a single information-access question — and then evaporated entirely.

For now, the Northrop Grumman 401(k) Suit Dropping closes the chapter on this challenge to the company’s handling of its retirement plan funds, unless an appellate court is asked to reopen it.