Defense behemoth L3Harris has pledged a hefty $650,000 to settle a class action lawsuit, culminating accusations of breaching federal benefits law. The lawsuit, spotlighting exorbitant fees and costly investment options in the retirement plan, concluded with a Florida federal court filing.

L3Harris To Pay $650K in 401(k) settlement : Allegations and Resolution

Former employees, spearheaded by Robert J. Stengl, petitioned the court to approve the settlement, effectively closing their Employee Retirement Income Security Act (ERISA) lawsuit against L3Harris Technologies Inc. The aerospace and defense titan was accused of flouting fiduciary duties under ERISA, neglecting to negotiate lower fees and retaining pricy investment options in its $5.2 billion L3 Technologies Master Savings Plan.

The settlement, disclosed on Friday, marks the resolution before the court could render a judgment on L3Harris's motion for summary judgment. It brings respite to approximately 50,000 plan participants. Plaintiffs lauded the settlement as a significant triumph, ensuring immediate relief and averting the risks and expenses of a trial.

Settlement Terms and Coverage

The agreement encompasses L3Harris 401(k) participants and their beneficiaries who were part of the plan between November 23, 2015, and December 31, 2019. Lead plaintiffs are slated to seek incentive rewards from the settlement, with attorneys angling for a share of nearly $217,000.

Allegations of Fiduciary Negligence

The lawsuit, initiated in March 2022 against the Melbourne-based conglomerate, its investment committee, and board of directors, underscored discrepancies in fees compared to other similarly sized plans. Despite substantial bargaining power, plan participants were saddled with exorbitant recordkeeping and administrative fees, dwarfing those of comparable plans.

The suit alleged that L3Harris's investment committee failed to capitalize on available lower fees for numerous funds, resulting in overpayments ranging from 13% to 30%. The company purportedly left the plan's investment portfolio largely untouched since 2015, leaving workers at a financial disadvantage.

Legal Proceedings and Mediation

U.S. District Judge Paul G. Byron endorsed class certification in June, citing common queries among all proposed members. While a seven-day bench trial was slated to commence on February 5, 2024, mediation sessions held toward the end of 2023 bore fruit in the form of a settlement in principle.

Representatives for the involved parties were not immediately available for comment.

L3Harris To Pay $650K in 401(k) settlement : Legal Representation

The class is represented by a team from Capozzi Adler PC and Matthew Fornaro PA. L3Harris is represented by legal counsel from Sidley Austin LLP and King Blackwell Zehnder & Wermuth PA.