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Judge OKs class action vs Northrop Grumman over severance pay for laid off workers

Federal Court

By D.M. Herra | Oct 23, 2019

Dirksen flamingo federal

CHICAGO -- A class action lawsuit can proceed against aerospace giant Northrop Grumman, after a federal judge ruled in favor of former employees arguing that they and others were entitled to severance pay that they never received.

U.S. District Judge Andrea R. Wood of the U.S. District Court Northern District of Illinois approved the class for the first count of the claim, for benefits due and clarification of rights under the severance plan. 

The suit was filed by former employees Alan Carlson and Peter DeLuca, who were among a group of employees laid off in 2013 from Northrop Grumman subsidiary Northrop Grumman Technical Services Inc. The employees say that under Northrop Grumman’s severance plan, governed by the Employee Retirement Income Security Act, they were entitled to continued benefits and severance pay they never received.

According to the complaint, layoffs were typically accompanied by a memo explaining to the laid-off employee the severance benefits to which they were entitled. This memo was typically viewed as a perfunctory part of the layoff process and had no bearing on whether employees actually received benefits. In 2012, the plaintiffs say, the company changed its policy so that only employees who received a memo would receive severance pay. The decision of whom would receive pay was left to front-line supervisors. Regardless of whether employees received the memo, however, they continued to receive medical, dental and vision benefits as part of their severance.

The plaintiffs argued that because the verbiage of the plan did not change, the company had no right to change its policy, making the memo a necessary component of the severance package. They asked the court to certify a class of all people who worked more than 20 hours a week for Northrop Grumman and were laid off in 2012 or later without receiving a memo notifying them of their eligibility for severance benefits.

The plaintiffs allege Northrop Grumman interpreted the severance plan inconsistently by providing benefits regardless of whether an employee received the memo but paying out cash severance only to those who received the memo. They also took issue with the fact that the memo was not a condition of receiving severance until 2012.

Northrop Grumman argued that some people did not receive a cash severance for reasons that had nothing to do with the memo, such as failure to return a separation agreement. To address this concern, Wood recommended the class definition be altered to specify that the class incorporates people who did not receive a cash severance because they did not receive the memo.

The court did not certify the class for the second count of the claim, that employees were deprived of their plan rights to limit the company’s costs. The plaintiffs argued that they were denied their severance pay because they qualified for a large amount of pay, but Wood found this claim may not satisfy the typicality or numerosity requirements for a class action.

In their third claim, the plaintiffs sought class-wide reformation of the plan to remedy Northrop Grumman’s change to the way it administered the plan. The court found this also did not satisfy the typicality requirement for a class action, since the class as defined includes people who were not yet employed by Northrop Grumman when the change to benefit administration took place.

Although Wood did not certify the class for the second and third counts of the claim, she left the door open for the plaintiffs to revise the class definition or claims and file a new motion.

Plaintiffs have been represented by attorneys Michael Bartolic and Rebecca Kay Bryant, of Chicago, and Robert J. Barton and Vincent Cheng, of Block & Leviton LLP, of Washington, D.C.

Northrop Grumman has been defended by attorneys from the firm of Mayer Brown LLP, of Chicago.

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Organizations in this Story

Block & Leviton LLPU.S. District Court for the Northern District of Illinois Chicago DivisionNorthrop GrummanMayer Brown,LlpLaw Office of Michael Bartolic PC