Northrop Grumman 2010 Annual Report Download - page 99

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remediation, payment of attorney fees and costs, and punitive damages. The June 2009 trial date was vacated.
The litigation has been stayed until the next scheduled status conference, which has been set for May 19, 2011.
On March 27, 2007, the U.S. District Court for the Central District of California consolidated two Employee
Retirement Income Security Act (ERISA) lawsuits that had been separately filed on September 28, 2006, and
January 3, 2007, into In Re Northrop Grumman Corporation ERISA Litigation. The plaintiffs filed a
consolidated Amended Complaint on September 15, 2010, alleging breaches of fiduciary duties by the
Administrative Committees and the Investment Committees (as well as certain individuals who served on or
supported those Committees) for two 401K Plans sponsored by Northrop Grumman Corporation. The company
is not a defendant in the lawsuit. The plaintiffs claim that these alleged breaches of fiduciary duties caused the
Plans to incur excessive administrative and investment fees and expenses to the detriment of the Plans’
participants. On August 6, 2007, the District Court denied plaintiffs’ motion for class certification, and the
plaintiffs appealed the District Court’s decision on class certification to the U.S. Court of Appeals for the Ninth
Circuit. On September 8, 2009, the Ninth Circuit vacated the Order denying class certification and remanded
the issue to the District Court for further consideration. As required by the Ninth Circuit’s Order, the case was
also reassigned to a different judge. The plaintiffs’ renewed motion for class certification was rejected on a
procedural technicality, and they re-filed on January 14, 2011. The District Court postponed the trial date of
April 12, 2011, to an as yet undetermined date pending resolution of the class certification motion as well as
summary judgment motions, which are to be filed by May 2, 2011. Based upon the information available to the
company to date, the company believes that it has substantive defenses to any potential claims but can give no
assurance that the company will prevail in this litigation.
On June 22, 2007, a putative class action was filed against the Northrop Grumman Pension Plan and the
Northrop Grumman Retirement Plan B and their corresponding administrative committees, styled as Skinner et
al. v. Northrop Grumman Pension Plan, etc., et al., in the U.S. District Court for the Central District of California.
The putative class representatives alleged violations of ERISA and breaches of fiduciary duty concerning a 2003
modification to the Northrop Grumman Retirement Plan B. The modification relates to the employer funded
portion of the pension benefit available during a five-year transition period that ended on June 30, 2008. The
plaintiffs dismissed the Northrop Grumman Pension Plan, and in 2008 the District Court granted summary
judgment in favor of all remaining defendants on all claims. The plaintiffs appealed, and in May 2009, the
U.S. Court of Appeals for the Ninth Circuit reversed the decision of the District Court and remanded the matter
back to the District Court for further proceedings, finding that there was ambiguity in a 1998 summary plan
description related to the employer-funded component of the pension benefit. After the remand, the plaintiffs
filed a motion to certify a class. The parties also filed cross-motions for summary judgment. On January 26,
2010, the District Court granted summary judgment in favor of the Plan and denied plaintiffs’ motion for
summary judgment. The District Court also denied plaintiffs’ motion for class certification and struck the trial
date of March 23, 2010 as unnecessary given the District Court’s grant of summary judgment for the Plan.
Plaintiffs appealed the District Court’s order to the Ninth Circuit.
Based upon the information available, the company believes that the resolution of any of these claims and legal
proceedings listed above would not have a material adverse effect on its consolidated financial position, results of
operations or cash flows.
Hurricane Katrina Insurance Recoveries – The company is pursuing legal action against an insurance provider,
Factory Mutual Insurance Company (FM Global), arising out of a disagreement concerning the coverage of
certain losses related to Hurricane Katrina (Katrina) (see Note 16). Legal action commenced against FM Global
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NORTHROP GRUMMAN CORPORATION