Bafford v. Northrop Grumman Corp., 2:18-cv-10219-ODW (Ex)

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
PartiesSTEPHEN H. BAFFORD, et al., Plaintiffs, v. NORTHROP GRUMMAN CORPORATION, et al., Defendants.
Docket Number2:18-cv-10219-ODW (Ex)
Decision Date01 February 2022

STEPHEN H. BAFFORD, et al., Plaintiffs,


No. 2:18-cv-10219-ODW (Ex)

United States District Court, C.D. California

February 1, 2022




In this case, Plaintiffs Stephen H. Bafford, Laura Bafford, and Evelyn L. Wilson bring a putative class action against Defendants Northrop Grumman Corporation; Administrative Committee of the Northrop Grumman Pension Plan; and Alight Solutions LLC for damages arising from miscalculation of Plaintiffs' retirement benefits. The operative Second Amended Complaint, filed August 13, 2021, sets forth a claim against the Administrative Committee for violations of the Employee Retirement Income Security Act (“ERISA”) and two state-law claims against Alight. (Second Am. Compl. (“SAC”), ECF No. 83.) The Administrative Committee and Alight each move to dismiss pursuant to Federal Rule of Civil Procedure


(“Rule”) 12(b)(6). (Committee Mot., ECF No. 84; Alight Mot., ECF No. 85.) For the following reasons, the Court GRANTS the Administrative Committee's Motion with limited leave to amend, DEFERS ruling on Alight's motion, and ORDERS Plaintiffs and Alight TO SHOW CAUSE regarding supplemental jurisdiction.[1]


For purposes of these Rule 12(b)(6) motions, the Court accepts Plaintiffs' well-pleaded allegations as true. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001).

Plaintiffs are retirees and former employees of Northrop. They began working for Northrop in the late 1980s, during which time they accrued pension benefits under two defined benefit subplans of Northrop's pension plan (the “Northrop Plan”). (SAC ¶¶ 23-25.) The Administrative Committee is the Plan Administrator and fiduciary of the Northrop Grumman Pension Plan pursuant to ERISA, 29 U.S.C. §§ 1002(16)(a)(i), 1002(21). (SAC ¶ 9.) The Administrative Committee is therefore responsible for, among other things, providing pension benefit statements to Northrop Plan participants in accordance with the requirements of ERISA. (SAC ¶ 10.) Beginning in 2008, the Administrative Committee delegated this responsibility to Alight's predecessor.[2] (SAC ¶ 11.)

In the late 1990s, Plaintiffs stopped working for Northrop and began to work for the TRW Corporation. (SAC ¶¶ 26-28.) As TRW employees, they accrued pension benefits under TRW's pension plan (the “TRW Plan”). (SAC ¶ 28.)

In December 2002, Northrop acquired TRW and, as a result, Plaintiffs became Northrop employees again. (SAC ¶ 29.) Plaintiffs continued to accrue benefits under the TRW Plan as Northrop Employees. (SAC ¶ 31.) The TRW Plan and its benefits are not at issue in this lawsuit.


Beginning in 2010, Plaintiffs began requesting pension benefit statements for their Northrop Plan benefits through Alight. (SAC ¶ 36.) In the SAC, Bafford sets forth a chart indicating the twelve pension benefit statements he received between March 2010 and June 2016, all of which indicated a monthly 100% joint and survivor annuity benefit of approximately $2, 100.00. (SAC ¶ 37.) Wilson requested similar statements from Alight. (SAC ¶¶ 39-40.)

Wilson retired in 2014, and Bafford apparently retired in 2016. (SAC ¶¶ 41, 43- 44.) They each began receiving monthly pension benefits in accordance with the estimates and statements Alight had provided them. (SAC ¶¶ 42, 26.) Then, in late 2016 and early 2017, they received from Northrop a recalculation notice informing them of a systemic error that resulted in Northrop substantially overestimating and overpaying Plaintiffs' pension benefits. (SAC ¶¶ 49, 50.) Northrop informed Bafford that his monthly benefit would be reduced from approximately $2, 000 to approximately $800. (SAC ¶ 50.) Northrop similarly informed Wilson that her benefits should have been less than half of what they had been up to that point and requested that Wilson repay over $35, 000 of the benefit she had already received. (SAC ¶ 53.)

The error occurred as follows. The subplans in which Plaintiffs are participants are defined benefit pension plans, in which “retirees receive a fixed payment each month, and the payments do not fluctuate with the value of the plan or because of the plan fiduciaries' good or bad investment decisions.” Thole v. U.S. Bank N.A., 140 S.Ct. 1615, 1618 (2020); (SAC ¶ 15). A retiree's fixed payment is based on a pension calculation formula set forth in that retiree's subplan. (See id.)

Under Plaintiffs' subplans, a final average pay formula is used to calculate the amount of the defined benefit payments, and the two main considerations are: (1) the number of years of service compared to the employee's age; and (2) the average rate of annual salary (“average earnings”) during the employee's highest three years of salary out of the last ten years the employee was covered under the Plan. (SAC 16.) The second consideration is the one Alight miscalculated. Plaintiffs accrued benefits under


the Northrop Plan during their earlier years with Northrop. When they later returned to Northrop after its acquisition of TRW, they continued to accrue retirement benefits under TRW's plan, not Northrop's. Thus, the second variable should have been calculated based on Plaintiffs' average earnings during their early years with Northrop, in the late ‘80s and early ‘90s. Instead, Alight calculated Plaintiffs' benefits based on their average earnings during their later years with Northrop, which were higher than their salaries many years prior. On the basis of this miscalculation of average earnings, Alight overstated-and Northrop overpaid-Plaintiffs' benefits. (SAC ¶¶ 32-35.)

Based on these events, Plaintiffs asserted claims on behalf of themselves and a putative class of employees against Defendants for: (1) violation of ERISA, 29 U.S.C. § 1104(a), against Northrop and the Administrative Committee; (2) violation of ERISA, 29 U.S.C. § 1104(a), against Alight; (3) violation of ERISA, 29 U.S.C. § 1025; (4) professional negligence, against Alight; (5) negligent misrepresentation, against Alight; and (6) violation of ERISA, 29 U.S.C. § 1106(a), against all Defendants. (First Am. Compl. (“FAC”), ECF No. 32.) In April 2019, the Administrative Committee and Alight each moved to dismiss the FAC, and the Court granted Defendants' motions, dismissing the fourth and fifth claims with prejudice and without leave to amend, and dismissing all other claims with leave to amend. (Order Dismissing FAC, ECF No. 68.) Instead of amending, Plaintiffs filed a Notice of Intent Not to Amend, (ECF No. 69), and the Court entered Judgment in favor of Defendants, (J., ECF No. 73.)

Plaintiffs appealed, and on April 15, 2021, the Ninth Circuit issued its Opinion, affirming in part and vacating in part the Court's dismissal. Bafford v. Northrop Grumman Corp. (“Bafford I”), 994 F.3d 1020 (9th Cir. 2021). The Ninth Circuit affirmed the Court's dismissal of the ERISA claims (the first, second, third, and sixth) and confirmed that this Court was correct to provide leave to amend the third claim. Id. at 1030. The Ninth Circuit proceeded to find that, contrary to this Court's prior determination, Plaintiffs' negligence and negligent misrepresentation claims were not


preempted by ERISA. It accordingly vacated the dismissal of the negligence and negligent misrepresentation claims and remanded for further proceedings. Id. At 1032.

Following the Ninth Circuit's mandate, Plaintiffs filed the operative Second Amended Complaint. Plaintiffs omit the first, second, and sixth claims from their Second Amended Complaint, maintaining the third claim against the Administrative Committee and the fourth and fifth claims against Alight. The Administrative Committee and Alight each move to dismiss pursuant to Rule 12(b)(6). (Committee Mot.; Committee Opp'n, ECF No. 87; Committee Reply, ECF No. 90; Alight Mot.; Alight Opp'n, ECF No. 88; Alight Reply, ECF No. 91.)


A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). A complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)- a short and plain statement of the claim-to survive a dismissal motion. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual “allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (holding that a claim must be “plausible on its face” to avoid dismissal).

The determination of whether a complaint satisfies the plausibility standard is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. A court is generally limited to the pleadings and must construe all “factual allegations set forth in the complaint . . . as true and . . . in the light most favorable” to the plaintiff. Lee, 250 F.3d at 679. However, a court need not blindly accept conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Ultimately, there must be sufficient factual allegations “to give fair notice and to enable the opposing party to defend itself effectively, ” and the “allegations


that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).


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