The 10 Biggest Lockheed Martin Lawsuits in Company History

Lockheed Martin

Lockheed Martin is an American aerospace and technology company specializing in producing information security, arms, and defense technology for customers throughout the world. The company was formed through a merger between Martin Marietta and the Lockheed Corporation in 1995. The company’s headquarters is in North Bethesda, Maryland. The aerospace giant has nearly three decades under its belt at that time. Lockheed Martin has been sued for numerous violations. Some lawsuits arose from workers filing class-action lawsuits, some from customers claiming damages, and others through record-keeping errors found by government agencies and self-reporting mechanisms to keep the business on track. Most settlements were under $10 million, but a handful cost the company millions. Here are the ten biggest Lockheed Martin lawsuits in company history.

10. Lockheed Martin sued for unfair business practices Settlement amount: $12.8 Million

Project on Government Oversight reports Cable & Computer Technology filed a lawsuit against Lockheed Martin for claims of unfair business practices. The plaintiffs claim that Lockheed Martin’s subsidiary company Sanders entered into a contract with the plaintiff in a bid to Boeing for computer upgrades for a B-1B bomber project for the Air Force. Sanders agrees to partner in the bidding process but broke the contract with CCT two weeks before the bid was due, leaving CCT with no time to find a different partner to pursue the deal. A jury determined that breaking the contract left the plaintiff in the lurch, and awarded Cable & Computer Technology damages of $12.8 million for contract fraud in a civil dispute that was settled on November 27, 2002.

9. Lockheed Martin sued for age discrimination Settlement amount: $13 million

The EEOC investigated allegations of age-related discrimination in a lawsuit filed in May of 1994. The suit claims that Martin Marietta laid-off older employees, targeting them based on their age, violating the Age Discrimination in Employment Act. Workers age 40 and older were either laid off or forced to retire for five years between 1990 and 1994. the workers were all part of the Martin Astronautics Group in non-union positions. It was estimated that 2,000 formers workers were affected by the illegal layoffs. Martin was ordered to pay restitution of 413 million to settle the dispute with workers, under the orders of the Equal Employment Opportunity Commission. The case was settled on November 21, 1996.

8. Lockheed Martin sued for false claims Settlement amount: $15.85 million

The United States Justice Department reports that Lockheed Martin was accused of overcharging the government for tools used in various government contracts. The government claims that a subcontractor for Lockheed inflated the costs of military aircraft tools the charges were passed on to the United States government. Many of the perishable tools were mischarged in several government contracts over seven years in a pricing scheme developed by Tools & Metals Incorporated. The incidences occurred between 1998 through 2005. The former president of TMI pleaded guilty to the charges for the price scheme and received a prison sentence of seven years for his part in the scheme. Lockheed Martin was brought up on civil claims per the False Claims Act for inflating the price of the perishable tools. They were further alleged to act recklessly by failing to monitor TMI’s billing practices. The case was filed under US exx rel. Becker, et al v Tools & Metals Inc. resulted in a penalty of $15,850 which Lockheed Martin agreed to pay to settle the civil suit.

7. Command Technology v Lockheed Martin for unfair competition Settlement amount: $24.8 million

Case Text confirms that Lockheed Martin was sued by a small tech company called Command Technology for allegations of unfair competition. CT claimed that Lockheed Martin shut their company out of a program for developing electronic maintenance manuals for the F-16 fighter jet, using proprietary information from CT to build a rival product. CT further claimed that the actions of Lockheed Martin interfered with the economic relationships of Command Technology. The antitrust misconduct settled in a civil lawsuit in November of 2013, after a jury heard the facts surrounding the case. They determined that Lockheed Martin was in violation of Unfair Competition laws and held them responsible for damages to Command Technology. They awarded the plaintiff $24.8 million in damages to settle the lawsuit against Lockheed Martin.

6. Lockheed Martin sued for Overbilling on CR2 and S3 contracts Settlement amount: $ 27.5 million

The Department of Justice reports that Lockheed Martin Integrated Systems was accused of violating the False Claims Act. The company overbilled the government for work completed by poorly qualified employees on the Rapid Response contract and the Strategic Services Sourcing contract with the United States Army Communication and Electronics Command. Under-qualified employees were dispatched to perform the work agreed to under the terms of the contracts, yet the government was billed for rates charged by workers with higher qualifications. Multiple agencies were affected by the scheme that Lockheed Martin knowingly participated in. The Department of Justice investigated the allegations concluding that Lockheed Martin engaged in Government Contract Fraud misconduct in the civil case. Lockheed Martin was penalized 27.5 million in a settlement ordered on December 19, 2014.

5. Lockheed Martin Corporation settles lawsuit from Burbank residents Settlement amount: $60 Million +

Lockheed Martin got accused of creating environmental hazards resulting in the illness and death of some residents in Burbank, California. Thirteen hundred residents of Burbank alleged that they suffered damage to their health due to decades of exposure to environmental toxins from the B1 plant where aircraft manufacturing took place. Instead of a class-action lawsuit, the claims were settled unusually. Claimants were allowed to engage in private mediation processes to compensate residents for the deaths of over 80 residents with death or serious illness from cancer. Each family received a settlement with the highest award at $300,000 for the death of a family member from cancer. Other residents received settlements in the neighborhood of $10,000 on up. Some residents received awards to compensate for the loss of property value because of the negative press that the area received from reports of the health hazards of living in the area. Lockheed Martin did not claim any liability for the cancer diagnosis. The company did agree to pay $60 million to settle and resolve the lawsuit and avoid future claims.

4, Abbott et al v. Lockheed Martin Corporation et al Settlement amount: $62 Million

A class-action lawsuit filed against Lockheed Martin Corporation in 2015 resulted in a penalty of $62 million for the aerospace company. The case was a civil matter in the Southern District of Illinois court in private litigation for benefit plan administrator violation and pension ERISA violation. The original lawsuit alleging mismanagement of 401 (k) plans with charges of excessive fees resulted in a breach of fiduciary duty of the company under ERISA. The suit charged $1.3 billion in damages to workers. Papers submitted to the court show that the decisions made by Lockheed’s portfolio managers invested too conservatively. Their decisions caused the fund to underperform when compared to peers. The choices affected over 108,000 participants in Lockheed’s ERISA plan. Attorneys Schlichter Bogard & Denton represented the plaintiffs Abbott and other parties and filed the lawsuit on September 11, 2006. After years of fighting the lawsuit claiming $1.3 billion in damages, both parties agreed to $62 million to settle. The Abbot lawsuit is one of the most expensive ERISA-related lawsuits ever filed against the company. Lockheed Martin received orders to take preventative measures to keep fees down in the future. Lockheed Martin acknowledged no wrongdoing but agreed to make payments to class members into the retirement plans for current employees and issue checks to those no longer employed with the company. Legal fees for the settlement cost $20.67 million for the plaintiffs.

3. Idaho National Engineering and Environmental Laboratory Contract Dispute with Lockheed Martin Settlement amount: $ 66 million

A lawsuit against Lockheed Martin was filed in the US District Court of Idaho citing misconduct on the part of Lockheed resulting in poor contract performance. The civil suit alleged that Lockheed’s Pit 9 contract defaulted. The original lawsuit from 1994 resulted from a fixed-price contract for the design, construction, and testing of remediation facilities. Remediation of waste was also an element of the deal for Pit 9. Pit 9 was at the Idaho National Engineering and Environmental Laboratory reservation. The Pit 9 contract got terminated by the Department of Energy’s management contractor in 1998 for default. The decision resulted in an after-tax charge of $117 million. The US District Court in Idaho upheld the Pit 9 contract termination and rejected counterclaims of Lockheed Martin, ordering a settlement amount of $66 million for the plaintiff. The case was resolved on October 29, 2004, going against Lockheed Martin after years of legal dispute and argument over the situation. Although Lockheed Martin appealed the case, the ruling got upheld. Lockheed Martin had to pay the penalties.

2. Lockheed Martin sued over misplaced comma space parts deficiencies Settlement amount: $70.6 million

Lockheed Martin was accused of poor contract performance when it entered into a contract with the Department of Defence regarding spare part deficiencies for the F-35 fighter caused by incorrect electronic equipment logs for the parts in question. The aerospace giant agreed to invest $36.5 million to improve its performance metrics for delivering spare parts for the F-35. Additionally, it will put $10 million into provisioning and cataloging of work on the F-35 spare parts and a minimum of 424.3 million to make agreed-upon spare parts over five years. They settled with the Department of Defense on January 12, 2021, to provide restitution for $70.5 million. This number appears to be a popular settlement amount for Lockheed Martin. A sales contract for the C-130J military transport aircraft provided the other party with a generous gift because of the mistake. Lockheed Martin fully honored the contract for the revamped Hercules aircraft to either the British Royal Air Force, the Italian military, or Australia. These are the three parties who ordered the craft. Lockheed has not yet disclosed which received the accidental gift.

1. Overbilling costs Lockheed Martin over the F-35 Settlement amount: $265 million

Contractor Misconduct reports that Lockheed Martin caught an overbilling error that resulted in the most expensive restitution amount in the history of the company. Lockheed Martin has learned not to trifle with the Department of Defense. The company instituted self-monitoring of its billing processes with everything else related to the F-35 contract with the government. The agreement with the US Department of Defense for the F-35 Joint Strike Fighter development program has had its share of disputes. One was for a deficiency in parts that cost the aerospace and defense tech giant over $70 million. Lockheed Martin caught an error resulting in an inadvertent overbilling during a routine audit. They did the right thing and notified the government immediately. A coding error in the billing system for Lockheed was responsible for the mistake that occurred in 2002. The incident involved invoices from the BAE Systems and Northrop Grumman company. The error was a no-fault situation for both companies. All parties agreed the event was a cost and labor mischarge. Lockheed Martin announced news of its discovery. They offered to pay a restitution settlement amount of $265 million on August 9, 2007.

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