Description: Class action alleging that American Airlines and related defendants breached their fiduciary duties under ERISA by investing employees' retirement savings with managers and in funds that use ESG strategies.
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Spence v. American Airlines, Inc.
Case Documents:
Filing Date Type File Action Taken Summary 02/21/2024 Memorandum Opinion and Order Download Motion to dismiss denied. Texas Federal Court Denied Motion to Dismiss American Airlines Employee Class Action Alleging ESG-Related Breaches of ERISA Duties. The federal district court for the Northern District of Texas denied a motion by American Airlines, Inc. and related defendants to dismiss a class action complaint alleging that they breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by investing American Airlines employees’ retirement savings “with investment managers and investment funds that pursue leftist political agendas through environmental, social and governance (‘ESG’) strategies, proxy voting, and shareholder activism.” The complaint alleged that the defendants included ESG funds as investment options that “pursue nonfinancial and nonpecuniary ESG policy agendas as part of their investment strategies,” as well as funds not branded as ESG funds that were “managed by investment companies who have voted for many of the most egregious examples of ESG policy mandates, on issues such as divesting in oil and gas stocks, banning plastics, requiring ‘net zero’ emissions, and imposing ‘diversity’ quotas in hiring.” The court found that the plaintiff adequately alleged that the defendants breached their duty of prudence and duty to monitor “by selecting, including, and retaining investment managers who pursue ESG objectives rather than focusing exclusively on maximizing financial benefits” and by failing to monitor those responsible for retirement plan assets. The court also found that the plaintiff adequately alleged a breach of the duty of loyalty with the complaint’s “plausible story” that the defendants’ “public commitment to ESG initiatives motivated the disloyal decision to invest Plan assets with managers who pursue non-economic ESG objectives through select investments that underperform relative to non-ESG investments, all while failing to faithfully investigate the availability of other investment managers whose exclusive focus would maximize financial benefits for Plan participants.” 06/02/2023 Complaint Download Complaint filed.