The federal district court for the Northern District of Texas awarded approximately $4.6 million in attorney’s fees to a plaintiff who prevailed on a claim that American Airlines, Inc. and the American Airlines Employee Benefits Committee (collectively American) had breached their fiduciary duty of loyalty under the Employee Retirement Income Security Act of 1974 (ERISA) by allowing corporate interests in environmental, social, and governance (ESG) objectives and their investment manager’s ESG interests to influence their management of employee retirement plans. The court found that American had “sufficient culpability to warrant granting attorney’s fees” even though the court did not award damages. The court also found that other factors favored awarding attorney’s fees to the plaintiff, including that American had the ability to pay, that an attorney’s fee award would provide an incentive to American and other companies “to better adhere to the duty of loyalty,” and that “the case grappled with a significant and novel issue of whether ERISA permits asset managers to invest Plan assets with ESG-related goals rather than the exclusive financial interests of the Plan participants.” The court also denied American’s motion for reconsideration of the final judgment but clarified multiple points of the injunction.

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.

Spence v. American Airlines, Inc.

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Texas Federal Court Awarded $4.6 Million in Attorney’s Fees to Plaintiff Who Challenged Influence of ESG Interests in American Airlines Employee Retirement Plans

Filed

United States of America

Texas

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Texas Federal Court Awarded $4.6 Million in Attorney’s Fees to Plaintiff Who Challenged Influence of ESG Interests in American Airlines Employee Retirement Plans

Impacted group

Fossil fuel

Finance