The federal district court for the Northern District of Texas found that there were genuine issues of material fact as to whether American Airlines, Inc. and the American Airlines Employee Benefit Committee violated their duties of prudence and loyalty under the Employee Retirement Income Security Act of 1974 (ERISA) by including funds in an employee retirement plan that were managed by investment managers that pursued environmental, social, and governance (ESG) policy goals. Regarding the duty of prudence, the court said a factfinder could find that the defendants breached their duty by “failing to monitor investment managers and failing to address the facts and circumstances of ESG proxy voting and shareholder activism.” Regarding the duty of loyalty, the court concluded a factfinder could find that the defendants “allowed their corporate ESG goals and/or the goals of a large shareholder to influence the Plan by allowing assets to pursue ESG objectives through proxy voting and shareholder activism.” The court further found that there were factual disputes as to the losses suffered by the retirement plan.

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 Denied American Airlines Summary Judgment Motion in Class Action Alleging Breaches of Fiduciary Duties Related to ESG Investments

Filed

United States of America

Texas

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Texas Federal Court Denied American Airlines Summary Judgment Motion in Class Action Alleging Breaches of Fiduciary Duties Related to ESG Investments

Policy instrument

Just transition

Renewable energy

Fossil fuel

Economic sector

Finance