In a groundbreaking legal development, Bryan Spence, an American Airlines Inc. pilot, has sought class certification for a lawsuit against the airline. The suit alleges that the company’s 401(k) plan prioritizes investments in environmental, social, and corporate governance (ESG) strategies at the expense of participants’ best interests.
Class Certification Motion
On Tuesday, Spence petitioned a Texas federal judge to certify a class encompassing over 100,000 individuals, consisting of all plan participants and beneficiaries since June 2017. Spence argues that class certification is a natural step in this case under the Employee Retirement Income Security Act (ERISA), given that all participants have allegedly suffered from the airline’s “unlawful, Plan-wide misconduct.”
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Unprecedented Legal Territory
This lawsuit, currently under consideration by Judge Reed O’Connor in the US District Court for the Northern District of Texas, stands out as one of the initial private-sector cases accusing a retirement plan fiduciary of breaching duties related to ESG investments.
Allegations Against American Airlines
Spence contends that global ESG funds have exhibited underperformance compared to the broader market over the past five years. By favoring these funds over alternative investments, American Airlines, according to Spence, is violating its duty to act solely in the interest of plan participants.
American Airlines’ Defense
In response, American Airlines has called for the dismissal of the case, labeling Spence’s legal theory as fundamentally flawed. The airline rejects the accusations and awaits a ruling on the merits of the dispute from Judge O’Connor.
Legal Representation
American Airlines is represented by O’Melveny & Myers LLP and Kelly Hart & Hallman LLP, while Hacker Stephens LLP and Sharp Law LLP are legal counsel for Bryan Spence.
As the legal battle unfolds, the outcome of Spence v. Am. Airlines, Inc. could set a precedent for future disputes involving retirement plan fiduciaries and their responsibilities regarding ESG investments. The case is a focal point for the ongoing debate on balancing fiduciary duties and sustainable investment practices in the corporate world.
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