A Texas federal judge ruled Friday that American Airlines breached federal benefits law by emphasizing environmental, social, and governance (ESG) factors in managing its 401(k) plans. However, the court postponed deciding whether retirees suffered financial losses and what remedies, if any, are appropriate.
U.S. District Judge Reed C. O’Connor issued a 70-page order in a proposed class action brought by American Airlines pilot Bryan Spence, who claimed the airline violated the Employee Retirement Income Security Act (ERISA). The ruling follows a four-day bench trial after Spence initiated the lawsuit in June 2023.
The court found that American’s ESG-driven strategy, including its reliance on investment manager BlackRock, violated ERISA’s fiduciary duty of loyalty. Judge O’Connor noted the company prioritized corporate interests and BlackRock’s ESG agenda over its fiduciary obligations.
“Defendants turned a blind eye to BlackRock’s ESG activism,” Judge O’Connor said, citing evidence of a conflicted relationship between American Airlines and BlackRock that influenced plan administration.
