While the court ruled that American breached ERISA’s duty of loyalty, it dismissed claims that the airline’s actions violated the duty of prudence, finding that its overall investment practices met industry standards. Judge O’Connor noted testimony from American’s expert supported the conclusion that the company’s investment processes were adequate.
The judge also rejected arguments that American failed to properly monitor BlackRock’s proxy voting activities. He emphasized that while outsourcing oversight to Aon mitigated prudence concerns, the duty of loyalty imposes stricter standards.
On the issue of damages, Judge O’Connor deferred a decision pending additional briefs from both parties. The judge requested arguments on whether ESG practices caused financial losses, the impact of a 2021 BlackRock proxy vote that affected Exxon stock, and the necessity of an injunction against ESG-focused strategies if no losses are proven.
American Airlines spokesperson Jessica Johnson said the company is reviewing the decision. BlackRock spokesperson Amanda Friedman emphasized the firm’s focus on maximizing client returns and acting independently.
