Airline Pilot Sues American Airlines Retirement Plans Over ESG Funds

Discover the legal battle between airline pilot Bryan P. Spence and American Airlines retirement plans over investment choices that prioritize environmental, social, and governance factors. This article dives into the arguments presented in the amended complaint and the response from both sides.

The Lawsuit Begins

Explore the legal battle between Bryan P. Spence and American Airlines retirement plans.

In the lawsuit Spence v. American Airlines Inc. et al, former American Airlines pilot Bryan P. Spence is suing the American Airlines Inc. defined contribution retirement plans.

Spence alleges that he and other participants were defaulted into underperforming funds that prioritize environmental, social, and governance (ESG) factors in investment selection.

Arguments from the Plaintiff

Take a closer look at Bryan P. Spence's claims and responses to the motion to dismiss.

According to Spence's attorneys, the defendants mischaracterized the plaintiffs' allegations and the nature of Spence's claims. The lawsuit does not prohibit fiduciaries from considering investment products that support ESG-based policies, but rather focuses on the financial harm caused by allowing plan assets to be used for non-economic ESG investing.

Furthermore, the filing states that even if the court were to differentiate between the two investment methods, Spence still has standing to assert claims related to brokerage window funds under Fifth Circuit precedent.

Breaches of Fiduciary Duties

Learn about the alleged breaches of fiduciary duties outlined in Spence's amended complaint.

Spence's attorneys argue that the defendants breached their fiduciary duties of loyalty and prudence. They also failed to prevent managers from using objectives harmful to plan participants' investments.

The amended complaint further accuses the defendants of breaching their duty to monitor individuals responsible for plan investments, putting the overall plan assets at risk.

ESG Funds in Investment Lineup

Examine the inclusion of ESG-themed funds in American Airlines retirement plans' investment lineup.

Spence's amended complaint argues that ESG-themed funds were improperly included in the plans' investment lineup. These funds, according to Spence, underperformed compared to other pecuniary-focused funds.

Additionally, some of the plans' ESG-oriented funds are managed by individuals who have used their voting power to support ESG-themed shareholder proposals, which Spence believes can be detrimental to participants' investments.

By allowing ESG factors to influence investment decisions, participants may have experienced lower returns and overall diminished plan assets.

Standing to Bring the Lawsuit

Understand the plaintiffs' argument regarding standing and involvement in the lawsuit.

The defendants argued that Spence lacks standing because he has not invested in the specific challenged funds. However, Spence and the purported class believe they have standing to bring the lawsuit.

They argue that the claims do not solely rely on the way plan assets are used for ESG objectives, but on the financial harm caused by allowing the inclusion of underperforming ESG funds in the investment lineup.

Conclusion

The lawsuit filed by Bryan P. Spence against American Airlines retirement plans sheds light on the inclusion of environmentally, socially, and governance-focused funds within the plans' investment lineup.

Spence's argument centers around the alleged breaches of fiduciary duties and the financial harm caused by underperforming ESG investments. The outcomes of this lawsuit will have implications not only for the participants involved but also for the broader investment landscape within retirement plans.

FQA :

What prompted Bryan P. Spence to file this lawsuit?

Bryan P. Spence noticed that his retirement plan invested in underperforming ESG funds. He believes this investment strategy breached fiduciary duties and caused financial harm, leading him to file a lawsuit against American Airlines retirement plans.

How do ESG-themed funds influence investment decisions in retirement plans?

ESG-themed funds consider environmental, social, and governance factors when selecting investments. In this case, the inclusion of such funds in the retirement plan's investment lineup led to alleged underperformance and potentially harmed the participants' overall investments.

What are the main breaches of fiduciary duties claimed by Bryan P. Spence?

Bryan P. Spence alleges that the defendants breached their duties of loyalty and prudence by including ESG funds that underperform relative to alternative options. Additionally, they failed to prevent managers from pursuing non-economic objectives, indirectly harming plan participants.

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