American Airlines Not Liable for Monetary Losses in ERISA ESG Case

On September 30, 2025, the U.S. District Court for the Northern District of Texas issued a Final Judgment in Spence v. American Airlines, Inc., No. 4:23-cv-522, holding that American Airlines, Inc. and its Employee Benefits Committee (EBC) (together, American Airlines) are not liable for monetary losses or monetary equitable relief in a closely watched ERISA breach of fiduciary duty case involving environmental, social, and governance (ESG) investments in the company's 401(k) plan (the Plan). This case has generated significant attention as one of the first private-sector challenges to ESG-related investments brought under ERISA's fiduciary duty provisions. 

We previously wrote about the January 2025 decision in this case where, after a bench trial, the district court found American Airlines liable for breaching ERISA's fiduciary duty of loyalty, but not ERISA's duty of prudence, by "investing – or relying on others to invest – their employees' retirement assets toward [ESG] objectives." The Plan relied on investment managers like BlackRock and Aon, which the district court pointed to as meeting or surpassing prevailing industry standards in finding no breach of the duty of prudence. 

Nearly a year later, in its decision as to remedies, the court found that the plaintiff in this case had "failed to sufficiently establish actual monetary losses to the Plan." The court cited Bussian v. RJR Nabisco, Inc., 223 F.3d 286, 300 (5th Cir. 2000) and McDonald v. Provident Indem. Life Ins. Co., 60 F.3d 234, 237-38 (5th Cir. 1995), for the idea that a "plaintiff must establish a causal link between the fiduciary breach and actual economic loss before monetary relief may be rewarded." The court also denied the plaintiff's request for disgorgement, fee reimbursement, and other monetary equitable relief as unsupported by the trial record. The court determined that, instead, it was necessary to award injunctive relief "to ensure that Defendants and their investment managers act solely for the pecuniary benefit of the Plan and implement compliance measures to ensure fidelity to ERISA's fiduciary standards." But the court stated that it was ensuring that the injunction is "narrowly tailor[ed]" "to avoid overbreadth that could disturb the Plan's investment structure and undermine proper management of the Plan."  

Notwithstanding the court's aim to "narrowly tailor" the injunctive relief awarded, the scope of the permanent injunction granted is quite broad in that it enjoins "any proxy voting, shareholder proposals, or other stewardship activities on behalf of the Plan that are motivated by or directed towards non-pecuniary ends, including but not limited to ESG-oriented investment management and objectives, that are not in the exclusive best financial interest of Plan participants and beneficiaries." It also requires several other specific actions from American Airlines. First, American Airlines is required to hire and appoint at least two independent members of the EBC, "without any connection or relationship, financial or otherwise, with BlackRock, Aon, or any other administrator, advisor, and/or investment manager of Plan assets, including any of their subsidiaries and/or affiliated entities," to serve for five years. Second, the injunction requires "[t]he new EBC, or any group that may succeed it" to "[p]rovide a written report on an annual basis to each Plan participant identifying any financial transactions and/or financial relationships between [American Airlines] and each administrator, advisor, and/or investment manager of Plan assets, including any of their subsidiaries and/or affiliated entities" and to annually certify in writing to each Plan participant that the EBC (and each administrator, advisor, and/or investment manager of Plan assets) "will only and solely pursue investment objectives based on provable financial performance, not DEI, ESG, sustainability, or any other nonfinancial criteria" and "that they will only allow proxy votes to be cast on behalf of Plan participants solely to maximize the long-term financial returns of Plan participants' investments, and not DEI, ESG, sustainability, or other non-financial criteria." Third, American Airlines must publish on its corporate website information concerning American Airlines' or its plan administrator's, advisor's or investment manager's membership in "UN PRI, Net Zero Asset Managers Initiatives, Ceres Investor Network, or any organization principally devoted to achieving DEI, ESG, climate-focused investment or stewardship objectives." The injunction also provides that such memberships shall be reviewed by the independent members of the EBC. Fourth, American Airlines is enjoined "from using BlackRock, or any other asset manager that is a significant shareholder of [American Airlines] (who owns 3% or more of [American Airlines'] shares) or who holds any of [American Airlines'] fixed debt, to manage Plan assets without policies preventing those who maintain the corporate relationship with the asset manager from also being Plan fiduciaries or playing a role in managing the Plan."

In addition to this Final Judgment being significant as one of the first in this area of the law, it is also practically helpful as guidance for 401(k) plan fiduciaries in how to avoid similar suits focused on ERISA fiduciary duties and ESG investments. The decision underscores that plan fiduciaries should document the steps taken in hiring and monitoring investment managers, administrators, and advisors, carefully review the terms of any contract entered into between a plan and its asset managers, and ensure that there is sufficient independence between those at an employer responsible for any relationship with a plan's asset manager and plan fiduciaries making investment decisions involving the asset manager on behalf of the plan. 

Motion to Dismiss Filed in Novel ERISA Welfare Plan Class Action 

Defendants Northwestern University and its Executive Director of Benefits (collectively, Northwestern) filed a motion to dismiss a proposed class action alleging they breached their ERISA fiduciary duties by failing to prudently and loyally select and monitor Northwestern's health and welfare plan's preferred provider organization (PPO) medical insurance options, allowing the low-deductible option to be financially dominated by the high-deductible option, and by failing to disclose this material information to the plan's participants. Barbich v. Northwestern University, No. 25-cv-6849 (N.D. Ill.). The plaintiffs who filed the case, former plan participants, claim that Northwestern's acts and omissions caused millions of dollars in losses to the proposed class. In the complaint, they point to the plan and its participants allegedly "paying wholly excessive and unnecessary healthcare expenses in the form of lost wages due to excessive premiums unaccompanied by any reduced out-of-pocket expenses." 

In support of the motion to dismiss, Northwestern asserts that the plaintiffs lack standing to bring the lawsuit having not alleged a cognizable injury-in-fact. According to Northwestern, the plaintiffs do not allege that they were charged more for their health insurance coverage than allowed under the plan documents or that Northwestern mismanaged plan assets, and they received all the benefits to which they were entitled under the terms of the plan. Northwestern also argues that the plaintiffs do not allege any harm to the plan as a whole, and therefore failed to allege a viable ERISA section 502(a)(2) claim. Further, according to Northwestern, the acts complained of – setting the terms and pricing of the plan options available to participants, including the PPO option – are settlor, not fiduciary acts, and therefore are not covered by ERISA's fiduciary duty provisions. Northwestern also argues that allegations that it offered participants a menu of coverage options do not plausibly allege an ERISA fiduciary violation, and that the complaint, seeking "solely legal demand relief," does not state a viable claim under ERISA section 502(a)(3) for injunctive and appropriate equitable relief. Finally, in support of the motion to dismiss, Northwestern asserts that the plaintiffs' derivative failure to monitor claim must fail given the failure of the underlying fiduciary breach claims, and that the plan documents disclosed all material information participants needed to make coverage selections, including the cost structure of each plan option, rendering the plaintiffs' alleged failure to disclose claim likewise deficient.

The U.S. District Court for the Northern District of Illinois will decide this motion after briefing is completed.

In the News

Tony was mentioned in Law360 in connection with a case involving ERISA liability claims against the heirs of Mary Chichester DuPont Clark. Tony represents the estate of one of the DuPont heirs and orally argued the case for the DuPont heirs in the Third Circuit.

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.