Fort Worth-based American Airlines faces trial over alleged mismanagement of pension funds, judge rules

Fort Worth, Texas – A judge in Texas has ruled against American Airlines’ request to dismiss a lawsuit filed by one of its pilots. The lawsuit alleges that the airline, headquartered in Fort Worth, has not acted in the best interest of its 401(k) pension plan participants by investing in ‘woke’ funds that focus on leftist political goals.

The pilot, Bryan P. Spence, who also serves as a Lieutenant Colonel and an F-16 instructor at the Naval Air Station Joint Reserve Base in Fort Worth, filed the lawsuit last June. He claims that the investments in Environmental, Social, and Governance (ESG) are underperforming.

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Specifically, Spence has targeted BlackRock, the investment management firm handling the ESG investments in American Airlines’ pension plan, which is one of the largest in the U.S., with about 100,000 members and $26 billion in assets. He argues that BlackRock prioritizes social and political objectives over financial gains, which he believes could be detrimental to the plan members.

American Airlines tried to get a lawsuit dismissed in February, but Texas District Judge Reed O’Connor decided earlier this month that the case should go to trial. In his 40-page order, Judge O’Connor suggested that American Airlines might have been careless in managing its investments, particularly those concerning Environmental, Social, and Governance (ESG) matters, though he did not definitively state that the airline was imprudent.

Judge O’Connor indicated that a trial is necessary to fully explore the facts and evaluate the evidence. It is common for large companies today to follow a formal ESG policy that influences decisions on environmental, social, and governance issues.

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In his lawsuit, Bryan P. Spence points out several ESG policies including initiatives for sustainability, support for LGBTQ+ issues, and efforts toward racial and gender diversity, along with executive compensation and diversity among leaders. Spence claims that while some of American Airlines’ investment funds are explicitly marked as ESG-compliant, many others pursue ESG objectives without being explicitly labeled as such.

The upcoming trial will determine if American Airlines breached the Employee Retirement Income Security Act of 1974, which requires pension managers to achieve the best financial outcomes for their 401(k) plan members. American Airlines contends that its ESG investments perform as well as other investments and has stated that its employees are informed about the different investment options within the pension plan.

The trial is due to start on Monday.