A veteran American Airlines pilot who is also a Lieutenant Colonel in the U.S. Air Force in his 20th year as an F-16 instructor at the Naval Air Station Joint Reserve Base in Fort Worth, Texas, has filed a class action lawsuit against American Airlines, claiming the carrier invested millions of dollars of employees’ retirement savings in funds that “pursue leftist political agendas”.
Bryan P. Spence is one of approximately 100,000 members of the American Airlines pension plan – one of the largest in the United States with around $26 billion assets, according to the lawsuit, which was filed in federal court in Dallas last week.
Over the last six years, Spence says he has suffered financial harm after investing in funds made available through the American Airlines pension plan. Spence says this is a result of the airline choosing funds that are designed to meet ESG goals.
Nowadays, the majority of big businesses have a formal ESG policy which is designed to guide the company’s decision-making on environmental, social, and governance matters.
In his lawsuit, Spence highlights examples of ESG policy, including sustainability efforts, LGBTQ+ interests and racial and gender diversity, as well as executive pay and diversity in leadership.
The problem, however, is that Spence claims ESG investments underperform financially compared to non-ESG investments and that they “engage in shareholder activism to achieve ESG policy agendas rather than maximize the risk-adjusted financial returns for Plan participants”.
While some of AA’s investment funds are specifically labelled as ESG-compliant, Spence alleges that many other funds target ESG goals without being labeled as such.
Spence even goes so far as to say that “many American workers don’t realize that their hard-earned money is being used against them.”
“Firms whose job is to deliver investment returns are instead weaponizing retirement funds, public pensions and other investments in pursuit of nakedly ideological goals,” the complaint continues.
“It is perhaps the most severe breach of the fiduciary standard in American history.”
Lawyers acting on behalf of Spence argue that American Airlines has a duty under the Employee Retirement Income Security Act of 1974 to ensure that all funds managed under its 401(k) plan deliver the best financial results for its members meaning that underperforming ESG investments should be dumped.
“The unlawful decision to pursue unrelated policy goals over the financial health of the Plan is not only flatly inconsistent with Defendants’ fiduciary responsibilities, it jeopardizes the retirement security of hundreds of thousands of American Airlines employees,” the complaint continues.
“Plaintiff brings this lawsuit to remedy Defendants’ breaches of fiduciary duties and for injunctive relief to prevent further violations and mismanagement of the Plan.”
If allowed to proceed to trial, Spence will call on the court to rule that American Airlines has breached its fiduciary duties under federal pension law and force the carrier to top up the plan to make up for losses from ESG funds.
The case was filed in Texas Northern District Court under case number: 4:2023cv00552
Is anyone obligating him to continue his employment with AA if he doesn’t like what the private entity that AA is, is doing?
You are missing the point. He has and does work for an employer who puts their social agenda above their fiduciary responsibility for their employees. If you choose to invest your funds in an underperforming asset, that is your business, but the company managing the retirement benefits does not have that luxury as they are required, by law, to choose assets based on performance, not social engineering.