Former American Airlines Pilot Fires Back in Retirement Plan ESG Suit

The plaintiff doubles down on allegations the airline defaulted him into ESG-related funds.


A former American Airlines pilot is continuing a push to collect damages from the airline and its benefits committee for allegedly defaulting him and thousands of other participants into underperforming funds that have a focus on environmental, social and governance investing.

Plaintiff Bryan P. Spence’s amended complaint in Spence v. American Airlines Inc., filed on Tuesday in U.S. District Court for the Northern District of Texas, looks to rebut arguments made by American Airlines in a motion to dismiss filed in early August. In his amended filing, Spence sets out to prove that 37% of his retirement savings were invested in BlackRock Inc.’s Target Date 2045 fund, which he alleges uses ESG considerations.

“Defendants have included funds in the Plan that are managed by investment managers that pursue nonfinancial and nonpecuniary ESG policy goals through proxy voting and shareholder activism,” the complaint states. “These investment managers have voted for many of the most egregious examples of ESG policy mandates, on issues such as divesting in oil and gas stocks, banning plastics, and requiring ‘net zero’ emissions, which do not contribute to the company’s profitability or increasing shareholders’ returns.”

In its motion to dismiss the case, American Airlines argued that the ESG-linked funds in question were not available in the core investment menu, but rather through the self-directed brokerage window, meaning participants would have had to go in and individually select them. American Airlines also argued that Spence, in fact, had not been invested in the ESG-related funds.

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Judge Reed O’Connor had previously slated a trial date to begin on June 24, 2024. 

In the amended complaint, Spence alleges there were “four investment menu options” for participants to choose from, including options managed by BlackRock Inc. and State Street Global Advisors, two firms he argues follow ESG-based investing strategies.

The complaint points out that Spence had 37.8% of his retirement savings invested in Target Date 2045, managed by BlackRock. The plaintiff then cites various media citations of BlackRock and its chairman and CEO, Larry Fink, discussing the benefit of ESG investing.

Spence listed the following fund managers in the core investment menu as well, arguing that all follow ESG investment strategies:

  • American Beacon Advisors
  • Artisan Partners
  • Loomis, Sayles & Co.
  • Morgan Stanley Investment Management
  • TCW Group
  • Thompson, Siegel & Walmsley LLC
  • State Street Global Advisors

“Many of these funds are not branded or marketed as ESG funds; however, the actions of their investment advisors and managers give rise to the same ERISA violations as those funds that do market themselves as ESG funds,” the complaint states.

By choosing these funds, Spence argues, the American Airlines committee was not following its fiduciary obligation to participants because it was “selecting and retaining poorly performing and more expensive ESG funds as investment options, and by failing to investigate and monitor the fund managers’ proxy voting and shareholder activism.”

In its request for dismissal, American Airlines argued that Spence’s “inability” to allege that ESG funds were available in the core investment plan lineup, and therefore subject to fiduciary selection and monitoring by the plan committee, was grounds for dismissal of the case.

The attorneys also argued, however, that an assertion in the complaint that plan fiduciaries should not consider investment products from managers who have cast a proxy vote for an ESG-based policy, regardless of performance, is “as wrongheaded as it sounds.”

“Acceptance of Plaintiff’s theory would compel ERISA fiduciaries to ignore actual investment performance and instead screen out investment options ‘based on non-pecuniary factors’ (i.e., the manager’s proxy voting record), potentially harming participants by depriving them of access to some of the best performing, most popular, and highest rated funds on the market,” they wrote.

American Airlines also challenged Spence to provide analysis of the fund performance as compared with other options—something the amended complaint does not do.

Neither attorneys for either side nor representatives for American Airlines replied to a request for comment.

Spence is represented by Hacker Stephens LLP and Sharp Law LLP; American Airlines is represented by attorneys with the law offices of Kelly Hart & Hallman LLP and O’Melveny & Myers LLP. 

The American Airlines retirement plan includes agents, management, and support staff employees; Transport Worker Union employees; flight attendants; and pilots, according to the filing. The plan has more than 100,000 participants and approximately $26 billion in assets, the filing noted.

Adviser Product Partnerships – 8/30/23

IPX Retirement partners with benefits provider and advisory on plan solutions; FIDx adviser partnerships lead to $1B in annuity contracts; Integrity partners with Community Care Agency on benefits for Asian American Seniors.  


IPX Retirement Partners with Higginbotham and Verity for 403(b) and 457 Plan Offerings

IPX Retirement will provide its master recordkeeper and plan governance program solutions to benefits provider Higginbotham and financial advisory Verity Advisors LLC.

The firms will have access to IPX’s recordkeeping and PGP services with the goal of simplifying administration and reducing plan costs in 403(b) and 457 plans.

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“Participants want choices in retirement investment providers but also low costs, consistent oversight, and support from trusted advisers,” Kevin Grant, president of Higginbotham executive benefits, said in a statement. “IPX has the most effective platform we’ve found to help us offer that kind of seamless experience to Texas educators.”

IPX also recently partnered with Verity Advisors to offer a plan governance solution in conjunction with their Vyntanna program for North Carolina school districts.

Advisers Have Leveraged Fiduciary Exchange LLC to Book $1B in Annuity Contracts

Fiduciary Exchange LLC, or FIDx, announced financial advisers have used its platform for more than $1 billion in new annuity contracts since the platform’s full market launch in September 2021.

The FIDx platform links financial advisers with leading insurance carriers and ensures that annuities are integrated as an asset class alongside traditional investments in client portfolios, according to the announcement. The product is designed to enhance operational efficiency for advisers, their firms, and insurance carriers.

“This achievement goes beyond merely processing new business,” Rich Romano, FIDx’s CEO, said in a statement. “We’re focused on empowering advisers with comprehensive ways to seamlessly incorporate annuities into portfolios for their clients. In line with this vision, we’ve recently surpassed $50 billion in active annuity accounts managed on our platform.”

Integrity Partners with Community Care Agency to Reach Asian American Seniors

Integrity Marketing Group LLC, a distributor of health insurance, and provider of retirement planning solutions, announced it has partnered with Community Care Agency to reach Asian American seniors with its product offerings.

Community Care Agency is an insurance agency based in Dallas, Texas,  led by Jimmy Lee and Grace Tran. Focusing on the Asian-American market, Community Care Agency works to eliminate language barriers through education in native languages.

The partnership will provide Community Care with Integrity’s insurance technology platform designed to help agents bring the best benefit options to clients. The offering includes Integrity’s AI-powered Ask Integrity to connect agents to clients in faster time.

“We bridge the communication gap between the carriers and consumers to ensure that the seniors we serve fully understand their coverage options,” Tran, vice president of Community Care Agency, said in a statement. “With Integrity’s technology, we can keep our communities up to date and offer more support and better training to our agents.”

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