Lawsuit over ESG in 401(k) not cleared for takeoff, American Airlines says

investmentnews.com:

The first lawsuit over the use of ESG in a 401(k) has a few gaping holes — most notably that the lead plaintiff in the proposed class action wasn’t invested in any of the funds in question, defendant American Airlines said.

In a motion to dismiss filed Friday, the airline also noted that the investment options at the center of the complaint are not on the $27 billion plan’s menu — they are only available through a self-directed brokerage account. The company was sued in June for allegedly breaching its fiduciary duties under the Employee Retirement Income Security Act in connection with numerous ESG-themed funds available to participants.

The lead plaintiff for the proposed class, pilot Bryan Spence, “seeks to insert himself into the ongoing, politicized debate over the wisdom of ESG-themed investing. But this is a case without a controversy,” the airline stated in its motion to dismiss. “Plaintiff does not allege that he has allocated any portion of his plan account to the challenged funds he lists in the complaint, or to any non-ESG investment options that happen to be sponsored by Challenged Managers with objectionable proxy-voting policies. Nor could he, as he has never invested either in any of the 25 funds he identifies in the complaint as ESG funds or in any investment options sponsored by the challenged managers.”

That defense gives the plaintiff little to work with, and there are significant odds that the court will scrap the case, lawyers said.

The airline’s response points out “obvious deficiencies with the complaint,” such as the lack of investments by the plaintiff and the fact that the funds were in the only available through a brokerage window, Bonnie Treichel, chief solutions officer at Endeavor