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On January 10, 2025, the United States District Court for the Northern District of Texas, in Spence v. American Airlines, found that American Airlines, as a fiduciary of its two major 401(k) plans, had violated its ERISA duty of loyalty in allowing/not monitoring "ESG activism" (principally in proxy voting and "jawboning" management of portfolio companies) by the plans’ largest investment manager, BlackRock, with respect to stock held in plan index funds managed by BlackRock. The court, however, deferred the issue of remedies until further briefing by the parties.
On September 30, 2025, the court issued its decision with respect to remedies, granting broad injunctive relief, including significant limitations on the conduct of American Airlines (AA) and AA plan fiduciaries and imposing on them extensive disclosure obligations. It did not, however, require AA or AA fiduciaries to pay any monetary damages, finding that plaintiffs had failed to “establish a causal link between the fiduciary breach and actual economic loss [for which] monetary relief may be awarded.”
On October 28, 2025, defendants in the litigation filed a motion to reconsider the remedies order, raising certain technical issues and requesting “more flexible” language with respect to limits on investment/proxy voting decisions.
In this article we review the equitable relief ordered by the court in detail and (very) briefly discuss certain modifications to that relief requested by AA.
A preliminary note
The court, in its decision on the merits, found that defendants had only breached their ERISA fiduciary duty of loyalty. The court did not find that they had breached their duty of prudence, holding that, even though “the evidence revealed ESG investing is not in the best financial interests of a retirement plan,” AA’s failure to act on this issue did not violate the ERISA duty of prudence. ERISA’s fiduciary prudence standard is based on “prevailing industry standards,” and AA “did not imprudently deviate from the industry standard.”
As a result, the remedies ordered by the court only go to preventing a possible future violation of the duty of loyalty, not to issues of prudence.
Equitable remedies ordered by the court
Because they are both extraordinary and novel, we are going to quote the remedies ordered by the court in full (they are very concise). And we’ll comment on certain (critical) remedies (e.g., the possible prohibition on pursuit of ESG/DEI objectives) and on the issues raised by defendants in their motion to reconsider.
The court ordered that:
AA shall hire and appoint at least two independent members of the EBC [the AA plan committee] to serve as a member of the EBC for five (5) years from the date of this order. The independent members of the EBC shall not have 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.
AA shall publish on its corporate website in a location easily accessible to Plan participants information concerning membership of AA, and each administrator, advisor, and/or investment manager of Plan assets, 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 webpage shall link to the terms and conditions of each such membership, including any sign-on statements or disclaimers made by AA and each administrator, advisor, and/or investment manager of Plan assets. And such membership shall be provided to the independent members of the EBC for careful scrutiny of compliance with (2) above.
AA is hereby enjoined from using BlackRock, or any other asset manager that is a significant shareholder of AA (who owns 3% or more of AA’s shares) or who holds any of AA’s 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.
Other issues raised in the motion to reconsider
In addition to the “softening” of the pecuniary/non-pecuniary standard noted above (changing “provable financial performance, not DEI, ESG, sustainability” to “financial risk/return criteria”), defendants also asked that the plans’ brokerage window be excluded from coverage by the order and that (in most cases) satisfaction of requirements by non-AA parties be met by a contractual requirement and certification.
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We have noted (in the past) that we expect proxy voting (and the sort of cajoling-of-portfolio-company-management that plaintiffs alleged BlackRock used in this case) to be a major focus of the Trump Administration. This litigation raises the same issues.
The challenge (as noted above) will come down to defining the somewhat blurred line between, i.e., investment management decisions directed at addressing climate change as a “pecuniary” issue vs. investment management decisions directed at addressing climate change as something that is “good for the planet.” Being clear about that distinction – in the context (as here) of litigation or (in Trump Administration efforts) in the context of regulation – is likely to be easier said than done.
We will continue to follow this issue.