Court Rejects Damage Claims Against Compass Lexecon Client American Airlines in Novel ERISA Class Action

On September 30, 2025, US District Judge Reed O’Connor entered a final judgment in a first-of-its-kind ERISA class action alleging that American Airlines, Inc. (AA) and its Employee Benefits Committee (collectively, the “Defendants”) breached their fiduciary duty to the participants of AA’s retirement plans (Plaintiff) under the Employee Retirement Income Security Act of 1974 (ERISA). The Plaintiff alleged that the Defendants allowed their investment managers, including BlackRock, to influence investments with a focus on environmental, social, and governance (ESG) factors as opposed to acting solely in the best financial interest of the Plaintiff.

Compass Lexecon Senior Consultant Professor Audra Boone of Colorado State University and Professor Russ Wermers of the University of Maryland at College Park served as experts for American Airlines.

Professor Boone offered opinions on the lack of economic harm from proxy voting activities of the investment managers and rebutted the Plaintiff’s expert’s statistical conclusions related to stock price movements. Professor Wermers opined that including ESG funds is not unreasonable, that the investment options and returns in the Plan, including those of the ESG funds at issue, were economically reasonable, and that other similar plans used the challenged investment managers.

Although Judge O’Connor initially found liability, he ultimately determined in his final judgment that the Plaintiff had failed to prove the existence of any damages. He agreed with Professors Boone and Wermers that “Defendants acted in accordance with prevailing industry practices” and the “Plaintiff has not sufficiently established that the Plan suffered actual, compensable financial losses as a result of Defendants’ breach.” He therefore denied the Plaintiff’s request for monetary damages, disgorgement, fee reimbursement, and other monetary equitable relief.

Professors Boone and Wermers were supported by a Compass Lexecon team that included Adel Turki, Ed Grgeta, Joseph Goodman, Vera Liang, and Xiao Zhang.

We worked closely with Brian Boyle, Shannon Barrett, and William Pollak of O’Melveny & Myers LLP.