Aon | Financial Services Group
Back to FSG Quick Insights | Subscribe to FSG Quick Insights >>
On September 30, 2025, in a much-anticipated decision concerning ESG investing in defined contribution retirement plans, the Northern District of Texas issued its final judgment in Spence vs. American Airlines, Inc., ruling that American Airlines (American) owes no monetary damages but must undertake multiple remedial measures.
The underlying case, brought by an American pilot on behalf of a class of participants and beneficiaries of American’s two 401(k) plans (collectively, “the Plan”), alleges that American and its Employee Benefits Committee (EBC) breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) by investing:
“millions of dollars of American Airlines employees’ retirement savings with investment managers and investment funds that pursue political agendas through environmental, social and governance (ESG) strategies, proxy voting, and shareholder activism—activities which fail to satisfy these fiduciaries’ statutory duties to maximize financial benefits in the sole interest of the Plan participants.”1
Following a 4-day bench trial, the court held that American had breached its duty of loyalty under ERISA, reasoning that:
“The belief that ESG considerations confer a license to ignore pecuniary benefits is mistaken. ERISA does not permit a fiduciary to pursue a non-pecuniary interest no matter how noble it might view the aim. Plaintiff therefore proved by a preponderance of the evidence that American disloyally acted with an intent to benefit a party other than Plan participants and in a manner that was not wholly focused on the best financial benefit to the Plan.”2
After subsequent briefing by the parties on issues related to losses and remedies, the court concluded that the plaintiff “failed to sufficiently establish actual monetary losses to the Plan.”3 However, citing authority under ERISA to provide “other equitable or remedial relief”, the Court determined that “it is necessary to award equitable relief to ensure that Defendants and their investment managers act solely for the pecuniary benefit of the Plan and implement compliance measures to ensure fidelity to ERISA’s fiduciary standards.”4
To that end, the court permanently enjoined the defendants through the following directives (among others):
- Not permitting any proxy voting on behalf of the Plan that is driven by non-pecuniary goals, including ESG-oriented investments
- Hiring at least 2 independent members of the EBC
- Issuing annual certifications to Plan participants that the EBC “will only and solely pursue investment objectives based on provable financial performance, not DEI, ESG, sustainability, or any other non-financial criteria”5
- Prohibiting the use of any asset manager that owns 3% or more of American’s shares (or who holds any of American’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”6
The impact of this decision on the ERISA litigation landscape remains uncertain. While a lack of monetary damages may dissuade plaintiffs’ lawyers from filing similar suits, that could change “based on how the political and regulatory environment evolves around ESG.”7
1 - Amended Class Action Complaint, Spence vs. American Airlines, Inc., No. 4:23-cv-00552 (N.D. Tex., August 25, 2023)
2 - Findings of Fact and Conclusions of Law, Spence vs. American Airlines, Inc., No. 4:23-cv-00552 (N.D. Tex., January 10, 2025); notably, the court ruled that American had not breached its duty to act prudently under ERISA
3 - Final Judgment, Spence vs. American Airlines, Inc., No. 4:23-cv-00552 (N.D. Tex., September 30, 2025)
4 - Id.
5 - Id.
6 - Id.
7 - “American Airlines Judgment Leaves Room for More ESG 401(k) Suits”, Bloomberg Law (October 6, 2025)
About Aon
Aon (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that help protect and grow their businesses.
Follow Aon on LinkedIn, X, Facebook and Instagram. Stay up-to-date by visiting Aon’s newsroom and sign up for news alerts here.
©2025 Aon plc. All rights reserved.
Aon is not a law firm or accounting firm and does not provide legal, financial or tax advice. Any commentary provided is based solely on Aon’s experience as insurance practitioners. We recommend that you consult with your own legal, financial and/or insurance advisors on any commentary provided herein. All descriptions, summaries or highlights of coverage described herein are for general informational purposes only and do not amend, alter or modify the actual terms and conditions of any relevant policy. Coverage is governed only by the terms and conditions of such policy. Insurance coverage in any particular case will depend upon the type of policy in effect, the terms, conditions and exclusions in any such policy, and the facts of each unique situation. No representation is made that any specific insurance coverage would apply in the circumstances outlined herein. Please refer to the individual policy forms for specific coverage details.
The information contained in this document and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity.
This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.
Insurance products and services offered by Aon Risk Insurance Services West, Inc., Aon Risk Services Central, Inc., Aon Risk Services Northeast, Inc., Aon Risk Services Southwest, Inc., and Aon Risk Services, Inc. of Florida and their licensed affiliates.