The 5th Circuit Court of Appeals upheld a federal judge's decision to reject a suit against American Airlines Inc. by participants in a 401(k) plan claiming the company violated their fiduciary duties under ERISA.
In the decision, filed Monday in federal court in New Orleans, the circuit judges described the plaintiff's claims as "meritless" and lacked "constitutional standing."
"Defendants argue that plaintiffs do not have constitutional standing for their claims. We agree," the decision stated.
In the case of Ortiz et al. vs. American Airlines Inc. et al., originally filed in February 2016, participants in its Super Saver 401(k) plan criticized one of its investment options. According to the complaint, the American Airlines Credit Union Demand Deposit fund was the only investment option that qualified as an income-producing, low-risk, liquid fund, but produced poor returns.
Plaintiffs argued that the plan should have removed it and added a stable value fund.
But on Aug. 5, 2020, U.S. District Judge John McBryde in Fort Worth, Texas, rejected the case, writing that the "exact nature" of the plaintiffs' claims were not clear, and failed to show "that the credit union's investing of amounts was improper or a violation of any duty owed to them or the plan."
Further, Mr. McBryde said there was "no evidence that plan fiduciaries could not have rejected the rates set by the credit union or that plaintiffs could not have made different investment choices if they thought the rates were too low."
