In May, four current and former city employees plus an Oklahoma-based organization that counsels public sector employees on dropping their union membership sued three of the five pension funds within the New York City Retirement System.
Each of the five pension funds has an independent board of trustees. The boards of the pension funds representing city workers, teachers and board of education members have supported divesting some fossil fuel investments. They account for about 73% of the $253.2 billion in assets of the New York City Retirement Systems.
The boards of pension funds representing the police and fire departments have not participated in the fossil-fuel divestment strategy.
The plaintiffs accused the pension funds of trying "to elevate unrelated policy goals over the financial health of the plans," claiming that their action "jeopardizes the retirement security of plan participants and beneficiaries."
The pension funds responded that unhappy participants can object to investment decisions in several ways: complain to the trustees, petition legislators or complain to the state Department of Financial Services, which retains oversight of pension funds.
"Permitting courts to overrule public pension funds' discretionary investment decisions would run afoul of clear precedent reserving such investment judgments to the publicly accountable officials legally charged with administering the funds," they wrote.
"Allowing this suit to proceed would open the door to countless such challenges by numerous unharmed plaintiffs who hold different beliefs about how fund assets should be invested, with no perceptible limit on such lawsuits and no check against vexatious litigation," they added.
The pension funds pointed out that the current and former employees don't claim that any benefits have been denied or that they won't receive their pensions when they retire. "Without an injury in fact, a plaintiff cannot seek relief from the courts of this state," they wrote.
The other plaintiff is Americans For Fair Treatment Inc.
Three of the four individual plaintiffs are members of this group, which counts 14 AFFT members out of 639,000 participants in the three defendant pension funds, according to court documents.
"Fossil-fuel companies are free to bet that their industry will continue to make money even in the face of expanding regulation, ever-rising temperatures, and the increasingly intense global impacts of climate change," the pension funds wrote.
"But public pension funds are not required to bankroll that bet," they concluded. "That is a decision appropriately left to the funds, their trustees, and the financial experts who advise the funds' investment decisions — not the courts."