A U.S. District Court Judge in Fort Worth, Texas has ruled in favor of American Airlines Inc., rejecting claims by participants in a 401(k) plan that the company's fiduciaries violated their duties under ERISA.
The judge's granting of summary judgment closes a lawsuit that was filed in February 2016 and, at one point, was subject to a preliminary settlement that was eventually rejected by the judge.
"The court has had, and the defendants have expressed, uncertainty regarding the exact nature of the claims, that are being asserted by the plaintiffs, which were not resolved until the plaintiffs clearly defined their complaint in a document filed Nov. 12, 2019," U.S. District Judge John McBryde wrote in his opinion Wednesday.
Further, a prolonged dispute over whether the case should be granted class-action status — the judge ruled against that request — also contributed "to the less than rapid progression of this case over the years," the judge wrote in the case of Ortiz et al. vs. American Airlines Inc. et al.
The case involved Super Saver, a 401(k) Capital Accumulation Plan for Employees of Participating AMR Corporation Subsidiaries, according to the original complaint.
Participants criticized the American Airlines Credit Union Demand Deposit fund, one option in the 401(k) plan. The credit union was one of the defendants.
The plaintiffs said the defendants violated ERISA because the credit union fund was the "only plan investment option that would qualify as an income-producing, low-risk, liquid fund," the judge wrote in recounting the litigation history.
The plaintiffs said this fund produced poor returns, and they said the plan should have removed it and added a stable value fund, the judge wrote.
"There is 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," the judge wrote.
"Plaintiffs have not shown that the credit union's investing of amounts was improper or a violation of any duty owed to them or the plan," he added.
