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Employee Benefits 401(k) Class Action

Main v. American Airlines, Inc.

Nichols Kaster brought a class action lawsuit on behalf of current and former employees of American Airlines who participated in its 401(k) retirement plan alleging violations of the Employee Retirement Income Security Act of 1974 (ERISA). The complaint accused plan administrators of breaching their fiduciary duty and duty of loyalty owed to retirement plan participants by retaining in the plan certain investment funds that were underperforming and more expensive than alternatives.

Claims Upheld

American Airlines moved to dismiss the class claims, and the court denied in part. Main v. Am. Airlines Inc., 248 F. Supp. 3d 786, 790 (N.D. Tex. 2017). The court rejected the defendant’s argument that the duty of loyalty could not have been breached because a third party assisted in them in the sale of the funds. The court pointed out that the plaintiffs claims did not focus on the sale, but rather the fact that the plan administrators continued to offer the funds in question after the sale and long after the third-party’s involvement.

Next, American Airlines asked the court to dismiss certain named defendants, arguing that the plaintiffs did not sufficiently allege that they qualify as fiduciaries under the law. The court denied the request, finding Nichols Kaster adequately alleged that the named defendants were fiduciaries or had control or management over the plan. Last, the court allowed the plaintiffs to proceed with their failure to monitor claims.

Nichols Kaster’s Results

Shortly thereafter, Nichols Kaster obtained a settlement for the class in the total amount of $22,000,000, which the court held to be fair and reasonable.

Settlement Amount
$22,000,000

Past results are reported to provide an indication of the type of litigation in which we practice and should not be construed to create an expectation in any other case as all cases are dependent upon their own unique fact situation and applicable law. Any result we might have achieved on behalf of one client does not necessarily indicate similar results can be obtained for other clients.

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