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American Airlines Stable Value Lawsuit

This lawsuit alleged that American Airlines breached its fiduciary obligations by permitting more than $1 billion to be invested in the AA Credit Union Fund within the American Airlines defined contribution plan – a fund that plaintiffs claimed failed to outpace inflation. The case settled; however, the federal judge reviewing the $8.8 million settlement does not think that amount suffices.

The judge concluded that ‘“the income the Plan participants would have lost by not having access to a stable value option would appear to have been between $55 million and $88 million”’, if such an option was offered from February 2010 through present (using the same inputs employed by the plaintiffs’ counsel to arrive at a structural relief monetary value). The court did not have enough information to conclude “good cause for an entry” of the proposed settlement, or to proceed with a hearing to approve the proposed settlement as being “fair, reasonable, and adequate to the proposed classes.”

www.napa-net.org; December 12, 2016.