July 19, 2021 opinions

Posted on by tadbartlett

Designated for publication

  • Ortiz v. American Airlines, Inc., 20-10817, appeal from N.D. Tex.
    • Stewart, J. (Smith, Stewart, Ho), ERISA, standing, class action
    • Affirming in part, reversing in part, and vacating in part district court’s summary judgment in favor of defendants dismissing plaintiffs’ ERISA claims for breach of fiduciary duty against employer and pension entities.
    • American Airlines (“AA”) offered a set of options for 401k retirement savings to its employees, which options were selected by AA’s Pension Asset Administration Committee (“PAAC”); one of the options, a demand-deposit, low-yield option, was housed at the AA Federal Credit Union (“FCU”). Plaintiffs, on behalf of a putative class, raised three claims: “The first asserted that AA and the PAAC breached their fiduciary duties of loyalty and prudence under 29 U.S.C. § 1104(a)(1)(A)–(B)3 by failing to remove the FCU Option from the Plan (‘Count I’). The second contended that FCU breached its fiduciary duty of loyalty under 29 U.S.C. § 1106(b)(1)5 by dealing with plan assets held by the FCU Option for its own benefit (Count II). The complaint also averred AA and the PAAC are liable as co-fiduciaries for FCU’s breach. The final claim averred that AA and the PAAC engaged in a ‘prohibited transaction’ under 29 U.S.C. § 1106(a)(1)6 by offering the FCU Option (‘Count III’).”
    • Plaintiffs and defendants reached a settlement about five months into the litigation, at $8.8 million, although plaintiffs had claimed to have lost between $55 million and $88 million. The district court denied preliminary approval of the settlement agreement. Thereafter, the district court denied class certification, but approved the plaintiffs proceeding as representatives of the Plan. The district court then granted a summary judgment motion filed by AA and PAAC, and another summary judgment motion filed by FCU.
    • First, the Court held that the plaintiffs had abandoned their claim under Count III, and had abandoned a portion of their claim under Count I, regarding breach of the duty of loyalty.
    • The Court then held that the plaintiffs lacked standing to pursue their remaining claim against AA and PAAC. The Court held that, because plaintiffs had failed to show that they would have selected a “stable value” plan rather than the FCU demand-deposit plan if the stable value plan had been available, their claim arising from the lack of a stable value option during certain years was too speculative to support constitutional standing.
    • The Court, however, disagreed with the district court that the plaintiffs did have standing in their claims against FCU. The Court held that, although plaintiffs showed they have a concrete, redressable claim against FCU regarding lower interest rates on their funds because FCU used plan assets to make loans to other plan members, plaintiffs had failed to show causation between this conduct and their returns; “Plaintiffs have not supplied any evidence demonstrating that investors in FCU funds other than the FCU Option received higher interest rates generated by investments of Plan assets.”
    • Accordingly, the Court held–although on different grounds from the district court–that the district court correctly dismissed the claims as to Counts I and II.
    • The Court then found no abuse of discretion in the district court’s denial of preliminary approval of the proposed class settlement. The Court held there was no evidence in the record to address the district court’s concern regarding the gap between the settlement amount and the claimed losses. The Court also found that there was no abuse of discretion in the district court’s initial finding of likelihood of success on the claims in denying settlement approval and then subsequently granting summary judgment, as the district court had less information at the settlement stage than the showing made at the summary judgment stage.

Unpublished

  • U.S. v. Mendoza, 20-10267, appeal from N.D. Tex.
    • per curiam (Southwick, Oldham, Wilson), criminal
    • Granting Anders motion to withdraw, and dismissing appeal.
  • U.S. v. Rodriguez-Gutierrez, 20-20259, appeal from S.D. Tex.
    • per curiam (Dennis, Costa, Engelhardt), criminal
    • Granting Anders motion to withdraw, and dismissing appeal.
  • U.S. v. Dorsey, 20-40437, appeal from E.D. Tex.
    • per curiam (Southwick, Oldham, Wilson), criminal
    • Granting Anders motion to withdraw, and dismissing appeal.
  • U.S. v. Toledo-Cruz, 20-40879, appeal from S.D. Tex.
    • per curiam (Smith, Stewart, Graves), criminal
    • Granting Anders motion to withdraw, and dismissing appeal.
  • U.S. v. Gilmore, 21-10095, appeal from N.D. Tex.
    • per curiam (Stewart, Haynes, Ho), criminal
    • Dismissing as frivolous second appeal from conviction and sentence.