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There was a time, not that long ago, when ESG was the dominant topic in the corporate governance world. Every company was expected to have a sustainability plan and to maintain a respectable ESG profile. However, as a result of now years-long ESG backlash, the predominance of ESG as a governance topic has diminished. Indeed, with the Trump administration’s active anti-ESG policies and actions, including among other things several anti-ESG executive orders, as well as the actions of several red state governors and legislatures, it now sometimes feels that ESG as a governance topic is in full retreat. However, two recent developments – including a court decision striking down a Texas state anti-ESG law and the filing of ESG-supportive ERISA liability lawsuit – suggest that, at a minimum, there may be more of the ESG story yet to be told.Continue Reading Countering Anti-ESG Backlash

Just a few years ago, ESG was one of the most important themes in the corporate and securities world. Companies were under pressure to demonstrate their sustainability qualifications and otherwise establish their ESG credentials. But then came the ESG backlash, and many companies found (and, indeed, continue to find) themselves attacked for their ESG efforts. The backlash has taken the form both of legislation and litigation. And while the ESG backlash litigation claimants have not always done well, there have also been some notable recent successes.

The most recent ESG backlash litigation success is in the ERISA liability action that an American Airlines pilot filed against American Airlines and its Employee Benefits Committee. In a January 10, 2025, post-trial decision (here), the court ruled, following a four-day evidentiary hearing, that the defendants had violated their duties of loyalty by encouraging employee 401(k) investment in BlackRock ESG funds. The court’s opinion is harsh in its criticism of the airline for advancing its corporate interest in ESG over the interests of the plan participants and for failing to examine and address the company’s conflicted relationship with BlackRock.  Continue Reading Plan Fiduciaries’ ESG Efforts Breached ERISA Duty of Loyalty, Court Holds

Daniel Aronowitz

On June 28, 2024, the U.S. Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo, in which the court overruled the so-called Chevron doctrine, pursuant to which courts had deferred to agency interpretations of ambiguous statutes. In the following guest post, Daniel Aronowitz, President of Encore [formerly Euclid] Fiduciary, provides his views of the Court’s decision in the Loper Bright Enterprises case and discusses its implications. A version of this article previously was published on Encore Fiduciary’s Fid Guru blog. I would like to thank Dan for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Dan’s article.Continue Reading Guest Post: The Overreaction to the End of Chevron Deference

I have noted in prior posts on this site the phenomenon of ESG backlash, which has not only taken the form of legislative and other overtly pollical action, but has also taken the form of litigation as well. Though the ESG backlash lawsuits generally have not fared well in the courts, one of these suits recently survived a motion to dismiss.

In a February 21, 2024, ruling, the Northern District of Texas denied the motion to dismiss in a lawsuit filed by an American Airlines pilot alleging that the airline and its employee benefits committee violated their fiduciary duties under ERISA to the company’s 401(k) plan participants in connection with selection and retention of funds whose managers allegedly pursue non-economic ESG objectives rather than maximizing plan participants’ financial benefits. As discussed below, the ruling underscores just how fraught the ESG-related litigation picture has become. A copy of the court’s ruling can be found here.Continue Reading ESG Backlash ERISA Lawsuit Survives Dismissal Motion

Dan Aronowitz

Many of you may have seen the February 5, 2024 Wall Street Journal article (here) describing the new lawsuit filed against Johnson & Johnson accusing the company of mismanaging its workers’ prescription-drug benefits. The new complaint, a copy of which can be found here, arguably represents a new direction in ERISA liability litigation, perhaps the next big thing after all of the ERISA excess fee litigation. In the following guest post, Dan Aronowitz, President of Encore [formerly Euclid] Fiduciary, examines the new lawsuit and assesses what it may represent. He also considers the company’s defenses as well as the need for a vigorous response to lawsuits of this kind. A version of this article previously was published on the Fid Guru Blog. I would like to thank Dan for allowing me to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Dan’s article.Continue Reading Guest Post: Flipping the Script on the New Excess Health Plan Fee Case Against Johnson & Johnson

According to a new report, the number of excess fee and performance lawsuits filed in 2023 declined relative to the extraordinary filings levels in 2022, but excess fee lawsuit filings remained elevated. By contrast to prior years in which plaintiffs’ lawyers seemingly targeted benefit plans of all sizes, in 2023 the excess benefit plan lawsuits filed in 2023 primarily targeted companies with larger benefit plans. The number and aggregate total value of excess fee lawsuit settlements in 2023 was a record levels during the year. The January 8, 2024, report about the excess fee lawsuit filings, written by Daniel Aronowitz of Euclid Specialty, can be found here.Continue Reading Excess Fee Lawsuit Filings Declined in 2023 Due to Backlog of Prior Cases

In prior posts, I have noted the growing phenomenon of an anti-ESG backlash. The ESG backlash has taken the form of both legislation and litigation. In the latest examples of ESG backlash litigation, plaintiffs recently have filed two lawsuits against U.S.-based airlines based on the companies’ alleged actions supporting ESG-related initiatives. As discussed below, these latest lawsuits reconfirm that it is not the ESG laggards that are getting hit with ESG-related litigation; rather, the lawsuits are coming against companies that are taking ESG-supportive initiatives.Continue Reading Airlines Hit with ESG-Backlash Lawsuits

The filing of excessive fee litigation against plan fiduciaries is nothing new. However, according to a recent white paper, this type of litigation has entered a dangerous new phase, characterized by both heightened frequency and severity and affecting companies of all sizes. In this new phase, the risk of litigation has, according to the report, reached “unprecedented levels.” A copy of the report, written by Allison Barrett and Joel Townsend of AIG and entitled “Fiduciary Liability Insurance: Understanding the Rapid Rise of Excessive Fee Claims,” can be found here.
Continue Reading A New Wave of Excessive Fee Fiduciary Liability Litigation

paul-weiss-large-300x53In the settlement documents prepared in connection with securities class action settlements, the documents typically specify that certain groups are excluded from the settlement class. Among the groups typically excluded are “affiliates” of the class action defendant company. In a recent decision (here), the Second Circuit examined the question whether an ERISA-regulated benefit plan that the defendant company sponsors is an “affiliate” of the company and therefore precluded from sharing in the settlement proceeds. In the following guest post, members of the Paul Weiss law firm take a look at the Second Circuit’s decision and discuss its implications. I would like to thank the Paul Weiss attorneys for their willingness to publish their article on my site. I welcome guest post submissions from responsible parties on topics of interest to this blog’s readers. Please contact me directly if would like to submit a guest post. Here is the Paul Weiss attorney’s guest post.
Continue Reading Guest Post: ERISA-Regulated Benefit Plans Not “Affiliates” for Securities Class Settlement Purposes

As part of our beat here at The D&O Diaryfilings2016, we regularly monitor new lawsuit filings and try to identify trends and patterns. Over the years, we have noted and commented on this blog about many of the trends and patterns we have identified. More than once we have noted the incidence of director and officer liability litigation arising out of environmental issues. We have also noted that D&O litigation often follows after the announcement of FCPA investigations. As discussed below, there has been a flurry of recent filings involving environmental issues. I have also noted below an interesting variant on the FCPA follow-on civil lawsuit pattern.
Continue Reading Field Notes on Recent Corporate Suit Filing Trends