A New York state judge has thrown out a lawsuit against three of the five pensions funds in the $264.3 billion NYC Retirement System, saying

New York State Supreme Court Judge Andrea Masley ruled July 2 that she dismissed the complaint because “plaintiffs here have not, and will not, suffer any monetary losses based upon defendants’ investment decisions.”

Plaintiffs contended the pension funds’ investment decisions would impair their ability to provide long-term benefits for retirees, an allegation Masley wrote was “speculative.”

The judge supported her decision by referencing a 2020 U.S. Supreme Court decision, Thole et al. vs. U.S. Bank, NA, that said defined benefit participants lacked standing to sue unless they could prove they were harmed by a sponsor’s action. The 5-4 decision ruled for the defendant sponsor.

“Plaintiffs have not demonstrated sufficiently concrete or particularized harm,” Masley wrote. “Rather, just as the plaintiffs in Thole, the outcome of this action will not affect plaintiffs’ future benefits.”

Four participants in the three pension funds sued in May 2023, claiming divestment was an “unlawful decision to elevate unrelated policy goals over the financial health of the plans,” in Wong et al. vs. New York City Employees’ Retirement System et al.

The plaintiffs are a subway train operator, a former city public school teacher now a part-time teacher in a parochial school, an occupational therapist in a city elementary school and a school secretary in the city’s Department of Education.

The latter three are members of Americans for Fair Treatment Inc., an organization that advocates that “all public sector employees should have the freedom to choose to join a union or to abstain from joining a government union, an employee association, or other group,” according to its website.

The organization, also a plaintiff in the lawsuit against the pension funds, provides information about quitting union membership.

“This court’s decision is a big win for common-sense responsible investing, for New York City’s municipal workers and retirees, and for the future of our city and our planet,” said New York City Comptroller Brad Lander, a trustee to, and investment adviser and custodian for, the three pension funds, in a July 3 news release.

“I’m delighted that the court dismissed this attempt by anti-ESG forces to undermine responsible investing and prevent the transition to a low-carbon economy,” he said.

The city pension system consists of five pension funds each with separate, independent boards. Three of the pension funds are defendants because they have divested fossil fuel holdings: New York City Employees’ Retirement System; New York City Teachers’ Retirement System; and New York City Board of Education Retirement System.

These funds have about $192 billion in assets, representing 73% of the pension system’s total assets.

The pension funds “completed their divestment from fossil fuel reserve owners in their public equities” in 2022, and “they subsequently adopted net-zero implementation plans,” the July 3 news release said.

“Our pension funds are implementing ambitious and well-researched plans to address the material risks of climate change,” Lander added. That includes “divesting from fossil fuels, investing in renewable energy and climate solutions, and actively engaging with our asset managers and portfolio companies to reduce their financed emissions.”

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