US Judge Approves Shareholder Lawsuit Against Boeing
A US District Court judge has approved a shareholder class action lawsuit against Boeing, led by Rhode Island Treasurer James A Diossa. The case, filed on behalf of the Rhode Island employees’ retirement system and other similarly situated shareholders, alleges that Boeing and several of its top executives made false and misleading statements about the company’s safety practices between October 2019 and January 24, 2024. According to the complaint, these statements artificially inflated Boeing’s stock price, only for investors to suffer losses when the truth about safety lapses emerged.
Judge Leonie Brinkema of the Virginia Eastern District Court handed down her decision on March 7, 2025, granting the class action application with some important modifications. In her ruling, the judge acknowledged that the plaintiffs had met the established criteria for a class action, but she narrowed the scope of the claim in a few key areas. Notably, she ruled that option holders would not be allowed to participate in the class, thereby limiting the overall number of claimants.
A major point of contention was the proposed start date for the class period. The plaintiffs originally sought to begin the class period on September 30, 2019, when Boeing had publicly stated it was making steady progress on returning the B737 MAX to service after two fatal crashes and a global grounding. However, the defendants argued that the class period should not start before January 7, 2021, which is when Boeing and the US Department of Justice announced the conclusion of a deferred prosecution agreement related to B737 MAX safety issues. Citing evidence that showed no statistically significant stock price increases during the earlier period, Judge Brinkema agreed that January 7, 2021, was a more appropriate starting point. She also set the end of the class period on January 8, 2024, noting that any corrective stock price events after that date were likely due to the consequences of the door plug incident on an Alaska Airlines-operated B737-9.
The complaint alleges that former CEO David Calhoun, former CEO Dennis Muilenburg, former CFO Gregory Smith, and current CFO Brian West made misleading statements regarding how Boeing was addressing safety concerns. The allegation is that these misrepresentations induced investors to buy shares at inflated prices, only for the stock to decline sharply when the real safety issues came to light.
The judge’s ruling also sets strict deadlines for the case to proceed. Expert reports are to be completed within the next two months, and all discovery must be finished by May 9, 2025. These deadlines ensure that the litigation process remains efficient as both sides prepare to present their evidence.
This lawsuit follows a turbulent period for Boeing, marked by multiple safety incidents and subsequent regulatory and public scrutiny. The impact of these events has had a lasting effect on investor confidence and the company’s financial performance. In the broader context, the case represents an effort by shareholders to hold Boeing accountable for its communications regarding safety and its handling of critical issues that have affected its stock performance.
For many investors, the case is seen as a necessary measure to ensure transparency and proper risk management in the aviation industry. As the legal proceedings move forward, the outcome of this class action could have significant implications for corporate governance and the standards of communication that major airlines and aerospace companies must adhere to.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com