Friday 19 / April / 2024
Washington: The US Seventh Circuit Court of Appeals revived an investor lawsuit against the aerospace company Boeing over two 737 MAX crashes in Indonesia and Ethiopia in 2018 and 2019, according to a court opinion written by Judge David Hamilton.
"The suit alleges that Boeing officers and board members made materially false and misleading public statements about the development and operation of the 737 MAX in Boeing's 2017, 2018, and 2019 proxy materials. The district court dismissed the suit without addressing the merits, applying a Boeing bylaw that gives the company the right to insist that any derivative actions be filed in the Delaware Court of Chancery. We reverse," Hamilton said in the opinion, filed on Friday.
Two Boeing 737 MAX passenger airlines crashed, one in Indonesia in October of 2018 and the other in Ethiopia in March of 2019, killing a total of 346 people. Investigators found faulty patches that Boeing implemented to solve problems with the aircraft.
The plaintiff in the case, Seafarers Pension Plan, a shareholder of the Boeing Company, filed the derivative suit in December 2019 on behalf of Boeing under the Securities Exchange Act of 1934.
Because the federal Securities Exchange Act gives federal courts exclusive jurisdiction over actions under it, applying a Boeing bylaw requiring certain shareholder lawsuits to be filed in Delaware Chancery Court, this case would mean that the lawsuit would not be hearable in any forum, which would be contrary to Delaware corporation law, Hamilton said.
The court's decision will allow the lawsuit to move forward, meaning Boeing and its board will face litigation over the allegations that they misled investors about the 737 MAX airplanes prior to the two crashes.
