Boeing shareholders can pursue class action over 737 MAX safety

The Boeing logo is displayed at the company's factory in Renton, Wash. (AP Photo/Lindsey Wasson, File)

A federal judge certified a shareholder class action accusing Boeing of concealing safety deficiencies in its 737 MAX planes before two crashes that killed 346 people in 2018 and 2019.

In a decision on Monday, U.S. District Judge Franklin Valderrama in Chicago said shareholders who owned Boeing stock between Nov. 7, 2018 and Oct. 18, 2019 may sue as a group because they demonstrated a common means to measure damages. The class period ended two months earlier than shareholders wanted.

Class actions can allow greater recoveries at lower cost than individual lawsuits. The shareholders are led by a group of pension funds and private investors.

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Boeing faces a separate class action in the Alexandria, Virginia federal court, claiming it overstated its commitment to safe aircraft prior to the January 2024 mid-air cabin panel blowout on an Alaska Airlines 737 MAX 9.

Neither Boeing nor its lawyers immediately responded to requests for comment on Tuesday. Salvatore Graziano, a lawyer for the shareholders, declined to comment.

Shareholders accused Boeing of rushing development of the 737 MAX, ignoring safety warnings from employees, and misleading the Federal Aviation Administration about the plane’s safety because it feared losing market share to Airbus AIR.PA, whose A320 series is the 737’s main competitor.

They sued the Arlington, Virginia-based company following the deaths of 189 people in a Lion Air crash in October 2018, and 157 people in an Ethiopian Airlines crash in March 2019.

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Shareholders wanted the class period to end on Dec. 16, 2019, saying Boeing’s temporary suspension of MAX production that day exposed the company’s “unrealistic” timeline to resume flights. Boeing objected, saying it was already known the plane would be out of service until 2020.

The class period ends on a day the market learned that the MAX’s chief technical pilot Mark Forkner expressed concern in 2016 that an automated system on the plane was “running rampant.”

In January 2021, Boeing agreed to pay more than US$2.5 billion to resolve a U.S. Department of Justice criminal charge it conspired to defraud the FAA about the MAX’s safety.

(Reporting by Jonathan Stempel in New York, Editing by Franklin Paul)