March 26, 2013

Boeing class-action dismissal upheld; sanctions considered

Boeing Co. won a U.S. appeals court ruling affirming the dismissal of an investor lawsuit accusing company officials of making misleading public statements about the readiness of its 787 “Dreamliner” aircraft.

In the unanimous ruling, the Chicago-based appeals panel also asked a trial-court judge consider punishing lawyers for the plaintiff Livonia, Michigan, public employees’ retirement system for failing to adequately investigate statements allegedly made by a confidential source they relied on.

“The plaintiffs’ lawyers had made confident assurances in their complaints about a confidential source – their only barrier to dismissal of their suit – even though none of the lawyers had spoken to the source and their investigator had acknowledged that she couldn’t verify what (according to her) he had told her,” U.S. Circuit Judge Richard A. Posner wrote in his 18-page ruling for the three-judge panel.

The confidential source later recanted when questioned under oath by Boeing lawyers, according to Posner.

Boeing’s 787 jet entered service in 2011 after three years of delays caused by supply-chain interruptions, assembly problems and a machinists strike. The U.S. Federal Aviation Administration grounded the plane in January after overheated lithium ion batteries on some planes began emitting smoke.

The Livonia pension plan class action, or group lawsuit, was filed in 2009 by the San Diego-based class action law firm Robbins Geller Rudman & Dowd LLP. Named as co-defendants with Chicago-based Boeing were Chief Executive Officer W. James McNerney and Scott E. Carson, who led the company’s commercial airplane group.

Darren Robbins, a partner in the firm’s San Diego office, and James Barz, a partner in its Chicago office, didn’t immediately reply to an e-mailed request for comment on the appeals-court ruling. Barz also didn’t immediately return a telephone message seeking comment.

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