The Boeing Company facesmore potential class action litigationin the wake of two airline disasters within the last six months involving its now-grounded 737 Max 8 aircraft. Filed in New York’s Southern District, the lawsuit revolving around October 2018’s Lion Air Flight 610 crash into the Java Sea and March 2019’s Ethiopian Flight ET302 crash minutes after takeoff alleges a proxy statement submitted by Boeing and its directors days after the second disaster is materially false and misleading.
The lawsuit charges that the March 15 proxy submitted to the Securities and Exchange Commission is false and misleading in that it makes no mention of the crashes that claimed nearly 350 lives. According to the complaint, while the statement seeks the election of 13 director nominees and approval for executive officer compensation, among other asks, it makes no mention of the grounding of the 737 Max 8 jets or other material information regarding the planes and omits “any mention of the two crashes.” From the lawsuit:
“Boeing’s Proxy Statement is materially false and misleading because it fails to disclose the recent crippling events and circumstances that have shaken the Company to its core, subjected the Company to virtually unlimited civil and criminal prosecution and investigation, grounded its most innovative and profitable fleet of 737 MAX jets, and, among other things, left the Company scrambling to fix its most advanced automated flight systems and controls that both paralyzed its fleet and unveiled an air of secrecy and disinformation surrounding the introduction of this fleet without the necessary warnings to and training of pilots before introduction of the new automated systems incorporated into the design and engineering of this fleet and the method for stabilizing a plane experiencing a malfunction of these automated systems.”
Both incidents, which occurred minutes after takeoff, have been blamed on automated flight systems that essentially took control of the airplanes away from the pilots with no override option. As the lawsuit tells it, the innovations that meant to push Boeing into the future of flight “actually doomed its planes” while sullying the company’s reputation and business prospects. Though investigations into the disasters continue, the lawsuit states that what has developed in the aftermath so far has not been materially disclosed to stockholders by Boeing despite its leadership-related requests in the March 15 proxy statement.
“These events which have caused the Company to lose billions in market value call into question these executives’ ability to run this Company and their credibility in being transparent and making full and fair disclosures regarding these tragic events and their aftermath,” the complaint reads. “The failure to disclose these events in the Proxy Statement is a material omission altering the total mix of information available to Boeing shareholders in determining whether or not to approve the executive compensation.”
The lawsuit, which can be read below, looks to represent those who held Boeing stock at the close of business on February 28, 2019, and are eligible to vote in the company’s annual election of directors scheduled for this April.