Boeing directors to face investor lawsuit over 737 Max fatal crashes
Boeing’s board of directors must face a lawsuit from the planemaker’s shareholders over two fatal crashes of its 737 Max aircraft, which killed 346 people in less than six months, a US judge has ruled.
Delaware judge vice-chancellor Morgan Zurn found that the company had ignored “red flags” about the safety of the new aircraft and its anti-stall system, which the board “should have heeded but instead ignored”, following the crash of Lion Air flight 610 in October 2018.
The first incident occurred when the plane, which has an onboard system known as MCAS (manoeuvering characteristics augmentation system), crashed into the sea shortly after takeoff from Jakarta, killing all 189 passengers and crew on board.
Less than five months later, in March 2019, all 157 people on board Ethiopian Airlines flight 302 died when it crashed minutes after taking off from Addis Ababa, triggering a global grounding of the 737 Max fleet which lasted for almost two years.
“The Lion Air crash was a red flag about MCAS that the board should have heeded but instead ignored,” Zurn wrote in his ruling. “The board did not request any information about it from management, and did not receive any until 5 November, 2018, over one week after it happened.”
Zurn ruled that Boeing shareholders were able to bring a case against the company’s board, but dismissed some of their other claims.
“The primary victims of the crashes are, of course, the deceased, their families and their loved ones,” Zurn wrote, adding that Boeing shareholders had also undergone losses.
“While it may seem callous in the face of their losses, corporate law recognises another set of victims: Boeing as an enterprise and its stockholders. The crashes caused the company and its investors to lose billions of dollars in value.”
In a lengthy ruling summarising the shareholders’ case, Zurn wrote that Boeing’s board “publicly lied about if and how it monitored the 737 Max’s safety”.
Boeing said in a statement it was “disappointed in the court’s decision to allow the plaintiffs’ case to proceed past this preliminary stage of litigation”.
It added: “We will review the opinion closely over the coming days as we consider next steps.”
In January, Boeing paid $2.5bn (£1.8bn) to settle criminal charges of fraud and conspiracy brought by the US justice department in connection with the two crashes. The settlement included $2.2bn in compensation to the families of the people killed and a $243m fine.
The 737 Max aircraft was given permission to return to the skies by US regulators, the Federal Aviation Administration, in November 2020.
Commercial passenger flights on the aircraft resumed for the first time in 20 months in December, after the Brazilian airline Gol restarted flights on the plane.