US appeals court upholds dismissal of lawsuit against Boeing

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A US appeals court has upheld the dismissal of a lawsuit filed by Boeing stockholders against the airframer, alleging that Boeing had withheld information regarding delays to the 787 Dreamliner programme back in 2009.

The US Court of Appeals for the Seventh Circuit issued its ruling yesterday, saying that the validity of the first dismissal of the lawsuit is "unassailable".

The lawsuit was first dismissed in the US District Court for the Northern District of Illinois, Eastern Division, in March 2011.

A group of Boeing stockholders, identified as the City of Livonia Employees' Retirement System, had brought the lawsuit against Boeing, following a delay to first flight of the 787 announced on 23 June 2009. The announcement was followed by a drop of more than 10% in Boeing's stock price.

The plaintiffs, who had bought Boeing stock before the announcement of the delay, had argued that the airframer's executives had committed securities fraud.

In their first amended complaint, the plaintiffs said Boeing chief executive James McNerney and then-Boeing Commercial Airplanes chief executive Scott Carson had knew about the postponement of the 787 first flight when they made public statements about the programme before the announced delay. The plaintiffs alleged then that this was confirmed by "internal e-mails" of Boeing.

This first amended complaint, which did not identify the source of these e-mails, did not name the source of these e-mails. After this complaint was dismissed in court, the plaintiffs filed a second amended complaint which named their source as a "Boeing senior structural analyst engineer and chief engineer", later identified as Bishnujee Singh.

The plaintiffs' case fell apart, however, when it was later revealed that Singh had never worked for the airframer and was employed only as a Boeing contractor. He denied that he had worked on the 787 programme and had any internal knowledge of the programme, leading to the dismissal of the second amended complaint in court.

"Without evidence from the confidential source, then, the first dismissal stood, its validity unassailable," says the appeals court in its ruling yesterday.

In response to the ruling, Boeing says it is "pleased" with the outcome.

"The court affirmed that the plaintiffs' law firm manufactured this lawsuit, and it highlighted the fact that this firm has been criticised for such behaviour in other cases. Boeing looks forward to the hearings in the district court in which sanctions against the plaintiffs' law firm will be considered," says the airframer.