Boeing Agrees to a $237.5 Million Settlement Over Airplane Safety
The board of directors (“Board”) of The Boeing Company (“Boeing”) agreed to a staggering $237.5 million settlement of a lawsuit brought by stockholders on behalf of Boeing alleging that the Board and certain executive officers breached their fiduciary duties of oversight and monitoring of mission-critical airplane safety and airworthiness of the 737 MAX prior to the initial and second fatal crashes. Prior to the settlement, the Delaware Court of Chancery (“Court”) issued a Memorandum Opinion concluding that the stockholders had successfully alleged that a majority of the Company’s directors faced a substantial likelihood of liability for Boeing’s losses attributable to the crashes. The Court referenced the plaintiffs’ allegations that the Board had a misplaced focus on rapid production and profit maximization over engineering and safety, the Board had failed “to establish a reporting system for airplane safety” and turned “a blind eye to a red flag representing airplane safety problems.” In a stinging rebuke, the Court stated that “The Board publicly lied about if and how it monitored the 737 MAX’s safety.” Although we have no way of knowing, the Court’s statements on the Board’s actions in the Memorandum Opinion may have served as an incentive to Boeing agreeing to settle the litigation.
