Virginia Judge Certifies Class Action Against Boeing Over 737 MAX Safety

By Vyt? Kli?auskait? - Journalist | Simple Flying

The US District Judge for the Eastern District of Virginia, Leonie Brinkema, has greenlit a shareholder class action against Boeing over safety issues with the 737 MAX aircraft, according to a report by Reuters.

Shareholders filed a lawsuit against Boeing in January 2024, shortly after the mid-air door blowout incident on an Alaska Airlines Boeing 737 MAX 9. They alleged that the company misled investors about aircraft safety and its safety procedures.

Class action by investors

According to the report, shareholders accused the American aircraft manufacturer of prioritizing profits over safety and overstating its commitment to safe aircraft before the Alaska Airlines Boeing 737 MAX 9 door blowout incident in January 2024.

The federal judge who approved the class action lawsuit, Leonie Brinkema, ruled that shareholders—led by Rhode Island's state treasurer—who held Boeing stock between January 7, 2021, and January 8, 2024, may seek damages as a group.

On January 5, 2024, Alaska Airlines Flight AS1282 was involved in an incident when a door plug was ejected from the Boeing 737 MAX 9 aircraft. The aircraft, registered as N704AL, was just two months old at the time of the incident.

The National Transportation Safety Board (NTSB) said that the evidence showed four bolts that hold the door plug in place on the 737 MAX 9 were missing. No fatalities and no serious injuries resulted from the emergency on the flight. However, the January 2024 incident on Alaska Airlines flight AS1282 proved pivotal, putting Boeing under intense scrutiny from all quarters.

Alaska Airlines received $162 million compensation from Boeing in 2024 for the losses resulting from the mid-exit door plug blowout incident. The incident saw the carrier ground its entire Boeing 737 MAX 9 fleet temporarily, affecting its operations.

According to Reuters, shareholders wanted the class period to start in 2019, arguing that Boeing's misleading statements about aircraft safety after two fatal 737 MAX crashes in October 2018 and March 2019 had artificially inflated its stock price.

However, Judge Brinkema ruled that the class period should instead begin when Boeing resolved a US Department of Justice criminal case related to 737 MAX safety.

Calls for culture shift at Boeing

Boeing CEO Kelly Ortberg emphasized in a company-wide meeting earlier this month that the company's management culture needs significant change. Speaking to employees in St. Louis and via webcast to other Boeing locations, Ortberg acknowledged major issues, including poor communication and a culture of disrespect within management.

According to The Seattle Times, Ortberg shared that recent employee survey results, which had an 82% response rate, would likely be "brutal" for leadership. He agreed to use this feedback to develop a clear action plan for resolving Boeing's internal issues. Ortberg stated:

"We're going to put an action plan on those things, and I think they’re going to be brutal to leadership, quite frankly."