August 26, 2022
- Board also agrees to retool controversial forum bylaw
- Settlement will be paid by insurers into company’s coffers
Boeing Co.’s board will pay $6.25 million and amend a controversial company bylaw to end litigation in two courts challenging the aerospace manufacturer’s requirement that certain shareholder lawsuits be heard in Delaware, according to federal court filings in Chicago.
Judge Harry D. Leinenweber signed off tentatively on the deal Thursday, about seven months after an appeals court revived federal derivative claims filed against Boeing’s board in Chicago by a pension fund. The appellate ruling overturned Leinenweber’s novel 2020 decision sending the dispute to Delaware.
The judge scheduled a final settlement hearing for Dec. 14. The agreement will go to a judge in Delaware’s Chancery Court after the conclusion of approval proceedings in the US District Court for the Northern District of Illinois, according to the pension fund’s court filings.
The lawsuit, filed in 2019, emerged from shareholder derivative litigation over two high-profile crashes of Boeing’s 737 Max 8 jetliner that killed a combined 346 people. The investor suits accused Boeing’s board of ignoring safety issues before the crashes, which together cost the company more than $20 billion.
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The new settlement would amend Boeing’s forum bylaw to clarify that shareholder derivative suits can be heard by federal district courts in Delaware or the Eastern District of Virginia if Delaware’s state courts lack jurisdiction because they assert only federal claims.
“The Boeing bylaw change extends beyond claims arising under the Securities and Exchange Act of 1934 and allows federal derivative claims under any federal statutory scheme with exclusive jurisdiction to be brought in federal court,” Carol Gilden, lead counsel for the investors and partner at Cohen Milstein Sellers & Toll PLLC, said in a Friday statement. “Plus, those claims are not restricted to Delaware federal court and can be brought where Boeing is headquartered, which is an analogy other courts may rely on.”
The $6.25 million settlement amount would also be paid by the board’s insurers, according to the court filings.
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Cohen Milstein Sellers & Toll PLLC are counsel for the pension fund. Boeing and its board are represented by Sullivan & Cromwell LLP and Kirkland & Ellis LLP.
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