The United States Court of Appeal has decided to uphold an earlier decision to dismiss a lawsuit brought by Spirit AeroSystems’ investors. A three-judge panel of the Denver-based 10th U.S.
Circuit Court of Appeals ruled 2-1 that investors pursuing the proposed class action against Spirit had not met the “stiff burden” required for allegations of fraud. They claimed that they had been misled over production rates subsequent to the two fatal 737 MAX crashes in 2018 and 21019, respectively, and that critical information had not been released about Boeing’s desire for Spirit AeroSystems to cease delivery of any further shipsets in December 2019.
Despite the grounding, worldwide of the 737 MAX as well as the grounding of the aircraft by the US Federal Aviation Administration in March 2019, plus Boeing reducing production from 52 to 42 aircraft per month, the company initially continued to order 52 shipsets a month from Spirit AeroSystems. Shipsets include an aircraft’s fuselage, pylon, wing leading edges, thrust reverser and engine nacelle. According to Reuters news agency, Spirit reassured investors in October 2019 it would continue to produce 52 shipsets for an extended period. The plaintiffs alleged Spirit executives made the reassuring statements about production even though Boeing had privately told Spirit about plans to reduce purchases, something the executives deny.
Vice President of Finance, John Gilson resigned in January 2020 after a Spirit review in late 2019 concluded its accounting processes did not comply with established procedures. Spirit AeroSystems said that in 2020 the Securities and Exchange Commission closed its inquiry without recommending any enforcement action.
