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On September 7, 2021, a Delaware court largely denied The Boeing Company’s (“Boeing”) motion to dismiss a stockholder derivative suit against Boeing directors in connection with two crashes of Boeing’s 737 MAX airplane in October 2018 and March 2019. In In re The Boeing Company Derivative Litigation, No. 2019-0907-MTZ (Del. Ch. Sept. 7, 2021), the plaintiffs alleged, among other things, that Boeing’s board of directors had breached its fiduciary duty of oversight under the standards established in In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996) and Marchand v. Barnhill, 212 A.3d 805 (Del. 2019) by failing to establish an adequate reporting system for airplane safety and “turning a blind eye to a red flag representing airplane safety problems”. Though noting that Caremark claims are “possibly the most difficult theory in corporate law upon which a plaintiff might hope to win a judgment,” Vice Chancellor Zurn of the Delaware Court of Chancery (the “Court”), denied the defendants’ motion to dismiss on the basis that the plaintiffs had adequately pled facts to support the claim that the directors had breached their duty of oversight.
Special thanks to associate Joon Lee who contributed to this publication.
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