737 Max lawsuit over safety nears deal, sources say
The monetary portion of the deal could be about $250m, and would be paid by insurers, one source says
Seattle/Washington — Boeing investors have reached an agreement with current and former company officers to settle a lawsuit over the safety oversight of the 737 Max, two people familiar with the matter said on Thursday.
The proposed settlement agreement is expected to be filed in the coming days in Delaware chancery court, and is subject to approval by a judge, the people said. It would likely include provisions to increase internal safety oversight, they said.
One of the people added that the monetary portion of the agreement could be about $250m, and would be paid by insurers.
A Boeing spokesperson declined to comment. Lawyers representing the plaintiffs did not immediately respond to a request for comment.
The settlement agreement was reported earlier by the Wall Street Journal.
In an amended complaint unsealed in February, New York State Comptroller Thomas DiNapoli, who heads the state pension fund, and other investors argued that Boeing's board had breached its fiduciary duties and acted with gross negligence by failing “to monitor the safety of Boeing's 737 Max aeroplanes”.
The lawsuit, also filed in Delaware Chancery Court, alleges that the board did not develop any tools to evaluate and monitor aeroplane safety until after 737 Max crashes in Ethiopia and Indonesia killed 346 people in a span of five months, and the fleet was grounded.
In March, Boeing asked the Delaware court to throw out the shareholders' lawsuit, saying the board had engaged in “robust and well-established” oversight of jet's development.
In its motion to dismiss the complaint, Boeing said the plaintiffs ignored “the robust systems that had long been in place” to keep the board informed about significant risk issues.
“Boeing's Directors maintained this high scrutiny, moreover, during a period in which commercial aircraft, and Boeing's in particular, achieved ever higher levels of safety,” Boeing said, “a trend that cannot be squared with Plaintiffs' simplistic narrative about a 'safety-engineering culture' that had been 'intentionally dismantled.'”
Since 2019, Boeing's board has improved oversight of Boeing's engineering and industrial operations, and added new board members.
The settlement agreement was expected to add additional oversight.
Boeing acknowledged, as part of a deferred prosecution agreement with the US justice department in January, that the company concealed details about a crucial flight control system at the centre of the two crashes from the US Federal Aviation Administration.
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