Case: 1:09-Cv-07143 Document #: 92 Filed: 09/24/10 Page 1 of 20 Pageid #:1299

Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 1 of 20 PageID #:1299

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

CITY OF LIVONIA EMPLOYEES' RETIREMENT SYSTEM, Individually and on Behalf of All Others Similarly Situated, Case No. 1 :09-cv-07 143

Plaintiffs, Judge Suzanne B. Conlon I,, Magistrate Susan E. Cox THE BOEING COMPANY, W. JAMES McNERNEY, JR. and SCOTT E. CARSON,

Defendants.

DEFENDANTS' MEMORANDUM IN SUPPORT OF THEIR MOTION TO DISMISS WITH PREJUDICE ON THE BASIS OF FRAUDULENT MISREPRESENTATIONS BY PLAINTIFFS AND PLAINTIFFS' COUNSEL, ROBBINS GELLER

H. Rodgin Cohen (Pro Hac Vice Pending) Pravin B. Rao (#06230097) David B. Tulchin (Pro Hac Vice Pending) Patrick M. Collins (#06206686) Stephanie G. Wheeler (Pro Hac Vice Pending) Eric D. Brandfonbrener (#06195674) SULLIVAN & CROMWELL LLP PERKINS ColE LLP 125 Broad Street 131 South Dearborn Street New York, New York 10004-2498 Chicago, Illinois 60603-5559 Tel: (212) 558-4000 Tel: (312) 324-8400 Fax: (212) 558-3588 Fax: (312) 324-9400 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

Attorneys for Defendants The Boeing Company, W. James McNerney, Jr. and Scott E. Carson

September 24, 2010 Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 2 of 20 PageID #:1300

TABLE OF CONTENTS

Page

INTRODUCTION...... 1

BACKGROUND...... 4 A. The Court's Reliance On The Confidential-Source Allegations As The Basis For Denying Boeing's Second Motion To Dismiss...... 4 B. Once Informed Of The Identity Of The Confidential Source, Boeing Discovered That Every Single One Of Plaintiffs' Allegations On Which This Court Relied Is False...... 6

ARGUMENT...... 9

1. THIS COURT SHOULD DISMISS THE SAC WITH PREJUDICE...... 9 A. This Court Has The Power To Strike Plaintiffs' Fraudulent Allegations And Dismiss This Case With Prejudice ...... 10 B. Plaintiffs' Confidential-Source Allegations Are False ...... 11 C. The Court Should Strike The CS Allegations And Dismiss This Case ...... 14 D. Defendants Are Seeking Other Relief, As Well ...... 15

CONCLUSION...... 15 Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 3 of 20 PageID #:1301

TABLE OF AUTHORITIES

Page(s) CASES

Campo v. Sears Holdings Corp., 371 Fed. Appx. 212 (2d Cir. 2010)...... 11

Higginbotham v. Baxter International, Inc., 495 F.3d 753 (7th Cir. 2007) ...... 4, 5, 14

Makor Issues & Rights, Ltd. v. Tellabs, Inc., 513 F.3d 702 (7th Cir. 2008) ...... 14

Mañez v. Bridgestone Firestone N. Am. Tire, LLC, 533 F.3d 578 (7th Cir. 2008) ...... 10

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007)...... 10

OTHER AUTHORITIES

Fed. R. Civ. P. 11 ...... 10, 15

Fed. R. Civ. P. 12(c) ...... 15

Fed. R. Civ. P. 12(f)...... 10

Fed. R. Civ. P. 60(b)...... 10

Fed. R. Civ. P. 26(a)(1)...... 6

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INTRODUCTION

Defendants have learned that the confidential source ("CS") allegations on which this

Court expressly relied in upholding the Second Amended Complaint ("SAC") filed by Plaintiffs and their Counsel, Robbins Geller, are utterly false. Defendants believe that Plaintiffs and

Robbins Geller have committed a fraud on this Court, The Boeing Company ("Boeing"), and

Boeing's shareholders. Defendants have prepared and intend to file a separate lawsuit in fraud against Plaintiffs and Robbins Geller following disposition of the instant motion. Herein,

Defendants request that, in the interests of justice, the false allegations in the complaint pending before this Honorable Court be stricken, and Plaintiffs' SAC be dismissed with prejudice.

As the Court knows, for their SAC, Plaintiffs relied upon a single, allegedly well-placed source, a purported senior Boeing engineer, who alleged that Boeing and individual defendants fraudulently concealed the results of wing-stress testing in April and May of 2009. This Court expressly and exclusively relied on Plaintiffs' newly-pled allegations regarding this CS to uphold the SAC at its hearing on August 30, 2010. Citing to each of the four paragraphs that Plaintiffs added to bolster the SAC's scienter allegations, and reading those allegations into the record in emphasizing their persuasiveness, the Court took as true these and other key allegations about

Plaintiffs' CS:

• That the confidential source was a former Boeing employee. In fact, he was not

• That the confidential source was a Boeing Senior Structural Analyst Engineer and Chief Engineer. In fact, he was not.

• That the confidential source worked on the Wing-Body Integration Team for the 787 program. In fact, he did not

• That the confidential source reported to Larry Hall, Boeing's Vice President of the Wing- Body Integration Team. In fact, he did not

• That the confidential source's job responsibilities included stress and design review of the 787 wing joints. In fact, they did not Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 5 of 20 PageID #:1303

• That the confidential source, as part of his job, had direct access to, as well as first-hand knowledge of, the contents of Boeing's 787 stress test files that memorialized the results of the failed 787 side-of-body joint stress test and subsequent retest. In fact, he did not

Indeed, each and every one of these allegations -- every single one of them - is false, and the

Plaintiffs and Robbins Geller knew or should have known they were false when they represented them to this Court.

For what are now understandable reasons, Plaintiffs closely guarded their CS's identity until they could secure this Court's denial of the motion to dismiss the SAC. Only after the

August 30 hearing, at which this Court denied Defendants' motion for interlocutory appeal, did

Plaintiffs' Counsel reveal their source to be Mr. Bislmujee Singh.

After only the most basic inquiry, Defendants discovered that Plaintiffs and their

Counsel, Robbins Geller, falsified virtually every single representation they made to this Court, to Boeing, and to Boeing's shareholders concerning not only Mr. Singh's position and responsibilities at Boeing, but also and, significantly, his very basis for knowledge concerning

Plaintiffs' allegations.

In short, Mr. Singh is not who Plaintiffs say he is, and there is no basis whatsoever for

the allegations attributed to him.

• Mr. Singh is not -- and never was -- a Boeing Senior Structural Analyst Engineer and Chief Engineer. He has never even been a Boeing Company employee. He never held the title of Boeing Senior Structural Analyst Engineer. He is not and never has been a Chief Engineer at Boeing. While Mr. Singh did briefly perform low-level engineering work for an outside contractor, he never had the responsibilities during his brief contract work for Boeing that Plaintiffs and their Counsel, Robbins Geller, have misled this Court and Boeing to believe.

• Mr. Singh is not and never was a member of a "Wing-Body Integration Team."

• Mr. Singh never worked on or had job responsibilities for the critical side-of-body joint of the 787 Dreamliner that is the subject of this lawsuit.

Mr. Singh did not report to Larry Hall, and Mr. Hall is not Vice President of a Wing- Body Integration Team. 2 Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 6 of 20 PageID #:1304

• Indeed, Mr. Singh has never even worked on the model of the airplane whose test results are at issue in this lawsuit.

• It was never part of Mr. Singh's job to have direct access to, or first-hand knowledge of, Boeing's 787 stress test files that memorialize the results of the failed tests.

• Indeed, for numerous reasons, detailed below, Mr. Singh did not and could never have had access as part of his job to the side-of-body joint testing data and analysis for the April and May 2009 tests.

Simply put, every single allegation made by Plaintiffs and Robbins Geller about who Mr.

Singh is, what responsibilities he had, what he worked on, and what he had access to as "part of his job" is demonstrably false. And Robbins Geller, if not also Plaintiffs themselves, knew or should have known it.

These fabrications misled Defendants and this Court, and these misrepresentations were

solely responsible for this case remaining alive. As the Court explained at the August 30 hearing, Plaintiffs' addition of four new paragraphs containing Mr. Singh's "confidential source"

allegations were the dispositive difference in the Court's denial of Defendants' second motion to

dismiss. (H'rg Tr. at 20:11-21:1 (Aug. 30 2010).) Once Plaintiffs expanded the CS allegations

to add the allegations referenced herein, the Court credited them, and denied Boeing's motion to

dismiss.

Someone -- Plaintiffs or their Counsel, Robbins Geller, or both -- has lied to this Court

and caused inestimable harm to Boeing and the individual Defendants, harm that will only be

compounded if this case is allowed to go forward on the basis of these fraudulent

misrepresentations. This Court's swift intervention is required to preserve the integrity of these

judicial proceedings. Boeing respectfully requests that this Court immediately strike the four

new paragraphs in the SAC concerning the CS allegations, reinstate its earlier order granting

Boeing's motion to dismiss, and take such other actions as the Court deems necessary to address

the fraud that has been perpetrated on this Court and Defendants. 3 Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 7 of 20 PageID #:1305

BACKGROUND

A. The Court's Reliance On The Confidential-Source Allegations As The Basis For Denying Boeing's Second Motion To Dismiss

Plaintiffs filed the SAC following this Court's May 26, 2010 dismissal of their complaint,

adding the four additional paragraphs at issue, which purport to elaborate on their CS's background and knowledge. (See SAC 11139-42.) The new allegations in these paragraphs

described the CS as a "former Boeing Senior Structural Analyst Engineer and Chief Engineer"

(SAC ¶ 139), who had worked on the "Wing Integration Team" and who "as part of [his] job" had "direct access to" and "first-hand knowledge of' the "Wing Tests files" from April and May

2009 (id. ¶J 139-42). In opposing Defendants' motion to dismiss, Plaintiffs argued that "The

SAC Pleads Direct Evidence of Scienter" because "[t]he new allegations are attributed to a CS with direct knowledge of the 787's wing testing and direct knowledge of emails sent to" Boeing

executives, emphasizing that "[tJhe CS's job responsibilities included stress and design review

of the 787 wing joints." (Plaintiffs Opposition to Defendants' Motion to Dismiss The Second

Amended Class Action Complaint at 6-8 ("P1. Opp.") (emphasis in original).)

Plaintiffs specifically claimed that paragraphs 139-42 cured the failure of the First

Amended Complaint ("FAC") to plead "individualized factual allegations regarding each

defendant's state of mind." (P1. Opp. at 6-11.) Plaintiffs contended that the CS's important role

at Boeing -- his senior engineering position -- distinguished this case from the Seventh Circuit's

decision in Higginbotham v. Baxter International, Inc., 495 F.3d 753, 757 (7th Cir. 2007), which

held that courts should steeply discount confidential-source allegations in light of the inherent

uncertainty over whether these sources are telling the truth. Plaintiffs asserted that, by contrast

"[h]ere.. . facts attributed to a CS are cogent because he was 'in a position to know at first hand

the facts' alleged." (P1. Opp. at 9.)

Ell Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 8 of 20 PageID #:1306

Taking as truthful the new allegations and accepting Plaintiffs' contention that the Cs , s

position deserved special weight, the Court held that "the added details in the [SAC] satisfy the

stringent pleading requirements" of the PSLRA. (August 10, 2010 Order.) In a word, these new

allegations saved the SAC from dismissal with prejudice.

In response to this Court's pointed questioning about their CS at the August 30, 2010

hearing, Plaintiffs' Counsel again distinguished the SAC from the complaint dismissed in

Higginbotham, stating: "we have gone into great detail about who this person is, what their basis

[is] for speaking." (H'rg Tr. at 11:8-9 (Aug. 30, 2010).) When asked directly by the Court,

Plaintiffs' Counsel had to concede that the CS actually "did not work at Boeing during the class

period" -- even though the SAC's allegations clearly leave the opposite impression -- but they

continued to represent that the source "worked at Boeing" and that "as part of his work, he was

given access to files. . . prepared during the class period, and those are the documents that he

saw." (Id. at 13:11-13, 15:16.) Plaintiffs' Counsel also reminded the Court that the CS's "direct

supervisor is named in the complaint, his place of work is named in the complaint, and his name

has been put in our initial disclosures." (Id. at 10:16-18.)

Relying on these representations by Robbins Geller and the SAC' s new allegations, this

Court ruled that the allegations here were sufficiently "detailed" to distinguish this case from

Higginbotham. (Id. at 21:16-23, 17:5.) "Given the[] additional allegations," the Court believed

the SAC passed the PSLRA's heightened pleading requirement. (Id. at 17-20, 20:19; see also id.

at 17:4-7 ("[T]hose just a few paragraphs are detailed, and I am looking at paragraph 139 on

page 45 and the paragraphs that follow to page 47, paragraph 142.").)

The Court then read those specific amended CS allegations into the record, explaining

that it had relied on those allegations in denying the motion to dismiss. (H'rg Tr. at 17:7-16,

5 Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 9 of 20 PageID #:1307

18:10-18.)' The Court determined that these allegations contained in paragiaphs 139-42 were

"very specific, and if I may use the word cogent," and that they "connect[ed]" the Plaintiffs'

"general allegations" with "what was happening internally" at Boeing. (Id. at 20:14-18.)

B. Once Informed Of The Identity Of The Confidential Source, Boeing Discovered That Every Single One Of Plaintiffs' Allegations On Which This Court Relied Is False

Throughout months of motion practice, Plaintiffs and their Counsel refused to divulge the identity of their CS. Although Counsel eventually admitted that the CS was on Plaintiffs' Rule

26(a)(1) initial disclosures, Defendants could not identify him from that list of 229 persons, because no Boeing engineer fit the description detailed in the CS allegations. Plaintiffs' Counsel finally offered at the August 30 hearing that "now that the motion to dismiss has been denied, we will turn over the name" to Defendants. (H'rg Tr. at 11:11-12.) Afterward, Plaintiffs' Counsel revealed that their confidential source is Mr. Bishnujee Singh.

Defendants thereupon looked into the bona fides of Plaintiffs' CS and discovered almost

immediately that none -- not one -- of the key allegations about Mr. Singh is true. To attest to the truth of what has been discovered, Defendants attach the sworn declarations of seven Boeing employees (including multiple Boeing managers who supervised Mr. Singh as a contract employee) and a declaration from an employee of Infotech Enterprises America, Inc.

1 The Court explained that it had relied on the following allegations about the CS: that the source "is a former Boeing senior structural analyst engineer and chief engineer who worked on the mid-body fuselage, wing integration team for the 787 program," (H'rg Tr. at 17:7-10); that the source's responsibilities included "stress and design review of the 787 wing joints, as well as performing finite element modeling analysis for other engineers and designers working on the 787 wing project," (id. at 17:11-14); that the confidential source "reported to Larry Hall, Boeing's vice president of the wing body integration team," (id. at 17:14-16); that the "wing integration team included Larry Hall, Terry Pham. . . , who reported directly to Larry Hall, and Mike [Denton], vice president of engineering for the 787 program, who reported directly to defendant Carson," (id. at 18:10-14); and that, "[a]s part of the confidential source's job, he had direct access to, as well as firsthand knowledge of, the contents of Boeing's 787 stress test files" (Id. at 17:16-18). no Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 10 of 20 PageID #:1308

("Infotech"), the outside contractor for which Mr. Singh actually worked for a while before he was fired. 2 As is starkly evident from the chart below, the allegations in the SAC attributed to

Mr. Singh are simply false and misleading fabrications. Number 1 Number 1 is False Bishnujee Singh "is a former A. Mr. Singh was never a Boeing employee. (Mustafa Deel. Boeing Senior Structural ¶J 4, 7; Rosman DecI. ¶J 4, 7; Meyer Dccl. ¶J 4, 7; Ramabhatt Analyst Engineer and Chief Dccl. ¶J 2, 10; Ayson Dccl. ¶J 3, 8.) Engineer" (SAC ¶ 139) B. From September 2009 to January 2010, Mr. Singh was employed by Infotech, an outside contractor that provided engineering services to Boeing. (Mustafa Decl. ¶J 4, 7; Rosman Dccl. ¶IJ 4, 7; Ramabhatt Decl. ¶IJ 2, 10, 11.)

C. Mr. Singh was never a "Senior Structural Analyst Engineer" at Boeing. (Mustafa Deci. ¶11 7, 8; Rosman Dccl. ¶f 7, 8; Ayson Deel. ¶ 8.) He was never a Boeing "Chief Engineer" (Mustafa Decl. ¶J 7, 8; Rosman Decl. TT 7, 8; Meyer Decl. ¶J 7, 8; Hall Decl. ¶ 7; Ayson Decl. ¶ 8), and he never performed any of the functions of persons who held any of those positions. (Mustafa Decl. ¶ 8; Rosman Decl. ¶ 8; Ayson Decl. ¶ 8.)

D. "Chief Engineer" is a title "reserved for executive-level positions" at Boeing. (Mustafa Decl. ¶ 8; Rosman Decl. ¶ 8; Meyer Dccl. If 8: Hall Dee!. ¶ 7.

Number 2 Number 2 is False Bishnujee Singh "worked on A. There was no "Mid-Body Fuselage/Wing Integration Team." the Mid-Body (Mustafa Decl. ¶ 9; Rosman Decl. ¶ 9; Meyer Decl. ¶ 9.) Fuselage/Wing Integration Team for the 787 program" B. Mr. Singh was not part of the Wing Team or any "Wing (SAC ¶ 139) Integration Team," or the Side-of-Body Team for the 787. (Mustafa Decl. ¶ 9; Rosman Dccl. ¶ 9; Ramabhatt Deel. ¶ 11.)

C. Mr. Singh worked on a separate Mid-Body Integration Team that had no involvement with the wing joint or side-of-body issues. (Mustafa Dccl. TT 5, 9-11, 19; Meyer Dccl. ¶J 5, 9-11, 12; Ramabhatt Dccl. ¶J 5, 12.) Mr. Singh never worked on the wing joint or side-of-body issues that are the subject of the comnlaint or that caused any delay in the 787-8's first flight.

2 Defendants have submitted the Declarations of Karim Mustafa, Richard Rosman, Juli Meyer, Michael A. O'Grady, Michael Dean Petro, Lawrence Hall, and Antonette Ayson, all of Boeing, as well as the Declaration of Gurudath Ramabhatt of Infotech. 7 Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 11 of 20 PageID #:1309

(Mustafa Dee!. ¶J 5, 9, 11, 14; Ramabhatt Deel. ¶J 5, 11; O'Grady Dee!. ¶ 5.)

D. Mr. Singh did not work on the 787-8 model (the plane involved in this lawsuit) at all; in his short time working for Infotech (and at Boeing) in 2009-10 he worked only on the 787- 9 model. (MustafaDecl. ¶J 13, 14; Meyer Dee!. ¶J 11, 12; Ramabhatt Decl. It 11.)

Key Allegation Number 3 Allegation Number 3 is False Bishnujee Singh's "job A. Mr. Singh's work "did not involve the wing joints... [and responsibilities included he] did not perform analyses for the Wing Team" or any "wing stress and design review of project." (Mustafa Dccl. ¶ 14; see also Rosman Dee!. ¶J 5, 9, the 787 wing joints" (SAC 11, 14; Meyer Dee!. ¶J 9, 11; Ramabhatt Dee!. ¶f 5, 11.) "Mr. ¶ 139) Singh had no responsibilities for either the 787 wing or wing joints." (Mustafa Decl. ¶ 14; see also Rosman Dee!. TT 5, 11, 14; Meyer Dccl. ¶IJ 4, 5, 11; Ramabhatt Dee!. ¶J 5, 11.)

B. Mr. Singh' s "only responsibilities" were "for the Mid-Body Integration Team," (Mustafa Dccl. ¶ 5), which "was not involved in any way in examining the side-of-body joint" that is the subject of this lawsuit. (Mustafa Dee!. ¶ 11; see also Rosman Dee!. ¶J 5, 9, 11, 14; Ramabhatt Dee!. ¶J 5, 11.)

Key Allegation Number 4 Allegation Number 4 is False Bishnujee Singh "reported to A. Mr. Singh did not report to Larry Hall. (Hall Dee!. ¶ 5; Larry Hall, Boeing's Vice Mustafa Dee!. ¶ 15; Rosman Deel. ¶ 15; Meyer Dee!. ¶ 13.) President of the Wing-Body Integration Team" (SAC B. Larry Hall is not and has never been "Vice President of the ¶ 139) Wing-Body Integration Team" or even a member of any such team. (Hall Decl. ¶ 5; Mustafa Dee!. ¶ 15; Rosman Dee!. ¶ 15.) Mr. Hall is also not a Vice President. (Hall Dee!. ¶ 5.)

C. Indeed, Larry Hall has "never met Mr. Singh and do[es] not know who he is." (Hall Dee!. ¶ 5.)

Number 5 Number 5 is False "As part of [Bishnujee A. Mr. Singh did not "as part of [his] job" have access to the Singh's] job, he had direct side-of-body joint stress test data or results from the April and access to, as well as first- May 2009 testing concerning the side-of-body issue that is the hand knowledge of the subject of this lawsuit. (Mustafa Dccl. ¶J 12, 16-19; Rosman contents of, Boeing's 787 Dee!. TT 12, 16-19; Meyer Decl. ¶J 10, 14-17; Ramabhatt Dee!. stress test files that ¶J 8, 12; O'Grady Decl. ¶IJ 5-8.) memorialize the results of the failed 787 wing limit load B. The relevant test files were stored by the Side-of-Body Team test and subsequent re-test." on servers, access to which "is restricted" and requires Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 12 of 20 PageID #:1310

(SAC ¶ 139) "permission from an authorized Boeing manager." (Petro Dee!. TT 3, 4; see also O'Grady Dee!. ¶ 7.) Mr. Singh was not on the "list of all individuals who [were] granted access to those Side- of-Body Team servers." (Petro Deel. TT 6, 7.)

C. The servers to which Mr. Singh had access did "not include any of the six Side-of-Body Team servers." (Petro Dec!. ¶ 7.)

Number 6 Allegation Number 6 is False "According to [Bishnujee A. Larry Hall is "not a member of a 'Wing Integration Team' Singh], the Wing Integration and [is] not assigned to the 787 program." (Hall Dee!. ¶ 6.) Team members included Larry Hall, Terry Pham (who B. Mike Denton is "not a member of a 'Wing Integration reported directly to Larry Team" and "was not assigned to the 787 program." (Id.) Hall) and Mike Denton (Vice President of Engineering for C. Terri Pham did not work on the 787 program; during the the 787 Program, who relevant period, she "work[ed] directly in support of the 747-8 reported directly to defendant program", which is completely independent from the 787 Carson)." (SAC ¶ 140)

ARGUMENT

I. THIS COURT SHOULD DISMISS THE SAC WITH PREJUDICE

The false and misleading allegations added by Plaintiffs and Robbins Geller to the SAC

in paragraphs 139-42 have directly misled this Court and Boeing, constitute an ongoing fraud

upon this Court and Boeing, and threaten to cause a serious miscarriage of justice in this ease.

The allegations concerning Mr. Singh's role, responsibilities, and basis for knowledge about the

information attributed to him have been fundamentally misrepresented: Mr. Singh is not who

Plaintiffs say he is, and he could never have known the allegedly first-hand information

attributed to him. Yet these fraudulent allegations formed the basis for this Court's ruling

denying Defendants' motion to dismiss. Whether it is Plaintiffs and/or Robbins Geller who are

responsible for misleading this Court and Boeing, the result is an affront to this Court and a

flagrant abuse of the judicial system. A plaintiff cannot satisfy the demanding burdens of the

PSLRA by lying about the information to which a CS has access. Allowing discovery and this Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 13 of 20 PageID #:1311

case to proceed on this basis would reward Plaintiffs for defrauding the Court, making a mockery of the principles underlying the PSLRA and the rule of law. Paragraphs 139-42 of the SAC should be stricken by the Court and this entire case dismissed with prejudice.

A. This Court Has The Power To Strike Plaintiffs' Fraudulent Allegations And Dismiss This Case With Prejudice.

It is axiomatic that the Court has the power -- and in fact, the duty -- to rectify this fraud, by striking paragraphs 139-42 of the SAC and reinstating its original decision granting Boeing's motion to dismiss. See Fed. R. Civ. P. 12(f) (granting courts the power to strike allegations in a

complaint); Fed. R. Civ. P. 60(b) (granting courts the power to "relieve a party. . . from a final judgment, order, or proceeding" due to "fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct"); see also Fed. R. Civ. P. 11 (c)(3) (granting courts the power sua sponte to issue litigation sanctions). Indeed, "[n]o matter who allegedly commits a fraud on

the court - a party, an attorney, or a non-party witness -- the court has the inherent power to

conduct proceedings to investigate that allegation and, if it is proven, to punish that conduct."

Mañez v. Bridgestone Firestone N Am. Tire, LLC, 533 F.3d 578, 585 (7th Cir. 2008).

Here, any result other than dismissal would turn the PSLRA on its head. That statute

imposes heightened pleading requirements precisely to curb "nuisance filings, targeting of deep-

pocket defendants, vexatious discovery requests and manipulation by class action lawyers."

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 320 (2007). This case goes well

beyond mere "manipulation"; it constitutes an intolerable abuse of the judicial system. And it is

all the worse because these same Plaintiffs' lawyers are no strangers to questionable

confidential-source allegations, having previously shown themselves fully willing to engage in

misconduct of this very form. In fact, only months ago, the Second Circuit affirmed the

dismissal of a complaint filed by the Robbins Geller firm, finding that the allegations attributed

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to confidential sources there did not meet Rule il's requirement that there be a good faith basis

for pleadings. See Campo v. Sears Holdings Corp., 371 Fed. Appx. 212, 216 & n.4 (2d Cir.

2010). The same fate is even more appropriate here, where Robbins Geller's false

representations to the Court were the only thing that saved the SAC from dismissal and are so far

from the truth as to appear deliberately fabricated.

B. Plaintiffs' Confidential-Source Allegations Are False.

The critical allegations, set forth below, are -- and were -- false.

• Mr. Singh is "a former Boeing Senior Structural Analyst Engineer and Chief Engineer." ¶ 139.

This allegation is false: (1) Mr. Singh worked for Infotech, an outside service provider, and

has never been a Boeing employee. (Mustafa Decl. ¶J 4, 7; Rosman Decl. ¶J 4, 7; Ramabhatt

Decl. ¶J 2, 10, 11; Ayson Decl. ¶J 3, 8.) (2) Mr. Singh did not have the title "Boeing Senior

Structural Analyst Engineer." (Mustafa Deci. ¶IJ 7, 8; Meyer Decl. ¶J 7, 8; Ayson Decl. ¶ 8.)

(3) Nor was Mr. Singh a Boeing "Chief Engineer." (Mustafa Deci. TT 7, 8; Rosman Decl. ¶J 7,

8; Hall Decl. ¶ 7; Ayson Dccl. ¶ 8.) (4) Job titles including "Senior" and "Chief' are reserved

for senior engineering positions at Boeing, which Mr. Singh did not occupy. (Mustafa Deci. ¶ 8;

Rosman Decl. ¶ 8; Hall Decl. ¶ 7.) Instead, Mr. Singh was a low-level engineer providing

contract engineering services -- a "worker bee." (Mustafa Deci. ¶J 4, 8.)

• Mr. Singh "worked on the Mid-Body Fuselage/Wing Integration Team." ¶ 139.

This allegation is false: (1) Mr. Singh worked for Infotech on projects for the Mid-Body

Integration Team, which did not have responsibility for the wing, the wing joint, or the side-of-

body joint. (Mustafa Decl. ¶IJ 5, 9-11, 19; Rosman Decl. ¶J 5, 9-11, 19; Ramabhatt Decl. ¶J 5,

11, 12; O'Grady Decl. ¶ 5.) (2) There is no team at Boeing known as the "Mid-Body

Fuselage/Wing Integration Team." (Mustafa Decl. ¶ 9; Meyer Deci. ¶ 9.) (3) There is a Side-of-

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Body Team, but Mr. Singh was not on it; no one from Infotech was on that team, and the Stress

Manager for the Side-of-Body Team does not even know Mr. Singh. (Mustafa Dee!. ¶ 9; Meyer

Deel. ¶ 9; Ramabhatt Deel. TT 5, 11; O'Grady Dee!. ¶ 5.)

Mr. Singh "reported to Larry Hall, Boeing's Vice President of the Wing-Body Integration Team." ¶ 139.

This allegation is false: (1) Mr. Singh reported to Mr. Mustafa on the Mid-Body Integration

Team. (Mustafa Deci. ¶IJ 5, 15; Rosman Deel. ¶J 5, 15.) (2) Larry Hall is not on the 787 "Wing-

Body Integration Team," and is not its Vice President. (Hall Deel. ¶ 5.) (3) Larry Hall is not

assigned to any team on the 787 program. (Id. ¶J 2, 6, 8.) (4) Larry Hall is not a Vice President

of any team at Boeing. (Id. ¶ 5.) (5) Mr. Singh did not report to Larry Hall, who does not even

know who Mr. Singh is. (Id.)

• "[T]he Wing Integration Team members included Larry Hall, Terry Pham (who reported directly to Larry Hall) and Mike Denton (Vice President of Engineering for the 787 Program, who reported directly to defendant Carson)." ¶ 140.

This allegation is false: (1) Larry Hall is not a member of a Wing Integration Team and is

not assigned to the 787 program. (Hall Dee!. ¶J 2, 5, 6, 8.) (2) Terri Pham was not on a Wing

Integration Team and during the time period of the relevant allegations did not even work on the

787 program. (Id. ¶ 6.) (3) Mike Denton is not part of a Wing Integration Team, and during the

time period at issue was not assigned to the 787 program. (Id. ¶ 6.)

Mr. Singh's "job responsibilities included stress and design review of the 787 wing joints, as well as performing Finite Element Modeling analyses for other engineers and designs on the 787 wing project." ¶ 139.

This allegation is false: (1) Mr. Singh did not work on the 787 wing joint or side-of-body

joint, and instead worked on a different portion of the 787-9 plane under the direction of the

Mid-Body Integration Team. (Mustafa Dee!. ¶J 5, 9, 11, 14; Meyer Dccl. ¶J 4, 5, 11; Ramabhatt

Dee!. TT 5, 11.) (2) Mr. Singh did not perform analyses for the 787-8 or 787-9 wing teams or

12 Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 16 of 20 PageID #:1314

any "wing project." (Mustafa Decl. ¶J 9, 11, 14; Rosman Deci. IT 5, 9, 11, 14; Ramabhatt Decl.

¶J 5, 11.) (3) Mr. Singh's work did not involve the 787-8 model that was the subject of the wing testing mentioned in this lawsuit. Mr. Singh only worked on the 787-9 model, which is a completely different plane. (Mustafa Decl. ¶J 13, 14; Ramabhatt Dccl. ¶ 11.)

• "As part of [Mr. Singh's] job, he had direct access to, as well as first-hand knowledge of the contents of, Boeing's 787 stress test files that memorialize the results of the failed 787 wing limit load test and subsequent re-test, which transpired on April 21, 2009 and May 17, 2009, respectively (individually referred to as a 'Wing Test' file and collectively as the 'Wing Tests' files)." ¶ 139.

This allegation is false: (1) It was not "part of [Mr. Singh's] job" to have access to information concerning the side-of-body joint issue, because the tasks to which he was assigned had nothing to do with any side-of-body joint stress test data, results, or analysis. (Mustafa Dee!.

¶J 12, 16-19; Rosman Decl. TT 12, 16-19; Ramabhatt Dccl. ¶J 8, 12.) (2) It is unsurprising that Mr. Singh did not have access to this information. His supervisors on the Mid-Body Integration

Team did not have access to this information because they did not need it for their jobs.

(Mustafa Decl. ¶f 12, 16, 18; Rosman Dccl. ¶J 12, 16, 18; Meyer Decl. TT 10, 14, 16.) (3) The

Side-of-Body Team worked in a secured area to which Mr. Singh did not have access. (O'Grady

Deci. ¶ 8; Mustafa Dec!. ¶ 9; Rosman Dccl. ¶ 9.) (4) The April and May 2009 results on the side-of-body joint stress tests were housed on the Side-of-Body Team servers. Mr. Singh did not have access to these servers. To obtain access, he would have needed to have obtained approval

from an authorized manager. There is no record of Mr. Singh having sought such approval, and he does not appear on the list of persons who had access to the Side-of-Body Team servers.

(Petro Dccl. ¶J 3-7; O'Grady Dccl. ¶J 7-8; Mustafa Deci. ¶IJ 17-19; Ramabhatt Deci. ¶IJ 8, 9, 12.) Other assertions Plaintiffs made are similarly false. For example, in opposing the motion

to dismiss the SAC, Plaintiffs claimed that "[t]he pre-May 3 [2009] c-mails [concerning the

13 Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 17 of 20 PageID #:1315

results of the April testing] were sent by members of the Wing Integration Team—Larry Hall,

Terry Pham and Mike Denton—to defendants McNerney and Carson." (P1. Opp. at 4, 7.) That

cannot possibly be true; Larry Hall is not assigned to the 787 program, was never a member of

the Wing Integration Team, and has never worked on the side-of-body issue. (Hall Decl. ¶J 5, 6,

8.) Similarly, neither Terri Pham nor Mike Denton was on any Wing Integration Team, and

neither was assigned to the 787 program or side-of-body issue during the relevant time period.

(Id. ¶ 6.) These three individuals thus could not have been the source of "pre-May 3 emails" to

senior management concerning the results of the April testing on the side-of-body joint.

C. The Court Should Strike The CS Allegations And Dismiss This Case.

It is clear that this Court's ruling was premised entirely upon false representations by

Plaintiffs and Plaintiffs' Counsel and that if the actual facts about the CS had been truthfully

pleaded, the SAC would have been dismissed, because Mr. Singh in fact was not "in a position

to know at first hand the facts to which" Plaintiffs claim he might testify. Makor Issues &

Rights, Ltd. v. Tellabs, Inc., 513 F.3d 702, 712 (7th Cir. 2008). It is inconceivable that the Court

would have denied Defendants' motion to dismiss had Plaintiffs and their Counsel truthfully

represented that their CS was a low-level engineer for a contractor to Boeing, who worked on

parts of the 787 that do not even involve the critical side-of-body joint, and who had no access to

any test results regarding the side-of-body joint as part of his job. These allegations would never

have survived application of Higginbotham. And Plaintiffs and their Counsel knew it.

This Court should enter judgment in Defendants' favor. The Court has already granted a

motion to dismiss the FAC. This Court found in May that the FAC, which was identical to the

SAC in all material respects except for the additional fraudulent CS paragraphs, failed to plead a

"compelling" or "cogent" theory of scienter under the PSLRA and granted Defendants' motion

to dismiss. (May 26, 2010 Order at 10.) The only substantive changes to the SAC are the new 14 Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 18 of 20 PageID #:1316

paragraphs 139-42, and the Court's denial of Defendants' motion to dismiss the SAC rested entirely on those paragraphs. Stripped of these allegations, the Complaint cannot survive reconsideration, and judgment pursuant to Fed. R. Civ. P. 12(c) should be entered by the Court.

D. Defendants Are Seeking Other Relief, As Well.

Defendants have prepared and intend to file a separate action in fraud against Plaintiffs and Robbins Geller. In addition, in compliance with Rule 11(c), Defendants have notified

Plaintiffs that paragraphs 139-42 of the SAC violate Rule li's requirement that counsel conduct a reasonable inquiry to ensure that "factual allegations have evidentiary support." Fed. R. Civ. P.

11 (b)(3). By signing the SAC, Plaintiffs' Counsel certified that they had conducted a reasonable inquiry and that the factual contentions in the SAC have evidentiary support. Id. Any inquiry at all -- even a cursory one -- would have revealed that the key facts alleged in paragraphs 139-42 are patently false. Accordingly, Defendants hereby notify the Court that they intend to move this

Court to impose sanctions upon Plaintiffs and Robbins Geller.

CONCLUSION

Defendants respectfully request that paragraphs 139-42 of the SAC be stricken, and that the Court enter judgment for Defendants on the pleadings. Dated: September 24, 2010 Respectfully submitted,

By: Is! Pravin B. Rao One of their attorneys

H. Rodgin Cohen (Pro Hac Vice Pending) Pravin B. Rao David B. Tulchin (Pro Hac Vice Pending) Patrick M. Collins Stephanie G. Wheeler (Pro Hac Vice Pending) Eric D. Brandfonbrener SULLIVAN & CROMWELL LLP PERKINS ColE LLP 125 Broad Street 131 South Dearborn Street New York, New York 10004-2498 Chicago, Illinois 60603-5559 Tel: (212) 558-4000 Tel: (312) 324-8400 Fax: (212) 558-3588 Fax: (312) 324-9400 Attorneys for Defendants

15 Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 19 of 20 PageID #:1317

CERTIFICATE OF SERVICE

I, Pravin B. Rao, one of the attorneys for Defendants, hereby certify that on September

24, 2010, true and correct copies of the following:

. DEFENDANTS' NOTICE OF MOTION

• DEFENDANTS' MOTION TO DISMISS WITH PREJUDICE ON THE BASIS OF FRAUDULENT MISREPRESENTATIONS BY PLAINTIFFS AND PLAINTIFFS' COUNSEL, ROBBINS GELLER

• DEFENDANTS' MEMORANDUM IN SUPPORT OF THEIR MOTION TO DISMISS WITH PREJUDICE ON THE BASIS OF FRAUDULENT MISREPRESENTATIONS BY PLAINTIFFS AND PLAINTIFFS' COUNSEL, ROBBINS GELLER were filed electronically with the Northern District of Illinois - Eastern Division. Notice of this filing has been sent by operation of the Court's electronic filing system to all parties indicated on the electronic filing receipt. Parties may access this filing through the Court's ECF system. A courtesy copy has also been sent via e-mail to the following counsel of record, and additional counsel noted below via overnight mail with courtesy copy via email:

Lori A. Fanning Thomas E. Egler Marvin A. Miller Shannon M. Matera MILLER LAW LLC Trig R. Smith 115 S. LaSalle Street ROBB[NS GELLER RUDMAN & DOWD Suite 2910 LLP Chicago, Illinois 60603 655 West Broadway Tel. (312) 332.3400 Suite 1900 Fax. (312) 676-2676 San Diego, California 92101-3301 lfanningmil1erlawllc.com Tel. (619) 231-1058 [email protected] Fax. (619) 231-7423 tomergrdlaw.com smaterargrdlaw.com trigsrgrdlaw.com Case: 1:09-cv-07143 Document #: 92 Filed: 09/24/10 Page 20 of 20 PageID #:1318

Deborah R. Gross Randi D. Bandrnan Robert P. Frutkin ROBBINS GELLER RUDMAN & DOWD LAW OFFICES OF BERNARD M. LLP GROSS, P.C. 52 Duane Street Wanamaker Building 7th Floor Suite 450 New York, New York 10007 100 Penn Square East [email protected] Philadelphia, Pennsylvania 19107 Tel. (215) 561-3600 Fax. (215) 561-3000 debbiebemardmgross.com rpfbernardmgross.com

ADDITIONAL COUNSEL OF RECORD:

Michael J. Vanoverbeke Thomas C. Michaud VANOVERBEKE MICHAUD & TIMMONY, P.C. 79 Alfred Street Detroit, Michigan 48201 Tel. (313) 578-1200 Fax. (313) 578-1201 [email protected] [email protected]

Is! Pravin B. Rao Pravin B. Rao