Case: 1:19-cv-02394 Document #: 164 Filed: 06/30/20 Page 1 of 60 PageID #:3236 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION ) ) IN RE THE BOEING COMPANY ) Case No. 19-cv-2394 AIRCRAFT SECURITIES LITIGATION ) ) Hon. John J. Tharp, Jr. ) ) MEMORANDUM IN SUPPORT OF MOTION TO DISMISS John F. Hartmann, P.C. Joshua Z. Rabinovitz KIRKLAND & ELLIS LLP 300 N. LaSalle Chicago, IL 60654 (312) 862-2000 Craig S. Primis Matt Owen KIRKLAND & ELLIS LLP 1301 Pennsylvania Ave., N.W. Washington D.C. 20004 Counsel for Defendants Dated: June 30, 2020 Case: 1:19-cv-02394 Document #: 164 Filed: 06/30/20 Page 2 of 60 PageID #:3237 Table Of Contents Preliminary Statement ..................................................................................................................... 1 Facts Alleged In The Complaint And Subject To Judicial Notice .................................................. 4 Argument ........................................................................................................................................ 7 I. Plaintiffs Do Not Plead With Particularity A False Or Misleading Statement. .................. 8 A. Plaintiffs Do Not Plead With Particularity That Defendants’ Statements About The Design Of The 737 MAX Were False Or Misleading. ....................... 11 B. Plaintiffs Do Not Plead With Particularity That Defendants’ Statements About The Safety Of The 737 MAX Were False Or Misleading. ........................ 13 C. Plaintiffs Do Not Plead With Particularity That Defendants’ Statements About Information Provided To Pilots Were False Or Misleading. ..................... 20 D. Plaintiffs Do Not Plead With Particularity That Statements Regarding Boeing’s Progress Toward, Or The Potential Timing Of, The 737 MAX’s Return To Service Were False Or Misleading. ..................................................... 23 E. Plaintiffs Do Not Plead With Particularity That Defendants’ Statements About Boeing’s Financial And Operational Performance Were False Or Misleading............................................................................................................. 28 II. Plaintiffs Do Not Plead Facts Giving Rise To A “Strong Inference” Of Scienter. .......... 30 A. Plaintiffs Do Not Plead Facts Giving Rise To A Cogent Inference Of Scienter. ................................................................................................................ 30 1. Plaintiffs Do Not Adequately Plead That Boeing Acted With Scienter. .................................................................................................... 31 2. Plaintiffs Do Not Adequately Plead That The Individual Defendants Acted With Knowledge That Any Statements They Made Were False Or Misleading. ............................................................. 31 3. Plaintiffs’ Circumstantial Allegations Do Not Support A Cogent Inference Of Scienter. ............................................................................... 35 B. The Most Compelling Inference From Plaintiffs’ Allegations Is That Defendants Did Not Act With Scienter. ............................................................... 44 III. Plaintiffs Do Not Plead Loss Causation............................................................................ 46 Conclusion .................................................................................................................................... 50 i Case: 1:19-cv-02394 Document #: 164 Filed: 06/30/20 Page 3 of 60 PageID #:3238 Table Of Authorities Cases Alizadeh v. Tellabs, 2015 WL 557249 (N.D. Ill. Feb. 9, 2015) ...............................................................................28 Anderson v. Abbott Labs., 140 F. Supp. 2d 894 (N.D. Ill. 2001) .......................................................................................28 Arbitrage Event-Driven Fund v. Tribune Media, 2020 WL 60186 (N.D. Ill. Jan. 6, 2020) ..................................................................................26 Asher v. Baxter Int’l, 377 F.3d 727 (7th Cir. 2004) ...................................................................................................25 Bastian v. Petren, 892 F.2d 680 (7th Cir. 1990) ...................................................................................................46 Brody v. Transitional Hosps., 280 F.3d 997 (9th Cir. 2002) .....................................................................................................9 Carvelli v. Ocwen Financial Corp., 934 F.3d 1307 (11th Cir. 2019) ...............................................................................................24 Cause of Action v. Chicago Transit Auth., 815 F.3d 267 (7th Cir. 2016) .....................................................................................................5 In re Ceridian Sec. Litig., 542 F.3d 240 (8th Cir. 2008) ...................................................................................................44 City of Livonia v. Boeing, 711 F.3d 754 (7th Cir. 2013) ...................................................................................................32 City of Monroe v. Bridgestone, 399 F.3d 651 (6th Cir. 2005) .........................................................................................9, 16, 17 City of Westland v. MetLife, 129 F. Supp. 3d 48 (S.D.N.Y. 2015) ........................................................................................26 Davis v. SPSS, Inc., 385 F. Supp. 2d 697 (N.D. Ill. 2005) .......................................................................................26 Desai v. Gen. Growth Prop., 654 F. Supp. 2d 836 (N.D. Ill. 2009) .......................................................................................25 DiLeo v. Ernst & Young, 901 F.2d 624 (7th Cir. 1990) .........................................................................................8, 42, 45 ii Case: 1:19-cv-02394 Document #: 164 Filed: 06/30/20 Page 4 of 60 PageID #:3239 Dura Pharm. v. Broudo, 544 U.S. 336 (2005) .............................................................................................................8, 47 Fogel v. Vega, 759 F. App’x 18 (2d Cir. 2018) ...............................................................................................17 In re Ford Motor Company Securities Litigation, 381 F.3d 563 (6th Cir. 2004) .............................................................................................18, 28 Fulton Cty. Emps. v. MGIC Inv., 675 F.3d 1047 (7th Cir. 2012) .................................................................................................26 Gillis v. QRX Pharma, 197 F. Supp. 3d 557 (S.D.N.Y. 2016) ......................................................................................18 Glazer Capital v. Magistri, 549 F.3d 736 (9th Cir. 2008) ...................................................................................................36 Higginbotham v. Baxter Int’l, 495 F.3d 753 (7th Cir. 2007) .............................................................................................30, 39 Hirtenstein v. Cempra, Inc., 348 F. Supp. 3d 530 (M.D.N.C. 2018) ....................................................................................18 Institutional Inv’rs Grp. v. Avaya, Inc., 564 F.3d 242 (3d Cir. 2009).....................................................................................................26 Katyle v. Penn Nat. Gaming, 637 F.3d 462 (4th Cir. 2011) ...................................................................................................49 Makor Issues & Rights v. Tellabs, 513 F.3d 702 (7th Cir. 2008) .......................................................................................10, 30, 31 In re Maximus Sec. Litig., 2018 WL 4076359 (E.D. Va. Aug. 27, 2018) ..........................................................................50 McCready v. eBay, 453 F.3d 882 (7th Cir. 2006) ...................................................................................................37 McDonald v. Kinder-Morgan, 287 F.3d 992 (10th Cir. 2002) .................................................................................................28 In re Midway Games Sec. Litig., 332 F. Supp. 2d 1152 (N.D. Ill. 2004) .................................................................................9, 26 Nguyen v. Endologix, __ F.3d __, 2020 WL 3069776 (9th Cir. June 10, 2020) ...................................................32, 45 iii Case: 1:19-cv-02394 Document #: 164 Filed: 06/30/20 Page 5 of 60 PageID #:3240 Nozak v. Northern Dynasty Minerals, 804 F. App’x 732 (9th Cir. 2020) ............................................................................................42 Omnicare v. Laborers District Council, 575 U.S. 175 (2015) ...............................................................................9, 10, 13, 19, 22, 26, 29 In re Omnicom Sec. Litig., 597 F.3d 501 (2d Cir. 2010).....................................................................................................49 Phillips v. Scientific-Atl., 374 F.3d 1015 (11th Cir. 2004) .........................................................................................30, 32 Pugh v. Tribune Co., 521 F.3d 686 (7th Cir. 2008) .................................................................................30, 34, 39, 44 Rahman v. Kid Brands, 736 F.3d 237 (3d Cir. 2013).....................................................................................................41 Rosenzweig v. Azurix Corp., 332 F.3d 854 (5th Cir. 2003) ...................................................................................................24