Case Brief
City of Livonia Employees Retirement System v. Boeing Company
Facts: a class action suit was filed for all people who purchased stock from Boeing Company from 4th to 22nd June 2009 (Meiners, Ringleb & Edwards, 2014). This was because the Boeing was alleged for being so optimistic on getting the new Dreamliner into its services. The technical problems were known after test flight which delayed the first official flight leading to a fall in the stock on 23rd June.
Procedural history: The suit claimed of false statements made by the executives about the day for the normal service of the plane committing securities fraud.
Issue: is false statement by the executives securities fraud?
Decision: Posner, Circuit Court reversed a class action suit, the defendants won.
Rationale: according to the 1995 Private Securities Litigation Reform, the landscape of federal securities fraud litigation is altered and the one complaining is required to prove actual knowledge of falsity not predictions (Meiners, Ringleb & Edwards, 2014). There is a need to particulate facts that gave rise to the defendant’s actions putting in to consideration not just a mere inference. The law does not allow to publicly disclose risks of mere failures since the future is full of uncertainties. Predictions are always based on probability and they result to either actual happening or failure (Meiners, Ringleb & Edwards, 2014). Therefore mistaken predictions should not be considered as frauds or else it will discourage predictions including well grounded ones. Also the actions of the suit were affecting the entire team in the Boeing Company for instance the employees who were not involved in making the statement. The suit was dismissed in favor of the defendants.
References
Meiners, R. E., Ringleb, A. H., & Edwards, F. L. (2014). The legal environment of business.
