In an important ruling that clarifies the standards governing class certification in securities cases, the U.S. Court of Appeals for the Fourth Circuit reversed class certification in a closely watched securities-fraud litigation against Boeing. The decision provides defendants with stronger grounds for challenging class certification under the Supreme Court’s ruling in Comcast v. Behrend, which requires that plaintiffs provide evidentiary proof of a methodology for calculating class-wide damages in a manner consistent with their liability theory.
In its July 20 decision, the Fourth Circuit reversed certification of a shareholder class in litigation arising from the January 2024 door-plug incident involving an Alaska Airlines flight. The team persuaded the court that plaintiffs had failed to both provide a class-wide damages methodology and define their liability theory, leaving the district court with “nothing to compare” under Comcast. The proposed class sought billions of dollars in alleged damages based on approximately forty alleged misstatements spanning more than three years, which made the adequacy of plaintiffs’ class-wide damages methodology central to class certification.
The Fourth Circuit emphasized that district courts must rigorously scrutinize plaintiffs’ damages methodology before certifying a class in securities actions, and its opinion is now the leading court-of-appeals decision applying Comcast to securities actions.
The S&C team representing Boeing includes Rick Pepperman, Jacob Cohen, Jason Barnes and Madeline Zuschnitt. Gibson, Dunn and Crutcher was S&C’s co-counsel on the appeal.
Read our memo analyzing the Fourth Circuit reversal: Fourth Circuit Reverses Class Certification in Securities-Fraud Case.