Boeing Ruling Tightens Damages Model Requirements for Shareholder Actions

The Fourth Circuit's July 20 decision in Boeing has implications for class certification in shareholder actions alleging violations of SEC Rule 10b-5 under Section 10(b) of the Securities Exchange Act of 1934.

In Comcast Corp. v. Behrend (2013), the Supreme Court established a standard for evaluating class-wide damages models, requiring plaintiffs to demonstrate two key elements: class-wide measurability and consistency with liability theory.

The Fourth Circuit in Boeing vacated class certification because the plaintiffs had not provided a sufficiently specific, case-linked damages methodology at the class certification stage. The court found that the expert's approach fell short of what Comcast requires, noting that a list of possible methodologies is not a methodology.

For plaintiffs in shareholder class actions, the Boeing decision emphasizes the importance of presenting a detailed damages model at the class certification stage, including identifying the specific inflation-measurement approach and explaining how the model will evaluate price impact and confounding information.