Herald file photo                                Spirit Aerosystems crews work on the nose section of a Boeing jet in 2007.

Herald file photo Spirit Aerosystems crews work on the nose section of a Boeing jet in 2007.

Appeals court upholds dismissal of Spirit AeroSystems case

Associated Press

WICHITA, Kan. — Shareholders failed to show that Spirit AeroSystems and four of its executives lied about three manufacturing contracts that resulted in $434.6 million in losses, a federal appeals court panel ruled Tuesday.

Upholding a lower court decision, the 10th U.S. Circuit Court of Appeals ruled Tuesday that the investors behind a class-action lawsuit failed to show the aircraft parts maker or its executives made any material misrepresentations or omissions.

The lawsuit followed an October 2012 announcement that the Wichita company recorded $434.6 million forward losses on the three contracts at issue in the appeal. U.S. District Judge Eric Melgren threw out the lawsuit last year before it got to trial.

In addition to the Spirit, the executives named as defendants in the lawsuit are Jeffrey Turner, Spirit’s former chief executive officer Philip Anderson, the company’s chief financial officer Alexander Kummant, senior vice-president of Oklahoma operations and Terry George, vice-president overseeing the Boeing 787 project.

The class-action lawsuit was brought by stockholder Wayne Anderson as the lead plaintiff, along with the International Association of Machinists and Aerospace Workers, among others.

Spirit AeroSystems agreed to supply parts for three types of aircraft manufactured by Gulfstream Aerospace Corp. and The Boeing Co., specifically the Gulfstream G280 and G60, and the Boeing 787. Each project had production delays and cost overruns, which Spirit periodically publicly reported. Spirit acknowledged the risks in these reports, but expressed confidence in its ability to meet production deadlines and break even on the projects.

But on Oct. 25, 2012, Spirit announced it expected to lose hundreds of millions of dollars, and its stock price dropped 30 percent.

“The size of the loss does not suggest that the four executives knew or recklessly disregarded the risks that Spirit was eventually going to lose money on the three projects,” the appeals court panel said.

Justice Carlos Lucero partly dissented with majority opinion when it came to statements pertaining to the 787 program. He concluded that two executives likely had actual knowledge of the cost overruns and had “intentionally lied to investors about the status of the 787 project,” saying that part of the case should have been allowed to go to trial.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Image from Erickson Furniture website
From couch to coffee table — Local favorites await

Style your space with the county’s top picks for furniture and flair.

Nichole Webber: Drawing up plays for athletes and politics

The communications director for the city of Everett believes leadership is rooted in honesty, integrity and selfless commitment to others.

2025 Emerging Leader DeLon Lewis (Olivia Vanni / The Herald)
DeLon Lewis: Helping students succeed

Program specialist for Everett Community College believes leadership is about building bridges.

2025 Emerging Leader Natalie Given (Olivia Vanni / The Herald)
Natalie Given: Building trust and communicating concerns

Everett Police Department’s Public Information Officer builds relationship and better communication.

2025 Emerging Leader Scott Hulme (Olivia Vanni / The Herald)
Scott Hulme: Standing up for downtown

Business development manager for the Downtown Everett Association brings property owners, tenants and city leaders together.

2025 Emerging Leader Anthony Hawley (Olivia Vanni / The Herald)
Anthony Hawley: Creating friendships and filling pantries

Since 2021, Hawley has increased donations to Lake Stevens Community Food Bank through fundraising and building donor relationships.

2025 Emerging Leader Rick Flores (Olivia Vanni / The Herald)
Rick Flores: Learning lessons from marching band

Directs the Mathematics, Engineering, Science Achievement program at WSU Everett helps underrepresented students with tutoring, specialized courses, mentorship and support networks.

2025 Emerging Leader Melinda Cervantes (Olivia Vanni / The Herald)
Melinda Cervantes: Making sure every voice is heard

Prolific volunteer facilitates connections between Spanish-speaking public representatives and community members.

2025 Emerging Leader Megan Kemmett (Olivia Vanni / The Herald)
Megan Kemmett: Seeking solutions to any problem or obstacle

Executive director of Snohomish Community Food Bank overcomes obstacles to keep people fed.

2025 Emerging Leader Kellie Lewis (Olivia Vanni / The Herald)
Kellie Lewis: Bringing community helpers together

Edmonds Food Bank’s marketing and communications director fosters connections to help others.

2025 Emerging Leader Christina Strand (Olivia Vanni / The Herald)
Christina Strand: Helping people on the move

Community engagement specialist believes biking, walking and public transit can have a positive impact.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.