In Re The Boeing Co. Derivative Litigation

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN RE THE BOEING CO. ) Consol. C.A. No. 2024-1210-MTZ DERIVATIVE LITIGATION ) MEMORANDUM OPINION Date Submitted: May 22, 2026 Date Decided: August 13, 2026 Derrick B. Farrell, Matthew L. Miller, Robert B. Lackey, BLEICHMAR FONTI AND AULD LLP, Wilmington, Delaware; Javier Bleichmar, Joseph A. Fonti, BLEICHMAR FONTI AND AULD LLP, New York, New York; Lesley E. Weaver, STRANCH, JENNINGS & GARVEY, PLLC, Oakland, California; Christine M. Mackintosh, Kelly L. Tucker, Vivek Upadhya, GRANT & EISENHOFER P.A, Wilmington, Delaware, Attorneys for Plaintiffs Ohio Public Employees Retirement System and State Teachers Retirement System of Ohio. Justin O. Reliford, Elizabeth K. Dragovich, SCOTT+SCOTT ATTORNEYS AT LAW LLP, Wilmington, Delaware; Donald A. Broggi, Jing-Li Yu, SCOTT+SCOTT ATTORNEYS AT LAW LLP, New York, New York; Ora L. Lupear. Maxwell R. Huffman, SCOTT+SCOTT ATTORNEYS AT LAW LLP, San Diego, California, Attorneys for Plaintiff Oklahoma Firefighters Pension and Retirement System. Kyle H. Lachmund, Elizabeth J. Freud, Clayton B. Faller, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Sharon L. Nelles, David M.J. Rein, Leonid Traps, SULLIVAN & CROMWELL LLP, New York, New York, Attorneys for Defendants Robert A. Bradway, David L. Calhoun, Lynne M. Doughtie, David L. Gitlin, Lynn J. Good, Stayce D. Harris, Akhil Johri, David L. Joyce, Lawrence W. Kellner, Steven M. Mollenkopf, John M. Richardson, Sabrina Soussan, Ronald A. Williams, Douglas Ackerman, Uma M. Amuluru, Edwin J. Clark, Stanley Deal, Michael Delaney, Mark C. Fava, Thomas Galantowicz, Darrin Hostetler, Elizabeth Lund, Stephanie Pope, Scott A. Stocker, and Brian J. West, and Nominal Defendant The Boeing Company. ZURN, Vice Chancellor.1 1 Sitting by designation under Del. Const. art. IV, § 13(2). Docket item (“D.I.”) 155.  The Boeing Company (“Boeing” or the “Company”) is among “the world’s largest manufacturers of commercial aircraft.”2 “More than 10,000 Boeing commercial jetliners are currently in service worldwide.”3 Those planes were built by a global workforce of over 150,000 Boeing employees.4 After two airplane crashes in 2018 and 2019, Boeing’s safety standards and board oversight of safety were questioned. Boeing came to agreements with aggrieved regulators and stockholders by which Boeing made hefty payments and improvements in manufacturing, safety, and board oversight. But Boeing would suffer another spectacular mechanical failure. In January 2024, a Boeing jet’s door plug blew off at 15,000 feet. It appears undisputed the incident was caused by poor manufacturing. Regulators demanded fines, and stockholders came back to this Court to hold Boeing’s board accountable, complaining of more oversight failures. The plaintiffs have failed to plead any source of oversight liability that would compromise Boeing’s directors’ ability to impartially consider a demand for derivative litigation. The stockholders themselves tell a story of a board that was 2 D.I. 87 [hereinafter “Am. Compl.”] ¶ 74. 3 Id. ¶ 18. 4 The Boeing Co., Annual Report (Form 10-K) at 2 (Jan. 27, 2023); see Am. Compl. ¶ 1 (defining the relevant time period as “the period from at least 2021 through February 5, 2025”). attentive to safety, including the risks inherent in running a large manufacturing company making complicated machines with a post-COVID workforce. The board received copious reporting on numerous manufacturing and compliance risks, as well as management’s ongoing efforts to reduce those risks. None of that reporting put the board on notice of ongoing violations of law or a risk of serious corporate trauma that triggered a duty to act. Much of the reporting had nothing to do with the causes of the door plug blowout or subsequent regulatory costs. Delaware law does not hold corporate fiduciaries liable merely because a general risk materialized. In the absence of a bad faith dereliction of duty upon seeing a red flag, the defendants’ motion to dismiss is granted. I. BACKGROUND5 5 The facts are drawn from the operative amended complaint, the documents integral to it, and those incorporated by reference. Am. Compl.; see Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 320 (Del. 2004). Further, “[t]he court may take judicial notice of facts publicly available in filings with the SEC.” See Omnicare, Inc. v. NCS Healthcare, Inc., 809 A.2d 1163, 1168 n.3 (Del. Ch. 2002). Citations in the form of “Defs.’ Ex. —” refer to the exhibits in support of Defendants’ Motion to Dismiss, available at D.I. 95 through D.I. 129 and D.I. 139. Before filing this action, Plaintiffs pursued and received books and records pursuant to 8 Del. C. § 220. The Amended Complaint cites many of those books and records. The parties do not contest that under the incorporation by reference doctrine, I may consider those documents and Defendants’ exhibits in support of the Motion to determine whether the Amended Complaint has accurately referenced their contents in support of its claims and in pleading demand futility. Reiter ex rel. Cap. One Fin. Corp. v. Fairbank, 2016 WL 6081823, at *5–6 (Del. Ch. Oct. 18, 2016). 2  Plaintiffs Oklahoma Firefighters Pension and Retirement System, Ohio Public Employees Retirement System, and State Teachers Retirement System of Ohio (“Plaintiffs”) are Boeing stockholders.6 They seek to bring this action derivatively against twenty-five current and former Boeing directors and officers (“Defendants”).7 A. Boeing Recommits To Safety After The 737 MAX Crashes. In 2018 and 2019, two separate Boeing 737 MAX crashes took 346 lives.8 The tragedies inspired multiple investigations and proceedings in multiple arenas.9 Regulatory authorities assessed civil and criminal penalties,10 and stockholders turned to this Court to hold Boeing’s fiduciaries accountable for the resulting corporate trauma.11 In January 2021, Boeing entered into a deferred prosecution agreement (“DPA”) with the Department of Justice (“DOJ”) to resolve a criminal charge related to the Federal Aviation Administration’s (“FAA”) evaluation of Boeing’s 737 MAX 6 Am. Compl. ¶¶ 71–73. 7 Id. ¶¶ 75–109. 8 Id. ¶ 155. 9 Id. ¶¶ 156, 189. 10 See, e.g., id. ¶¶ 174, 185. 11 See In re Boeing Co. Deriv. Litig. (“Boeing I”), 2021 WL 4059934, at *20 (Del. Ch. Sept. 7, 2021). 3 aircraft.12 In exchange, Boeing agreed to pay a $243.6 million criminal monetary penalty, make over $2 billion in compensation payments, and implement a host of compliance obligations designed to prevent violations of U.S. fraud laws.13 Those obligations required Boeing to “foster a culture of ethics and compliance with the law in its day-to-day operations,” implement controls concerning airworthiness certifications and manufacturing records, and adjust its compliance program based on periodic risk assessments.14 In May, Boeing entered into a settlement with the FAA to resolve three open cases involving supplier oversight problems.15 Boeing agreed to pay an approximately $27 million civil penalty, “which could be reduced to $17 million if Boeing completed certain corrective actions.”16 Those corrective actions entailed “enhanced oversight of parts from suppliers ‘shipped at risk’” to ensure their safety for installation and operation.17 12 Am. Compl. ¶¶ 172–79; Am. Compl. Ex. A [hereinafter “DPA”]. 13 DPA ¶¶ 10, 12–13, 21–23. 14 Am. Compl. Ex. B [hereinafter “Plea Agreement”] at Attachment A-1 ¶ 6; see also DPA at Attachment C. 15 Am. Compl. ¶ 185. 16 Id. 17 Id. ¶ 186. 4  Boeing stockholders also sued the board for bad faith oversight failures.18 In November, the parties to that case executed a settlement agreement, which this Court approved in March 2022.19 It called for a $237.5 million payment to the Company and sweeping corporate governance reforms.20 Boeing created an independent board Aerospace Safety Committee to oversee the safety of Boeing’s aerospace products and services; created a Product and Services Safety Organization that reports to Boeing’s Chief Engineer and the Aerospace Safety Committee; imposed substantial Board and Aerospace Safety Committee reporting requirements; committed to ensuring that at least three directors have “knowledge, experience, and/or expertise with aviation/aerospace, engineering, and/or product safety oversight”; and separated the CEO and Board Chair positions.21 B. Boeing’s Corporate Governance And Oversight Of Airplane Safety And Quality As of the filing of Plaintiffs’ original complaint, Boeing was managed by a twelve-member board of directors (the “Board”).22 During the relevant time, the 18 See Boeing I, 2021 WL 4059934, at *1. 19 Am. Compl. ¶¶ 199–202; Defs.’ Ex. 1. 20 Defs.’ Ex. 1 ¶¶ 20–21; see also In re The Boeing Co. Deriv. Litig., C.A. No. 2019-0907- MTZ, at D.I. 193 Ex. A. 21 Defs.’ Ex. 1 ¶¶ U, W, EE. 22 Am. Compl. ¶ 75. 5 Board met at least bimonthly.23 Airplane safety was discussed at every meeting.24 At each Board meeting, management presented a Boeing Commercial Airplanes (“BCA”) Update reporting on safety and quality risks related to BCA’s operational performance and production targets.25 Twice a year, the Chief Aerospace Safety Officer presented a Global Aerospace Safety Update reporting on safety initiatives.26 The Board had two committees that oversaw compliance risks pertinent to airplane safety and quality.27 The Aerospace Safety Committee was responsible for oversight of “the safe design, development, manufacture, production, operation, maintenance, and delivery of the Company’s aerospace products and services.”28 At all relevant times, it comprised independent directors with extensive engineering, manufacturing, aerospace, aviation, or safety expertise.29 The Aerospace Safety Committee met at least twenty-three times between January 2022 and July 2024.30 23 See Defs.’ Exs. 122–135. 24 Id. 25 See, e.g., Am. Compl. ¶ 465(g) (“A June 27, 2023 BCA Update . . . to the Board disclosed various Spirit rework issues.”); id. ¶ 519(d) (referencing a June 27, 2023 BCA Update “explaining that the ‘[s]upply chain [was] driving traveled work’ for the 787 program”). 26 See, e.g., Defs.’ Ex. 88 at -7313; Defs.’ Ex. 89 at -6400; Defs.’ Ex. 90 at -6795; Defs.’ Ex. 91 at 7555; Defs.’ Ex. 92 at -8305. 27 See, e.g., Am. Compl. ¶¶ 582, 597. 28 Defs.’ Ex. 1 ¶ U; see Am. Compl. ¶ 200. 29 See The Boeing Co., Proxy Statement (Schedule DEF14A) at 13–23 (Apr. 5, 2024); The Boeing Co., Proxy Statement (Schedule DEF14A) at 8–14 (Mar. 3, 2023); The Boeing Co., Proxy Statement (Schedule DEF14A) at 10–15 (Mar. 11, 2022). 30 See Defs.’ Exs. 8–30. 6 During these meetings, it reviewed key risks and incidents pertaining to airplane safety through several reporting mechanisms. 1. Safety Management System (“SMS”) Risk Register Reports cover updates, metrics, and remediation efforts related to various airplane safety and quality risks. Those risks include recordkeeping noncompliance and foreign object debris (“FOD”) levels.31 2. In-Service Safety Reports cover recent safety incidents involving Boeing aircraft, Boeing’s response to the incidents, and its assessment of root causes.32 These reports aim to ensure the Board or the Aerospace Safety Committee learns of significant safety incidents or regulatory actions “within 24 hours or as soon as reasonably practicable after Boeing, is notified or made aware of an event.”33 3. SMS Implementation Reports cover SMS updates, including those related to the Speak Up platform to encourage employees and others to raise safety concerns.34 4. Special Attention Reports provide updates on matters requiring the Aerospace Safety Committee’s attention. Those matters include metrics on 31 See, e.g., Am. Compl. ¶ 480(e) (quoting June 27, 2022 SMS Risk Register Report referencing “[s]tamping allegations”); id. ¶ 581(a) (quoting February 10, 2022 SMS Risk Register Report referencing the potential need for “[l]ate stage rework” due to FOD). 32 See, e.g., id. ¶ 465(a) (referencing “In-Service Safety Reports that discussed a flaw in the altimeter installed in 787 aircraft, which Boeing traced in part to Spirit”); id. ¶ 597(b) (discussing an “In-Service Safety Report . . . that referenced a potential loose part”); id. ¶¶ 603–04; Defs.’ Ex. 20; Defs.’ Ex. 46. 33 Am. Compl. ¶ 604 (italics omitted). 34 See id. ¶ 581(b) (referencing a “SMS Implementation presentation to the [Aerospace Safety Committee] [discussing] a Speak Up report ‘regarding possible incorrect fastener installation on 777-9 wing’”). 7  rework—i.e., repairs to fix prior defects—and efforts to improve those metrics.35 The Audit Committee was responsible for oversight of, among other things, Boeing’s “internal control environment and compliance with legal and regulatory requirements.”36 Its mandate included monitoring compliance with the DPA and FAA regulations. Every year, the Audit Committee received a Compliance Risk Management (“CRM”) Report outlining key compliance risks, including aircraft certification and stamping noncompliance, and efforts to mitigate those risks.37 These channels presented the Board with information about Boeing’s manufacturing challenges and efforts to address them. The Amended Complaint addresses seven topics. 1. Workforce Productivity And Stability.38 Boeing, like many other companies, laid off and rehired a substantial number of employees due to the COVID-19 pandemic.39 The Board was aware Boeing had experienced “a decrease in personnel with prior manufacturing experience and faced “the Toughest Recruiting Environment in Decades.”40 Management regularly 35 See, e.g., id. ¶ 581(c) (referencing June 26, 2023 “‘Special Attention’ presentation to the [Aerospace Safety Committee] . . . disclos[ing] that [Boeing Commercial Airlines] experienced a ‘2.4% Increase in Rework % since 2022[.]’”); Defs.’ Ex. 73 at -1612 (June 26, 2023 Special Attention presentation listing “Actions to Improve” to decrease rework levels, including “[c]ontinued focus on training effectiveness and simplifying work instructions”). 36 The Boeing Co., Proxy Statement (Schedule DEF14A) at 18 (Mar. 3, 2023). 37 See, e.g., Am. Compl. ¶¶ 480(i)–(j) (referencing 2022 and 2023 CRM Reports). 38 Id. ¶¶ 34, 329, 473–76. 39 Id. ¶¶ 34, 208–11. 40 Am. Compl. ¶¶ 474(a)–(b). 8  updated the Board and its committees on efforts to ensure Boeing’s workforce was appropriately trained.41 2. Supplier Defects.42 Spirit AeroSystems Holdings, Inc. (“Spirit”) was one of Boeing’s key suppliers, responsible for producing approximately 70% of each 737 MAX aircraft.43 In part due to exogenous supply chain and workforce disruptions,44 Spirit allegedly suffered from quality issues resulting in the supply of defective products.45 Management regularly updated the Board and its committees on those defects and the rework being performed to remedy them.46 The updates also addressed management’s broader initiatives to reduce supplier-side quality escapes, including a “Spirit One Quality Plan.”47 On top of monitoring management’s initiatives, in 41 See, e.g., Defs.’ Ex. 6 at -3168; Defs.’ Ex. 136 at -2544; Defs.’ Ex. 121 at -3229; Defs.’ Ex. 122 at -0020. 42 Am. Compl. ¶¶ 465–72. 43 Id. ¶¶ 214–15. 44 See id. ¶¶ 216–17 (describing the effects of the pandemic and a labor strike on Spirit’s operations). 45 Id. ¶¶ 216–18, 465. 46 See, e.g., id. ¶ 465(b) (reporting that “Boeing would set up approximately twelve repair stations across Boeing sites to perform rework” on “flaws in fuselages Boeing received from Spirit”); id. ¶ 465(c) (quoting April 18, 2023 BCA Update referencing a “Spirit escape involving a 737 MAX” and “nacelle rework impacts”); id. ¶ 465(d) (quoting April 18, 2023 BCA Update referencing a “737 Spirit Notice of Escapement (NoE) Initial Assessment” and disclosing management’s assumption for a “[m]onthly rework max throughput at ~12 aircraft per month”); id. ¶ 465(e) (quoting April 24, 2023 Audit Committee materials disclosing “Boeing’s need to ‘perform rework’ on 737 MAX fuselages” after Spirit flagged a “non-standard manufacturing process”); id. ¶ 465(f) (quoting April 26, 2023 Audit Committee materials disclosing the “costs of rework” related to “quality issue on certain parts” supplied by Spirit); id. ¶ 465(h) (quoting August 28, 2023 Audit Committee Watch Items list discussing the need for “an assessment of ‘production and delivery impacts as well as inspection/rework requirements’” related to “737 MAX production issue caused by Spirit”); id. ¶ 465(i) (quoting October 16, 2023 Audit Committee Watch Items list disclosing “the Company was ‘performing rework’” on aircraft impacted by a “problem identified by Spirit”). 47 See, e.g., Defs.’ Ex. 32 at -1027 (June 27, 2022 SMS Risk Register Report presenting metrics for supplier-generated defects and identifying open corrective actions, including a 9  October 2023, the Board authorized Boeing to invest $100 million into Spirit to address its liquidity and operational needs.48 3. FOD.49 FOD refers to any item or debris improperly “left in Boeing aircraft” during the assembly process.50 FOD can damage aircraft.51 Management periodically updated the Board and its committees on FOD-per- aircraft data and corrective actions to reduce FOD, including improvements to tooling and internal inspection processes.52 4. Rework And Traveled Work.53 Rework refers to repairs performed on prior defects,54 and traveled work refers to production work performed out of sequence.55 Both are “realistic” features of manufacturing operations: defects require rework, and delays along the assembly line require traveled “Spirit One Quality Plan”); id. at -1028 (detailing further “[o]pportunities for supplier oversight, including improvements to Boeing’s “Initial Product and Production System Validation”); Defs.’ Ex. 93 at -7329–31 (April 18, 2023 BCA Update presenting mitigation efforts such as a “Supplier Summit,” a “Supply Chain Engineering Initiatives team to evaluate defect data and proactively implement process changes,” and a “NOE management team to address quality escapes from supply base into Boeing Quality Management System QMS”); Defs.’ Ex. 103 at -7687 (October 17, 2023 BCA Update describing management’s “[c]ontinuous [i]teration [and] [m]onitoring” of “Spirit disruption” and “[u]nderperforming suppliers”). 48 Am. Compl. ¶ 468; see Defs.’ Ex. 131 at -0660–61. 49 Am. Compl. ¶¶ 487–91. 50 Id. ¶ 43. 51 Id. 52 See, e.g., Defs.’ Ex. 31 at -0760–62, -0783 (February 10, 2022 SMS Risk Register Report presenting recent FOD metrics and management’s “[p]ath to [s]tability,” including “[h]eat maps and documentation for chronic repeat findings.”); Defs.’ Ex. 32 at -1024 (June 27, 2022 SMS Risk Register Report presenting “[s]uccessful actions” to reduce FOD, including “[e]nhanced accountability for Clean-As-you-Go,” “[s]trengthening internal inspection by expanding Gold Coin program (i.e., placing FOD intentionally on aircraft for discovery),” and “[i]mprovements to tooling (e.g., lighted vacuums, FODless drill . . . .)”). 53 Am. Compl. ¶¶ 509–23, 579–600. 54 Id. ¶ 53. 55 Id. ¶¶ 45, 509–11. 10  work.56 Management regularly updated the Board and its committees on rework and traveled work, and their root causes—i.e., supplier-side quality issues and the presence of FOD.57 Management’s updates regularly addressed efforts to mitigate those root causes.58 5. Tools And Parts Control.59 Boeing maintains internal controls ensuring all tools and parts are properly used and accounted for during the production process. Ineffective tool control can lead to aircraft delivered with FOD; the use of nonconforming or “scrapped” parts can lead to aircraft unsafe for operation.60 Management kept the Board and its committees apprised of nonconformities61 and initiatives to strengthen tools and parts control.62 Those initiatives included improvements to “tool check in and 56 Id. ¶ 45 (“When work slated for one workstation was not performed on time, . . . . [the] work [] traveled with the airplane down the assembly line and had to be completed out of the sequence provided in the manufacturing plan.”); id. ¶ 53 (“Jobs that were performed incorrectly had to be redone if defects were discovered.”); NTSB Report at 95–96 (“For a complex manufacturing process such as Boeing’s, where thousands of components are being integrated into a final assembly, it is realistic to expect that predefined plans may need to be adjusted at times to accommodate for manufacturing nonconformances.” (bolding omitted)). 57 See, e.g., id. ¶ 519(d) (quoting June 27, 2023 BCA Update explaining that the “[s]upply chain [was] driving traveled work” for the 787 program); id. ¶ 581(a). 58 See id. 59 Id. ¶¶ 554–65. 60 Id. ¶¶ 554, 595. 61 See, e.g., id. ¶ 597(b) (quoting April 17, 2023 In-Service Safety Report referencing “a potential loose part because of the use of an improper tool”); id. ¶ 597(c) (quoting June 26, 2023 In-Service Safety Report referencing “a potential loose part because of the use of an improper tool”); id. ¶ 562 (quoting August 28, 2023 Special Attention Report referencing “compliance risk related to unapproved parts installation escapes”). 62 See, e.g., Defs.’ Ex. 136 at -2546 (2022 CRM Report describing “[m]itigation plans . . . to address tool control across the enterprise”); Defs.’ Ex. 6 at -3170 (2023 CRM Report explaining that “BCA is working to improve ‘Lost tool Report’ processes; tool check in and return processes; tool tracking using Radio Frequency Identification Database capabilities or serialization tools; and employee training and risk awareness”). 11  return processes,” “tool tracking,” and “risk control plans regarding unapproved parts.”63 6. ODA Unit Interference and Employee Retaliation.64 After the 737 MAX crashes, and as required under the DPA, Boeing committed to fostering a “culture of ethics and compliance.”65 To that end, Boeing created its Speak Up and Ombudsman programs for employees to report on unsafe practices confidentially, “without a fear of retaliation.”66 The Board and its committees saw regular updates on the Speak Up program,67 ODA interference risks,68 and management’s progress on a range of anti-retaliation initiatives.69 7. Deficient Recordkeeping.70 Boeing relies on complete and accurate manufacturing records to certify its aircraft as airworthy.71 Fraud and safety risks can arise when, for instance, employees incorrectly “stamp” a required 63 Defs.’ Ex. 6 at -3170. 64 Am. Compl. ¶¶ 524–53. 65 See id. ¶¶ 25, 57; DPA, Attachment C ¶¶ 9–10. 66 Am. Compl. ¶ 204. 67 See, e.g., id. ¶ 550 (citing December 7, 2023 SMS Implementation Update reporting a decrease in the volume of Speak Up reports in 2023 relative to 2022); Defs.’ Ex. 62 at - 1823 (December 7, 2023 Implementation Update reporting on “Speak Up Health”); Defs.’ Ex. 67 at -1466 (April 17, 2023 SMS Implementation Update reporting on “actions . . . being implemented to address the process gaps” identified in the Speak Up program). 68 See, e.g., Defs.’ Ex. 77 at -1144 (August 29, 2022 Special Attention Report disclosing the results of a 2022 survey of ODA unit members); Am. Compl. ¶¶ 542–44 (citing Defs.’ Ex. 77 at -1144). 69 See, e.g., Defs.’ Ex. 136 at -2522, -2536–37 (2022 CRM Report discussing “progress on a new anti-retaliation procedure,” “[t]ailored mitigation strategies[,] and oversight processes”); Defs.’ Ex. 6 at -3156 (2023 CRM Report discussing “a restructured ODA process for interference allegation intake, review, investigation, and FAA disclosure”); Defs.’ Ex. 109 at -2306 (June 27, 2022 DPA Compliance Update reporting on management’s “[r]eview of anti-retaliation program and policies”). 70 Am. Compl. ¶¶ 479–96. 71 See id. ¶ 479. 12  manufacturing step as complete72 or fail to maintain “removal records” documenting the removal and replacement of parts.73 The Aerospace Safety and Audit Committees regularly received updates on recordkeeping compliance.74 Those updates addressed management’s efforts to monitor and mitigate recordkeeping deficiencies, including “root cause analys[e]s,” “new mandatory training,” tools “to track certification status,” and “improved data analytics and dashboard visibility.”75 C. The Door Plug Blowout On January 5, 2024, a Boeing 737-9 MAX flying as Alaska Airlines Flight 1282 climbed out of Portland, Oregon bound for Ontario, California. 76 Just as it reached 15,000 feet, the left mid-cabin door plug flew off, leaving a gaping hole in the aircraft.77 Seven passengers and a crew member sustained minor injuries.78 The aircraft made a safe emergency landing back in Portland.79 72 Id. 73 Id. ¶ 492; NTSB Report at 45, 87. 74 See, e.g., id. ¶¶ 480(a)–(h) (quoting Aerospace Safety Committee materials reporting on stamping allegations); id. ¶¶ 480(i)–(j) (quoting 2022 and 2023 CRM Reports identifying “Manufacturing Certification and Stamping” as a compliance risk). 75 Defs.’ Ex. 136 at -2544 (2022 CRM Report); Defs.’ Ex. 6 at -3149, -3168–69 (2023 CRM Report); see also Am. Compl. ¶¶ 480(b)–(c) (quoting Aerospace Safety Committee materials referencing a “corrective action plan entitled ‘Mfg. Discipline: Certifications & Stamping Project’”). 76 Am. Compl. ¶ 278. 77 Id. ¶¶ 278–79. 78 Id. ¶¶ 280, 282; Am. Compl. Ex. D [hereinafter “NTSB Report”] at 6. 79 Am. Compl. ¶ 283. 13  An investigation by the National Transportation Security Board (“NTSB”) revealed the cause: the door plug was missing bolts.80 The jet’s fuselage, manufactured by Spirit, had arrived at Boeing’s Renton, Washington 737 MAX factory with defective rivets that needed rework.81 The rework required Boeing personnel to open the door plug by removing four bolts securing the plug to the fuselage. Nobody on the job that day was experienced in opening and closing door plugs.82 The defective rivets were replaced, but the removed bolts were not.83 The Boeing personnel closed the door plug without conducting a quality assurance inspection or creating records of the removals.84 The jet was then delivered to Alaska Airlines.85 D. Regulators Investigate And Boeing Responds. Within hours of the incident, the FAA announced the NTSB would investigate and grounded 171 Boeing 737-9 MAX aircraft operated by U.S. airlines or in U.S. 80 See generally NTSB Report; see also Am. Compl. ¶¶ 289–92. 81 Am. Compl. ¶ 290. 82 Id. ¶ 476; NTSB Report at 86–88. 83 Am. Compl. ¶ 290; NTSB Report at 119. 84 Am. Compl. ¶ 292; NTSB Report at 120. 85 Am. Compl. ¶ 30. 14 territory.86 “The FAA also issued an Emergency Airworthiness Directive requiring operators to inspect aircraft before further flight.”87 Within a day of the incident, the Aerospace Safety Committee met to discuss the known facts, the Company’s initial response, and immediate next steps. 88 On January 8, in cooperation with the FAA, Boeing issued a Multi-Operator Message (“MOM”) with instructions for inspecting the grounded 737-9 MAX fleet before returning the aircraft to service.89 The Aerospace Safety Committee met again on January 10 and 12 to discuss preliminary inspection findings and to consider whether they presented broader production quality issues.90 The Aerospace Safety Committee planned to have some of its members participate in an onsite inspection of the Washington factory responsible for manufacturing the jet.91 That inspection took place on January 18.92 In the meantime, the FAA launched a formal investigation into the incident and into Boeing’s compliance with FAA regulations (the “Special Audit”). 93 On 86 Id. ¶ 297. 87 Id. 88 Defs.’ Ex. 23. 89 Am. Compl. ¶ 298; Defs.’ Ex. 133 at -0676. 90 Defs.’ Ex. 24; Defs.’ Ex. 133. 91 Defs.’ Ex. 24. 92 Defs.’ Ex. 25 at -8044. 93 Am. Compl. ¶ 301; see also Am. Compl. Ex. L. 15 January 24, the FAA froze Boeing’s planned 737 MAX production expansion and effectively capped production rates at thirty-eight planes per month.94 The next day, the Renton factory temporarily paused production as part of a quality stand-down.95 Over the next few months, Boeing held quality stand-downs across all of its BCA production lines.96 The same month as the door plug blowout, senior Boeing management discussed an acquisition of Spirit—a move intended to “improve the safety and quality of Boeing airplanes” and “promote supply chain stability.”97 Negotiations proceeded throughout the spring.98 Negotiations focused on Spirit’s need to divest certain assets involved in producing aircraft for Airbus SE (“Airbus”), a Boeing competitor.99 Airbus would not “pay anything to acquire its parts of Spirit” because “the deal was engineered largely to fit Boeing’s needs.”100 Spirit would end up paying $439 million in connection with the divestiture.101 On June 26, Boeing made its final, all-stock offer to acquire Spirit for $37.25 per share in Boeing common 94 Am. Compl. ¶ 316. 95 Id. ¶ 619. 96 Id. ¶ 625. 97 Id. ¶ 390. 98 Id. ¶¶ 391–412. 99 Id. ¶ 402. 100 Id. ¶ 421. 101 Id. ¶ 425(g). 16 stock, subject to an exchange ratio collar.102 The boards of both parties approved the merger on June 30.103 Spirit stockholders approved the merger on January 31, 2025.104 E. Regulatory Findings On March 4, 2024, the FAA announced the Special Audit was complete.105 The FAA identified ninety-seven alleged instances of noncompliance, including “multiple instances where [Boeing and Spirit] allegedly failed to comply with manufacturing quality control requirements.”106 The FAA gave Boeing ninety days from March 4 to submit a corrective action plan107 and expressed it would not lift Boeing’s production cap until it was satisfied.108 On April 29, management presented the first iteration of a “Comprehensive Product Safety & Quality Plan” to the Aerospace Safety Committee.109 Boeing submitted a proposed correction action plan to the FAA a month later.110 102 Id. ¶ 412. 103 Id. ¶¶ 413–14. 104 Id. ¶ 419. 105 Id. ¶ 335. 106 Id. ¶¶ 336–38. 107 Id. ¶ 336. 108 Id. 109 Id. ¶¶ 642–43. 110 Id. ¶ 356. 17  The DOJ performed its own investigation into the door plug blowout incident and concluded Boeing had breached the DPA.111 In July, Boeing and the DOJ filed a plea agreement (the “Plea Agreement”) in federal court, under which Boeing would plead guilty to a felony charge.112 The court rejected the Plea Agreement, observing that the “Government has monitored Boeing for three years now” and “it is not clear what all Boeing has done to breach the [DPA].”113 On May 29, 2025, Boeing and the DOJ entered into a two-year Non- Prosecution Agreement (the “NPA”).114 Among other things, the NPA required Boeing to pay another $444.5 million to the families and beneficiaries of the victims of the 2018 and 2019 crashes.115 On June 24, the NTSB issued its final report on the door plug blowout incident.116 The final report documented the probable cause of the incident as a series of production mishaps symptomatic of “systemic nonconformance issues.”117 F. The Door Plug Blowout Incident Inspires Lawsuits. 111 Id. ¶¶ 429–430. 112 Id. ¶ 430; see Plea Agreement. 113 Id. ¶ 441; Defs.’ Ex. 148 at 11. 114 Am. Compl. ¶ 444; see Am. Compl. Ex. F [hereinafter “NPA”]. 115 NPA ¶ 11. 116 Am. Compl. ¶¶ 426–27; see NTSB Report. 117 Am. Compl. ¶ 428; NTSB Report at 122; see also Am. Compl. Ex. K. 18  While those events unfolded, on May 22, 2024, several Boeing stockholders filed a class action complaint in the United States District Court for the Eastern District of Virginia alleging federal securities violations (the “Federal Securities Action”).118 On September 6, that court denied the defendants’ motion to dismiss.119 The Federal Securities Action remains pending. On October 21, 2024, Plaintiffs filed a joint amended verified stockholder derivative complaint in the Eastern District of Virginia (the “Federal Derivative Action”), asserting four counts.120 Counts I and II are bad faith oversight claims.121 Counts III and IV challenge the directors’ roles in causing the Company to violate Sections 14(a) and 10(b) of the Securities and Exchange Act.122 On December 20, the Eastern District of Virginia dismissed Counts I and II in the Federal Derivative Action, noting this Court “is a more appropriate venue to resolve [the] Caremark claims.”123 So told, Plaintiffs turned to this Court. On February 5, 2025, Plaintiffs filed a verified shareholder derivative complaint in this action reasserting their Caremark 118 Am. Compl. ¶ 448. 119 Id. ¶ 453. 120 Id. ¶ 449. 121 Id. 122 Id. 123 Id. ¶ 455 (italics added). 19 claims.124 This action was consolidated with another oversight action filed on November 25, 2024, and I appointed Plaintiffs as lead plaintiffs on March 20.125 Plaintiffs filed the Amended Complaint on August 15, 2025, asserting three counts.126 Count I is a breach of fiduciary duty claim against ten of the twelve members of the Board (the “Director Defendants”) pressing two bad faith oversight failures under Caremark.127 They point to the failure “to respond in good faith to red flags showing potential deficiencies in the mission-critical areas of airplane safety and regulatory compliance,” and the implementation of “a production schedule that . . . could not be met safely and in compliance with the law.”128 Count II asserts the same claim against thirteen officers (the “Officer Defendants”).129 Count III is an unjust enrichment claim alleging Director Defendants and Officer Defendants “wrongfully received” incentive-based compensation tied to unsafe production targets and illusory commitments to safety.130 124 D.I. 26. 125 D.I. 1; D.I. 25; D.I. 39; D.I. 50. 126 See generally Am. Compl. 127 In re Caremark Int’l Inc. Deriv. Litig., 698 A.2d 959 (Del. Ch. 1996); Am. Compl. ¶¶ 717–21. 128 Am. Compl. ¶ 719. 129 Id. ¶¶ 107, 724. 130 Id. ¶¶ 728–30. 20  On September 24, Defendants moved to dismiss under Court of Chancery Rules 12(b)(2), 12(b)(6), and 23.1.131 The parties briefed the motion by November 24.132 I heard argument on May 22, 2026, and took the motion under advisement.133 II. ANALYSIS My analysis begins and ends with “the gating question of demand futility.”134 Under Rule 23.1, a derivative complaint must “state with particularity . . . any effort made by the plaintiff to obtain the desired action from the entity” and “the reasons for not obtaining the action or not making the effort.”135 Having failed to make a demand, Plaintiffs must plead particularized facts supporting an inference that “demand is excused because the directors are incapable of making an impartial decision regarding the litigation.”136 Otherwise, the derivative action must be dismissed. Demand futility is conducted claim by claim, director by director.137 131 D.I. 93. 132 D.I. 94; D.I. 131; D.I. 138. 133 D.I. 151. 134 Conte ex rel. Skechers U.S.A., Inc. v. Greenberg, 2024 WL 413430, at *5 (Del. Ch. Feb. 2, 2024), aff’d, 338 A.3d 1289 (Del. 2025). 135 Ct. Ch. R. 23.1; see Brehm v. Eisner, 746 A.2d 244, 254 (Del. 2000) (“Rule 23.1 is not satisfied by conclusory statements or mere notice pleading.”). 136 United Food & Com. Workers Union & Participating Food Indus. Empls. Tri-State Pension Fund v. Zuckerberg, 262 A.3d 1034, 1054 n.146 (Del. 2021) (citing Wood v. Baum, 953 A.2d 136, 140 (Del. 2008)). 137 In re Vaxart, Inc. S’holder Litig., 2021 WL 5858696, at *15 (Del. Ch. Dec. 1, 2021) (quoting Cambridge Ret. Sys. v. Bosnjak, 2014 WL 2930869, at *4 (Del. Ch. June 26, 2014)); see also Zuckerberg, 262 A.3d at 1059. 21  Plaintiffs contend demand is futile because more than half of the Board faces a substantial likelihood of liability on the claims asserted both here and in the Federal Derivative Action.138 The claims here are premised on oversight failures sounding in the “fiduciary duty of loyalty, and specifically its subsidiary element of bad faith.”139 The claims in the Federal Derivative Action are premised on disclosure- related federal securities violations. I conclude neither set of claims impugns the Board’s ability to impartially consider a demand for the Caremark claims here. A. The Breach Of Fiduciary Duty Claims I begin with whether the Director Defendants face a substantial likelihood of liability on Plaintiffs’ Caremark claims. Plaintiffs allege the Board saw “dozens of red flags” warning of systemic airplane manufacturing issues leading up to the door plug blowout incident.140 They allege the Board ignored these red flags and, to make matters worse, implemented a production schedule that pushed profits over safety.141 Delaware law presumes directors perform their duties, including their oversight responsibilities, “in good faith and with reasonable care, even if their actions turn out poorly in hindsight.”142 That includes their responses to reporting 138 See Zuckerberg, 262 A.3d at 1