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Implications of Recent Boeing Decision on 10b-5 Class Certifications

This article was originally published in Law360.com on August 26, 2026 - https://www.law360.com/articles/2517663.

The Fourth Circuit’s July 20, 2026 decision In re: The Boeing Company (“Boeing”)¹applies the criteria established in Comcast Corp. v. Behrend (2013) (“Comcast”)² to the question of the requirements for plaintiffs’ class-wide damage model in class actions alleging violations of SEC Rule 10b-5³ under Section 10(b) of the Securities Exchange Act of 1934⁴(henceforth, “10b-5 matters”). While courts have often relied on Comcast as a basis for such determinations since its 2013 publication, the recent Boeing decision gives defendants a sharper argument regarding damage model requirements, while giving plaintiffs a roadmap for fortifying certification records before defendants can characterize their methodology as a placeholder.

The Comcast Standard

In Comcast, the Supreme Court laid out the standard for evaluating class-wide damages models. Although the Comcast class action alleged antitrust violations, it has been applied more broadly to other types of class actions, including shareholder class actions.⁵ Under the Comcast standard, plaintiffs must demonstrate two key elements:⁶

Class-wide measurability: The common damages model must be capable of reliably measuring damages on a class-wide basis; and
Consistency with liability theory: The model must align with the plaintiff’s theory of liability.

In shareholder class actions, this standard means that a proposed damage model must be a class-wide approach (rather than requiring individual inquiry) and must closely follow the specific way in which plaintiffs allege the share price was inflated.

The Appeals Court Reasoning in Boeing

In Boeing, the Fourth Circuit vacated class certification because the plaintiffs had not provided a sufficiently specific, case-linked damages methodology at the class certification stage.⁷ The plaintiffs relied on an out-of-pocket theory and an expert who described potential tools such as event studies and valuation methods, but the Fourth Circuit concluded that the expert had not committed to a concrete method for measuring artificial inflation on a class-wide basis.⁸

In particular, the Fourth Circuit raised two issues regarding shortcomings in the plaintiffs’ expert’s approach in applying the Comcast standard.

First, the Court noted that plaintiffs’ expert presented a list of potential approaches to several steps in his proposed damages model, including “a non-exhaustive list of valuation techniques” to address the untangling of confounding information, “three possible mechanisms for measuring artificial inflation,” and discussed the use of an event study but “remained noncommittal on if he would do that and, if so, how he would do that.”⁹ The Court noted that this “falls short of what Comcast requires,”¹⁰ and that “[a] list of possible methodologies, described in general terms, isn’t a methodology.”¹¹

Ultimately, the Court found that “[w]ithout a methodology, the district court has no way to rigorously evaluate whether damages are measurable on a class-wide basis, whether the damages methodology is consistent with the plaintiff’s liability theory or whether the proposed methodology for measuring damages is reasonable.”¹²

Second, the Court found that plaintiffs offered multiple theories of liability (including that the alleged misstatements either acted individually or collectively to either cause or maintain share price inflation).¹³ The Court stated that plaintiffs’ expert “seemed to be settling on a theory” only at the point when he issued a rebuttal report in the class certification proceeding, and that “plaintiffs never committed before the district court.”¹⁴ Without this information, the Court found it impossible to “compare the plaintiffs’ damages methodology to their liability theory” as required by Comcast.¹⁵

Practical Implications for Plaintiffs

Since Comcast, plaintiffs’ experts have routinely presented a detailed damages model at the class certification stage in antitrust class actions (especially those alleging price-fixing). This is notable as antitrust matters often involve very large data sets, thereby making it more burdensome for plaintiffs to present a detailed damages model.

For plaintiffs in shareholder class actions, the data analysis burden is often much less onerous than that of antitrust class actions.

The immediate lesson from the Boeing decision is that a class certification expert report in a shareholder class action should not merely state that damages will be measured using the out-of-pocket method. Rather, it should identify the specific inflation-measurement approach (e.g., event study or some other approach); explain whether inflation on various days in the alleged class period will be estimated using constant-dollar, constant-percentage, or some other approach; and describe how the model will evaluate price impact, if any, of confounding information.

An event study of corrective disclosures is often just the starting point for measuring share price inflation, and additional analyses are needed to determine the share price that would have prevailed in a but-for world in which no alleged misrepresentations or omissions occurred. These additional analyses depend on the facts and circumstances of the particular matter, and one cannot simply assert or assume that any and all available financial tools can be used in a particular matter.

This becomes particularly important for class actions alleging inflation in non-equity securities, such as options, where a standard event study may not always be feasible.

Plaintiffs should treat the class certification stage as the moment to make methodological commitments rather than preserve flexibility for merits discovery. In cases involving many alleged misstatements, multiple corrective disclosures, or a long class period, plaintiffs should explain how the model will estimate the valuation impact of confounding information, which is critical to measuring fraud-related inflation. This is particularly tricky when the confounding information is not very specific or disclosed in a manner that lends itself easily to assessing its price impact. One cannot simply assume that the price impact of confounding information can always be evaluated using one of the standard methods.

Further, experts should also connect the damages model to the actual theory of falsity alleged in the case. Where plaintiffs assert an inflation-maintenance theory, they should be prepared to explain how alleged misstatements maintained inflation and how later disclosures removed that inflation on a class-wide basis. Any liability theory alleging that misstatements acted collectively to cause share price inflation will require a damages approach that accounts for that collective impact.

Practical Implications for Defendants

For defendants, Boeing creates a stronger pathway to oppose certification where the plaintiff’s expert offers a generic description of out-of-pocket damages without a case-specific implementation plan. Defendants should ask the court to require plaintiffs to identify the actual inflation model, the corrective disclosure framework, the disaggregation approach for distinguishing the price impact of alleged fraud from confounding information, and the method for translating alleged price impact into class-wide damages. Based on Boeing, the strongest defense arguments will arise where the alleged fraud is sprawling, the alleged misstatements differ materially in content and timing, the class period is long, and/or the alleged corrective events contain substantial confounding information.

Multiple courts have recognized event study-based out-of-pocket models as accepted or plausible tools for measuring securities damages,¹⁶ and Boeing does not change that. Defense arguments should not propose that event studies are categorically insufficient in 10b-5 cases, but the better defense argument is narrower and more potent: while an expert’s proposed model may be accepted in the abstract, in each matter it needs to be adequately adapted to the case’s exact mix of alleged misstatements, disclosures, inflation theories, and confounding information with sufficient specificity.

Damages Models Must Be Developed Earlier

Boeing has the potential to make damages methodology a more contested part of 10b-5 class certification, especially in cases involving inflation-maintenance theories, multiple and complex alleged misstatements, long class periods, and multiple corrective events. As a result, plaintiffs will need to front-load expert work by developing and justifying specific damages models at the class certification stage, an exercise often reserved for the merits phase. Defendants will have a greater incentive to depose damages experts aggressively and frame methodological gaps as Rule 23¹⁷ predominance problems rather than merits disputes.

It remains to be seen how wide an influence the Boeing decision will have. It is possible that it turns out to be a record-specific warning rather than a categorical shift in how district courts should evaluate damages models in class certification proceedings in 10b-5 matters. Courts have approved class certification where plaintiffs propose a simple out-of-pocket / event study approach, but Boeing shows that courts may be willing to reject certification where plaintiffs offer only a generalized damages standard in the face of a complex record of facts and potential theories. The practical message is therefore balanced: Boeing raises the cost of a bare-bones damage model proposal for plaintiffs, but it also clarifies what a defensible proposal should contain.

Reprinted with the permission from Law360

Footnotes:

1: Off. of Gen. Treasurer on behalf of Emps. Ret. Sys. v. Boeing Co., 2026 WL 2083048, No. 25-1492 (4th Cir. July 20, 2026).

2: Comcast Corp. v. Behrend, 569 U.S. 27 (2013).

3: “Rule 10b-5,” Cornell Law School.

4: Jay B. Kasner and Mollie Melissa Kornreich, “Section 10(b) Litigation: The Current Landscape,” American Bar Association (October 20, 2014).

5: See, for example, SEB Investment Management AB, et al., v. Wells Fargo & Company, et al., 22-cv-03811-TLT, (N.D. Cal) Order dated April 25, 2025.

6: Comcast, 569 U.S. at 34-35.

7: Boeing, 2026 WL 2083048 at 42.

8: Id. at 34.

9: Id. at 30-31.

10: Id. at 31.