DALLAS — A class-action lawsuit has been filed against Southwest Airlines on behalf of other stockholders, claiming the company has been "plagued by non-compliance and maintenance issues," according to court documents.
The lawsuit, which was filed in federal court Wednesday, accuses Southwest of having maintenance issues with flights for more than a decade. It also accuses the airlines and their top-officials of being non-compliant.
Plaintiff Robert G. Linenewebe, who is representing the class, says Southwest has repeatedly denied wrongdoing and self-touted remediation efforts, according to court documents.
The lawsuit states the class includes people who purchased or acquired Southwest Airlines securities between the dates of Feb. 7, 2017, and June 25, 2019.
Documents allege that during the time period, Southwest denied any wrongdoing and insisted that is was a complaint with government regulations.
"We are aware of the complaint and are reviewing it ahead of mounting a vigorous defense against it," Southwest officials said in a written statement Thursday.
The lawsuit claims the issues were exacerbated by the airlines' undue influence over Federal Aviation Administration officials. It also says the because of this and other wrongdoings, that passengers' safety was put at risk.
The lawsuit gives an example from the Wall Street Journal, that claims the FAA’s certificate-management office overseeing Southwest faced significant controversy over a decade ago “when congressional investigators discovered that local agency managers had allowed the airline to continue flying tens of thousands of passengers on nearly two dozen aircraft without completing mandatory structural inspections.”
In 2009, Southwest agreed to pay $7.5 million in penalties to settle allegations that it operated aircraft on 60,000 flights without completing mandatory maintenance checks for possible fuselage cracks, according to the lawsuit.
Passenger death
On April 17, 2018, Jennifer Riordan, an Albuquerque mother of two, was killed on Southwest Flight 1380. A catastrophic engine failure hurtled debris into a window, breaking a hole in the Boeing 737.
Seven other passengers on Flight 1380 were injured, which made an emergency landing in Philadelphia. Southwest said 144 passengers and a crew of five were on board.
Riordan’s death marked the first passenger fatality in a U.S. airline accident since 2009, according to the chairman of the National Transportation Safety Board. One of the 24 fan blades in the failed engine was missing, according to NTSB.
According to the class-action suit, Southwest’s stock price fell by $0.62 per share on the date of the deadly incident.
Two days after the fatal incident, the FAA announced it was going to order inspections of at least 220 aircraft engines while investigators looked at the broken fan blade.
This news caused the stock price to fall again, according to the lawsuit.
However, documents say inspections had allegedly been suggested in August 2016, two years before Riordan's death.
On June 21, 2018, eight passengers filed lawsuits against Southwest in connection with the engine explosion in April, according to the lawsuit.
Legal documents claim this also caused the stock price to fall.
Safety concerns
In June of 2019, the FAA reassigned three managers in a regional office that overlooked regulation of Southwest Airlines
The Wall Street Journal reported that the reassignments were partly due to allegations that FAA managers retaliated against safety inspectors who raised concerns about oversight of Southwest.
The Wall Street Journal article said some of the safety issues at Southwest included failing to check the computed weight of checked bags and hazardous landing incidents. The suit repeatedly references news coverage of the airline.
The lawsuit alleges this caused stockholders to suffer significant losses and damages.
Gary Kelly, Southwest’s Chairman of the Board, President, and Chief Executive and Tammy Romo, Southwest Chief Financial Officer are both named in the class-action suit.
Documents claim because of Kelly and Smith's positions within the company, they were aware of this information. They are both accused of being liable for false statements and omissions.
The lawsuit accuses Southwest of not being fully transparent in its annual reports.
Southwest claimed it "performed substantially all line maintenance on its aircraft and provides ground support services at most of the airports it serves" in an annual report filed in February 2017, according to the lawsuit.
Then in February 2018, Southwest filed another report for 2017, claiming the same efforts were made.
But the lawsuit alleges this information was false and misleading, because Southeast failed to disclose adverse facts about its operations and company. Again, the lawsuit accused Southwest of being non-compliant with government maintenance and safety regulations.
The lawsuit also claims Southwest's stock price continued to trade at artificially inflated prices.
"Had plaintiff and the other members of the class known the truth, they would have not purchased or otherwise acquired said securities or would not have purchased or otherwise acquired them at inflated prices that were paid," the lawsuit says.
The plaintiffs and other class members, which could included thousands of people, are seeking damages in a jury trial for their sales and purchases during the time period mentioned in the lawsuit.
More on WFAA:
