Shannahan v. FTAI Aviation Ltd.

Background

Michael Shannahan filed a proposed securities class action against FTAI Aviation Ltd. and certain of its officers. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. The proposed class consists of people and entities that purchased or acquired FTAI securities between July 23, 2024, and January 15, 2025.

The complaint alleges that, during that period, the defendants made materially false or misleading statements and failed to disclose adverse information about FTAI’s business. Specifically, it alleges that FTAI treated one-time aircraft-engine sales as maintenance, repair, and overhaul revenue; counted each engine sale as three module sales; and depreciated engines that were not leased, allegedly affecting reported costs and earnings before interest, taxes, depreciation, and amortization.

Lead-Plaintiff Motions

The court received seven motions seeking appointment as lead plaintiff. The applicants included Boston Retirement System and City of Hollywood Firefighters Pension Fund, Roger Wolter, Cady Pham, Ricardo Vilalta, Paulo Buigasco, the Central Pennsylvania Teamsters pension funds together with the City of Detroit General Retirement System, and the Nova Scotia pension plans.

Pham, Wolter, the Teamsters Pension Fund group, and Buigasco withdrew their motions. The Nova Scotia Plans and Vilalta filed notices stating that they did not oppose the motion by Boston Retirement and Hollywood Firefighters Fund.

The Private Securities Litigation Reform Act requires the court to appoint the “most adequate plaintiff.” The statute creates a rebuttable presumption in favor of the movant that timely responded to the required notice, has the largest financial interest in the relief sought, and preliminarily satisfies the relevant requirements of Rule 23 of the Federal Rules of Civil Procedure. That presumption may be rebutted by proof that the proposed lead plaintiff would not fairly and adequately protect the class or faces unique defenses.

Timeliness and Financial Interest

The required notice was published on January 17, 2025, and Boston Retirement and Hollywood Firefighters Fund filed their motion on March 18, 2025. The court therefore found that they satisfied the timing requirement.

The court also found that the two funds had the largest financial interest among the applicants. Boston Retirement purchased 17,080 FTAI securities during the class period and did not sell any during that period. Hollywood Firefighters Fund purchased 7,920 net shares. Together, they asserted losses of $494,121.67 on a first-in, first-out basis. The court treated the magnitude of the claimed loss as the most important factor in comparing financial interests.

The court permitted the two funds to proceed as a group even though the record did not describe a relationship between them before the litigation. Their joint declaration described their preparation for the motion, their plans to cooperate, their procedures for overseeing the litigation, their experience as institutional investors, and their selection of counsel. The court found these facts sufficient to show that they could function cohesively.

Rule 23 Requirements

At this preliminary stage, the court required only an initial showing of typicality and adequacy. Typicality means that the proposed lead plaintiffs’ claims arise from the same events and involve similar legal arguments as the other class members’ claims. Adequacy means that the proposed lead plaintiffs do not have interests conflicting with the class and have capable counsel.

The court found that Boston Retirement and Hollywood Firefighters Fund met both requirements. They alleged the same type of false and misleading statements and investor losses as the proposed class. The court found no conflict of interest, unique defense, or other problem that would impair their representation. It also noted their experience serving as lead or co-lead plaintiffs in other securities class actions and their stated willingness to perform the duties of lead plaintiff.

Because the motion was unopposed and no evidence rebutted the statutory presumption, the court found that Boston Retirement and Hollywood Firefighters Fund were the most adequate plaintiffs.

Counsel and Disposition

The court granted the unopposed motion by Boston Retirement and Hollywood Firefighters Fund. It appointed them as lead plaintiffs and approved their selection of Labaton Keller Sucharow LLP and Kessler Topaz Meltzer & Check, LLP as co-lead counsel. The court found both firms qualified based on their substantial experience prosecuting securities-fraud class actions.

The parties were directed to submit, by July 25, 2025, a joint letter stating their positions on a schedule for any amendment to the operative complaint and briefing on possible motions to dismiss. The Clerk of Court was directed to terminate the listed lead-plaintiff motion docket entries.