A securities suit against Gogo Inc. and several of its executives will move forward after Judge Jorge L. Alonso denied the motion to dismiss the lead plaintiff’s third amended complaint. Monday’s opinion found that, with additional allegations, the plaintiff sufficiently pleaded his Securities Exchange Act claims accusing the defendants of making false and misleading public statements about the reliability of Gogo’s in-flight internet connectivity services and its impact on Gogo’s financial outlook.
The Northern District of Illinois opinion explained that Gogo reportedly installed “2Ku” in-flight Wi-Fi systems on partner airplanes, although the defendants had knowledge that the systems would not work following the application of de-icing fluid to those planes. The plaintiff alleged that the defendants concealed the seriousness of the defect and made false promises about the company’s prospects. Reportedly, when Gogo made the belated de-icing disclosure in May 2018, the company’s artificially inflated stock price plunged, to the detriment of the plaintiff and fellow investors.
The opinion also stated that, in 2019, the court dismissed the plaintiff’s amended class-action complaint for failure to state a claim. Specifically, the court held that the plaintiff had not adequately alleged “ ‘specific facts to demonstrate when the 2Ku problems showed themselves to be of (such) … magnitude’ that they made the challenged statements false, at the time defendants made them, for failing to disclose the 2Ku problems or their severity.”
In contrast to the previous version of the complaint, the opinion explained that the current iteration includes new former-employee allegations about attempts to assess and correct the de-icing problem. The court also emphasized that its refreshed allegations explain not only how critical the 2Ku product success was to Gogo, but also that the timing of its debut was tantamount and that any interruption in rollout plans imperilled Gogo financially.
The court’s order set a status hearing for May 26.