Shannahan v. FTAI Aviation Ltd. — Entry #73: MEMORANDUM OF LAW in Support re: 72 MOTION to Strike Document No

Case 1:25-cv-00541-JAV         Document 73    Filed 01/22/26    Page 1 of 9


                        UNITED STATES DISTRICT COURT
                       SOUTHERN DISTRICT OF NEW YORK


CITY OF HOLLYWOOD FIREFIGHTERS’
PENSION FUND and BOSTON
RETIREMENT SYSTEM, Individually and
on Behalf of All Others Similarly Situated,
                                              No. 1:25-cv-00541-JAV
                            Plaintiffs,

       v.
                                              ORAL ARGUMENT REQUESTED
FTAI AVIATION LTD., JOSEPH P.
ADAMS, JR., and EUN (ANGELA) NAM,

                            Defendants.


     LEAD PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OF LEAD
 PLAINTIFFS’ MOTION TO STRIKE CERTAIN EXHIBITS FROM DEFENDANTS’
     MOTION TO DISMISS THE AMENDED CLASS ACTION COMPLAINT


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       Lead Plaintiffs City of Hollywood Firefighters’ Pension Fund and Boston Retirement

System (collectively, “Lead Plaintiffs”) respectfully submit this memorandum of law in support

of Lead Plaintiffs’ motion to strike certain exhibits from Defendants’ 1 Motion to Dismiss 2 the

Amended Class Action Complaint (the “Complaint,” ECF No. 64), filed concurrently herewith. 3

I.     INTRODUCTION

       It is well-established in the Second Circuit that during the motion to dismiss stage, the court

must “accept[] all factual allegations in the complaint and draw[] all reasonable inferences in the

plaintiff's favor.” ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007).

However, in a transparent attempt to contradict the Complaint’s well-pled factual allegations and

create their own counter-narrative, Defendants attached 23 extrinsic exhibits—selectively

excerpted and collectively spanning more pages than the Complaint itself—to their MTD. See

Decl. of Tansy Woan, Exs. A-W (ECF No. 70-1 through 70-23).

       Through these exhibits, Defendants assert an alternative set of facts consisting of irrelevant,

unsubstantiated, and contradictory information contained in earnings call transcripts, FTAI’s


1
  Defendants are FTAI Aviation Ltd. (“FTAI” or the “Company”), Joseph P. Adams, Jr.
(“Adams”), and Eun (Angela) Nam (“Nam”) (together with FTAI, “Defendants”).
2
 “MTD” refers to the Memorandum of Law in Support of Defendants’ Motion to Dismiss (ECF
No. 69). Citations to “¶” or “¶¶” refer to paragraphs in the Complaint. Unless otherwise noted, all
emphasis has been added and internal quotation marks omitted throughout.
3
  Rather than file a request for judicial notice, Defendants introduced the Exhibits through a
declaration in support of their MTD. Defendants’ gamesmanship leaves Lead Plaintiffs with only
two paths—(i) waiving Lead Plaintiffs’ challenge to Defendants’ exhibits or (ii) filing a motion to
strike to contest Defendants’ exhibits. Therefore, Lead Plaintiffs opted to file the instant motion.
Indeed, under similar circumstances, courts within this District have construed similar motions as
“an invitation by the plaintiff to consider whether the [exhibits] as submitted by the defendant may
properly be relied upon.” Burns v. Bank of Am., 2007 WL 1589437, at *11 (S.D.N.Y. June 4,
2007) (quoting Monroe v. Bd. of Ed. of Town of Wolcott, Connecticut, 65 F.R.D. 641, 645 (D.
Conn. 1975)); see Bazzelle v. Novocure Ltd., 2025 WL 843668, at *6–7 (S.D.N.Y. Mar. 18, 2025);
In re AppHarvest Sec. Litig., 684 F. Supp. 3d 201, 238–40 (S.D.N.Y. 2023).


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filings with the Securities and Exchange Commission (the “SEC”), and a self-serving chart that

purports to contain FTAI’s stock prices. It is improper for Defendants to ask the Court to consider

these materials at the motion to dismiss stage for the truth of the matter asserted therein. At bottom,

the introduction of Defendants’ MTD exhibits impermissibly attempts to establish competing facts

and inferences inconsistent with the well-pled allegations of the Complaint, which must be

accepted as true at this stage. See Section III, infra.

        Accordingly, Defendants’ gamesmanship should be rejected, and their competing factual

contentions and exhibits should be either (i) disregarded or (ii) considered only to determine what

the documents stated—not for the truth of the matter asserted therein.

II.     LEGAL STANDARD

        On a motion to dismiss, Defendants may not introduce facts not alleged in the complaint

unless such facts fall into specific exceptions. Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007).

A motion to dismiss may draw only on the complaint’s: (i) allegations, (ii) documents attached or

incorporated by reference, or (iii) documents “upon which [the complaint] solely relies and which

[are] integral to the complaint.” Id.; Safran Elecs. & Defense SAS v. iXblue SAS, 789 F. App’x

266, 270 (2d Cir. 2019) (same).

        At any rate, even in such a situation “where public records [] are integral to a fraud

complaint [but] are not attached to it, the court . . . is permitted to take judicial notice of those

records” “only to determine what the documents stated,” and “not to prove the truth of their

contents.” Roth, 489 F.3d at 509; In re Hebron Tech. Co., Ltd. Sec. Litig., 2021 WL 4341500, at

*1 n. 2 (S.D.N.Y. Sept. 22, 2021) (with respect to matters of public record, considering them “‘not

for the truth of the matters asserted therein,’ but only ‘for the fact that the statements were made’”);

SEC v. Fiore, 416 F. Supp. 3d 306, 328–29 (S.D.N.Y. 2019) (same); Sharette v. Credit Suisse

Int’l., 127 F. Supp. 3d 60, 75 (S.D.N.Y. 2015) (same).


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        Moreover, even when courts take judicial notice of documents attached to a motion to

dismiss, they should “continue[] to draw all reasonable inferences in the [plaintiff’s] favor.” SEC

v. Ripple Labs, Inc., 2022 WL 762966, at *1 n.1 (S.D.N.Y. Mar. 11, 2022). “Outside of these

categories, it is generally not appropriate for a court, on a motion to dismiss, to consider

information or documents extrinsic to the complaint.” City of Austin Police Ret. Sys. v. Kinross

Gold Corp., 957 F. Supp. 2d 277, 287 (S.D.N.Y. 2013).

III.    ARGUMENT

        In support of their MTD, Defendants rely on a number of exhibits to create an alternative

version of the facts alleged in the Complaint. Specifically, Defendants seek judicial notice of

four categories of materials: (i) earnings call transcripts, (ii) certain SEC filings, (iii) FTAI’s

stock price chart, and (iv) certain accounting rules. Because Defendants impermissibly proffer

the exhibits solely to dispute facts of the Complaint and ask the Court to accept those facts as

true, the below exhibits should be either (i) disregarded or (ii) considered only to determine what

the documents stated—not for the truth of the matter asserted therein.

        A.      The Court Should Not Consider Certain Earnings Call Transcripts—
                Exhibits F, G, P—Relied Upon by Defendants’ MTD, For the Truth of the
                Matter Asserted Therein

        To the extent Defendants introduced Exhibits F (Q4 2022 Earnings Call Transcript), G (Q3

2022 Earnings Call Transcript), P (Q2 2022 Earnings Call Transcript) for the truth of the matter

asserted therein, the Court should not consider these exhibits. In re Bausch & Lomb, Inc. Sec.

Litig., 2003 WL 23101782, at *17 (W.D.N.Y. Mar. 28, 2003) (declining to consider earnings call

transcript “not attached to the complaint or incorporated by reference”). The earnings call

transcripts merely mention that the Company reported positive financial results (MTD at 8), which

Defendants argue should somehow exonerate them of securities fraud, or that the modules have

“different useful life” (MTD at 5). The only purpose of introducing these earnings call transcripts


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is to dispute the Complaint’s well-pled allegations that Defendants engaged in undisclosed,

complex accounting improprieties. Accordingly, the Court should not consider Exhibits F, G, and

P for the truth of the matter asserted therein.

       B.      The Court Should Not Consider Certain SEC Filings—Exhibits H, S, T, U—
               Relied Upon by Defendants’ MTD, For the Truth of the Matter Asserted
               Therein

       Defendants introduced Exhibits H (2023 Form 10-K), T (2015 Form 10-K), U (July 23,

2024 Form 8-K) to support their arguments that FTAI has disclosed its accounting practices around

its depreciation policy and adequately cautioned the market concerning the uncertainty of the

Company’s financial results. See MTD at 12, 13, 14, 21. That is also improper. Leaving aside the

fact that the Complaint did not cite or rely on Exhibit H and that Exhibit T was disseminated

outside of the Class Period, the content of the exhibits directly contradicts the Complaint’s

allegations that Defendants engaged in a fraudulent accounting scheme, where among other things,

they manipulated the depreciation of the modules, inflated the value of the modules, and

fraudulently transferred the modules between Aerospace Products and Aviation Leasing to

artificially inflate the Company’s financial results. See ¶¶90–98, 99–104. Despite the well-pled

allegations, Defendants cite Exhibit U to argue that “Plaintiffs do not allege any facts that

contradict FTAI’s repeated attributions of its Aerospace Products Adjusted EBITDA growth to

increasing customer demand.” MTD at 14. Accordingly, the Court should not accept these

statements for the truth of the matter asserted therein. See Staehr v. Hartford Fin. Servs. Grp., Inc.,

547 F.3d 406, 424-25 (2d Cir. 2008) (considering SEC filings only for the fact that they “contained

certain information” and not “for the truth of the matter asserted”).

       Additionally, Defendants improperly introduced Exhibit S (February 20, 2025 Form 8-K)

to assert that FTAI’s “Audit Committee had determined that the short sellers’ allegations were

‘without merit.’” MTD at 9–10, 15. First, Defendants seek to use the exhibit to directly contradict


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the Complaint’s allegations that the Company’s accounting practices surrounding its Aerospace

Products and Aviation Leasing were improper. Second, absent any actual reports published by the

Audit Committee and without engaging in further discovery, Defendants’ argument lacks a factual

basis to rely on the Audit Committee’s findings and to conclude that the Muddy Waters Report

and Snowcap Report were “without merit.” Third, Exhibit S postdates the Class Period, rendering

it irrelevant to investors already damaged by Defendants’ fraud. Accordingly, the Court should not

consider Exhibit S for the truth of the matter asserted therein. See Lateral Recovery, LLC v. Cap.

Merch. Servs., LLC, 632 F. Supp. 3d 402, 436 (S.D.N.Y. 2022) (“When a court takes judicial

notice of a document on a motion to dismiss, it should generally do so only to determine what

statements the documents contain not for the truth of the matters asserted.”).

       C.      The Court Should Not Consider FTAI Historical Stock Price Chart—Exhibit
               W—Prepared by Defendants

       Defendants’ Exhibit W (FTAI Historical Stock Price Chart) is improper and should be

disregarded. Specifically, Exhibit W, which purports to show that “FTAI’s stock price was trading

higher than it was immediately before Muddy Waters published its meritless report” (MTD at 10),

incorporates information that is long past the end of the Class Period, rendering it irrelevant for

the Court’s disposition of Defendants’ MTD. Acticon AG v. China N. E. Petroleum Holdings Ltd.,

692 F.3d 34, 41 (2d Cir. 2012) (finding that an increase in share price shortly after the close of the

class period only raises an issue of fact not resolvable at the motion-to-dismiss stage). Accordingly,

the Court should not consider Exhibit W.

       D.      The Court Should Not Consider Certain Accounting Standards—Exhibits K,
               M, V—Relied Upon by Defendants’ MTD, For the Truth of the Matter
               Asserted Therein

       Finally, to the extent that Defendants introduced Exhibits K (FASB ASC Topic 330), M

(FASB ASC Topic 606), and V (FASB ASC Topic 230) for the sole purpose to establish that (i)


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the Company had properly calculated the fair value and book value of its inventory (see MTD at

13) and (ii) the Company’s financials were accurate and not misleading, thereby rebutting well-

pled allegations concerning Defendants’ accounting scheme that improperly inflated the

Company’s financial metrics, the Court should not consider Exhibits K, M, and V “for the truth of

the matters asserted therein.” In re Hebron Tech., 2021 WL 4341500, at *1 n. 2.

IV.    CONCLUSION

       For the foregoing reasons, to the extent Defendants seek to establish the truth of the facts

asserted therein, the Court should decline to consider Exhibits F, G, H, K, M, P, S, T, U, V, and

W.

Dated: January 22, 2026                      Respectfully Submitted,

                                             LABATON KELLER SUCHAROW LLP

                                             By: /s/ James T. Christie
                                             Michael P. Canty
                                             James T. Christie
                                             140 Broadway
                                             New York, New York 10005
                                             Telephone: 212-907-0700
                                             Facsimile: 212-818-0477
                                             [email protected]
                                             [email protected]

                                             KESSLER TOPAZ MELTZER
                                             & CHECK, LLP
                                             Sharan Nirmul
                                             Geoffrey C. Jarvis
                                             Vanessa M. Milan
                                             280 King of Prussia Road
                                             Radnor, PA 19087
                                             Telephone: (610) 667-7706
                                             Facsimile: (610) 667-7056
                                             [email protected]
                                             [email protected]
                                             [email protected]

                                             Counsel for Lead Plaintiffs City of Hollywood
                                             Firefighters’ Pension Fund and Boston Retirement
                                             System and Lead Counsel for the Class


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Case 1:25-cv-00541-JAV   Document 73     Filed 01/22/26      Page 8 of 9


                             KLAUSNER, KAUFMAN, JENSEN &
                             LEVINSON
                             Robert D. Klausner
                             7080 N.W. 4th Street
                             Plantation, Florida 33317
                             [email protected]

                             Additional Counsel for Lead Plaintiff City of
                             Hollywood Firefighters’ Pension Fund


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        Case 1:25-cv-00541-JAV            Document 73      Filed 01/22/26      Page 9 of 9


                           LOCAL RULE 7.1(C) CERTIFICATION

        I, James T. Christie, hereby certify that this memorandum of law complies with the word-

count limitations set forth in Rule 7.1(c) of the Local Rules of the United States District Court for

the Southern District of New York and Section 5(c) of the Court’s Individual Rules and Practices

in Civil Cases, and contains 1,837 words, exclusive of the caption, table of contents, table of

authorities, signature blocks, and this certificate.


DATED:           January 22, 2026
                 New York, New York


                                                              /s/ James T. Christie
                                                                 James T. Christie


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