Shannahan v. FTAI Aviation Ltd. — Entry #75: REPLY MEMORANDUM OF LAW in Support re: 72 MOTION to Strike Document No

Case 1:25-cv-00541-JAV         Document 75    Filed 02/12/26     Page 1 of 12


                        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.


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


       Case 1:25-cv-00541-JAV           Document 75        Filed 02/12/26      Page 2 of 12


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

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

further support of Lead Plaintiffs’ Motion to Strike Certain Exhibits from Defendants’ 1 Motion to

Dismiss the Amended Class Action Complaint (the “Complaint,” ECF No. 64). 2

I.     INTRODUCTION

       Defendants’ MTS Opposition is masterclass in hyperbole over substance. To start,

Defendants condemn the MTS as procedurally improper and accuse Lead Plaintiffs of only using

it as a vehicle to circumvent word limitations in the MTD Opposition. Defendants, however, ignore

that courts within this District have granted identical relief. See, e.g., Gagnon v. Alkermes PLC,

368 F. Supp. 3d 750, 763 (S.D.N.Y. 2019) (striking motion to dismiss exhibits pursuant to Rule

12(d)); Micholle v. Ophthotech, Corp., 2019 WL 4464802, at *11 n. 13 (S.D.N.Y. Sept. 18, 2019)

(striking motion to dismiss exhibits pursuant to FRE 201). Contrary to their lengthy brief, it is

Defendants who committed procedural error here by both including improper extraneous

documents in their motion to dismiss and failing to submit a standalone motion requesting judicial

notice. 3 Lead Plaintiffs simply seek to address these errors by moving to strike those improperly


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
  “Citations to “¶” or “¶¶” refer to paragraphs in the Complaint. Unless otherwise noted, all
emphasis has been added and internal quotation marks omitted throughout. “MTS” refers to Lead
Plaintiffs’ memorandum of law in support of their motion to strike (ECF No. 73). “MTS Opp.” or
“MTS Opposition” refers to Defendants’ memorandum of law in opposition to Lead Plaintiffs’
motion to strike (ECF No. 74). “MTD” refers to Defendants’ memorandum of law in support of
Defendants’ motion to dismiss (ECF No. 69). “MTD Opp.” refers to Lead Plaintiffs’ memorandum
of law in opposition to Defendants’ motion to dismiss (ECF No. 71).
3
  Indeed, Defendants’ footnote request for judicial notice is improper. See, e.g., Philpot v. Alternet
Media, Inc., 2018 WL 6267876, at *5 n.1 (N.D. Cal. Nov. 30, 2018) (rejecting defendant’s request
for judicial notice “state[d] in a footnote in its motion to dismiss” on the basis that “[defendant]
submits no formal request for judicial notice” and “does not explain what, if anything, the Court
is supposed to infer from [the extrinsic evidence proffered]”).
                                                  1


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relied on documents.

       Defendants’ other arguments similarly fail. Defendants’ contention that Lead Plaintiffs

used the MTS improperly to pad their MTD Opposition is absurd. See MTS Opp. at 1–2. Lead

Plaintiffs’ MTS makes no merits arguments and is limited to addressing the documents at issue

and why Defendants’ inclusion of them at this stage is improper. 4

       Moreover, Lead Plaintiffs’ request that the Court not credit Defendants’ exhibits for the

truth of the matter asserted is not an admission that the MTS lacks merit, as Defendants aver. MTS

Opp. at 3. Indeed, many documents were mentioned in the Complaint in an exceedingly passing

manner, which courts frequently find to be grounds for refusal to notice such documents. See

Bergensen v. Manhattanville College, 2021 WL 3115170, at *2 (S.D.N.Y. July 20, 2021) (finding

documents not incorporated by reference when the plaintiff “makes several clear references . . .

and quotes it twice”). As is uniform in any opposition to a proper request for judicial notice, Lead

Plaintiffs have requested that if the Court finds any document appropriate for notice, that it refuse

to consider them for the truth of the matter asserted as Defendants seek.

       All told, Defendants’ MTS Opposition confirms Lead Plaintiffs’ concern about

Defendants’ improper use of the 11 exhibits to dispute the Complaint’s well-pled allegations.

Defendants’ use of the Exhibits and request that the Court interpret the documents in a way

inconsistent with the Complaint’s well-pled allegations are inappropriate at this stage of the

proceedings. Indeed, “a court at this stage of our proceeding is not engaged in an effort to

determine the true facts.” Doe v. Columbia Univ., 831 F.3d 46, 48 (2d Cir. 2016). Accordingly,

for the reasons stated herein in the MTS, Lead Plaintiffs respectfully request that the Court grant


4
  Ironically, Defendants’ MTS Opposition is dripping with merits arguments—evincing a double
standard that cuts against Defendants’ arguments. See, e.g., MTS Opp. at 9–10, 11–13, 14–18.
                                                 2


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the MTS in full.

II.    ARGUMENT

       A.      The Court May Properly Consider Lead Plaintiffs’ MTS

       Lead Plaintiffs ask the Court to strike or exclude certain documents or, at the very least,

decline to use the documents for the purposes requested by Defendants. In their MTS Opposition,

Defendants first argue that the MTS pursuant to Rule 12(f) is “procedurally improper” and should

be denied on those grounds. MTS Opp. at 3–4. However, it is well within the Court’s authority to

strike or exclude matters presented outside the pleadings on a Rule 12(b)(6) motion to dismiss—

such as those Defendants submit here. See, e.g., Gagnon, 368 F. Supp. 3d at 763 (striking motion

to dismiss exhibits pursuant to Rule 12(d)); Micholle, 2019 WL 4464802, at *11 n. 13 (striking

motion to dismiss exhibits pursuant to FRE 201); City of Austin Police Ret. Sys. v. Kinross Gold

Corp., 957 F. Supp. 2d 277, 288–89 (S.D.N.Y. 2013) (granting plaintiff’s motion to strike exhibits

submitted in connection with defendants’ motion to dismiss in an attempt to dispute allegations in

complaint); In re UBS Auction Rate Sec. Litig., 2010 WL 2541166, at *16 (S.D.N.Y. June 10,

2010); Fonte v. Bd. of Managers of Cont’l Towers Condo., 848 F.2d 24, 25 (2d Cir. 1988) (“the

court may exclude the additional material and decide the motion on the complaint alone. . . .”);

Fed. R. Civ. P. 12(d) (“If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings

are presented to and not excluded by the court, the motion must be treated as one for summary

judgment under Rule 56.”). Indeed, “[w]hether to grant or deny a motion to strike is vested in the

trial court’s sound discretion.” Schneidermesser v. NYU Grossman Sch. of Med., 2024 WL

4054372, at *1 (S.D.N.Y. Sept. 5, 2024). Accordingly, the MTS is procedurally proper and can

be considered by the Court.


                                                3


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        B.      The Court Should Not Consider Certain Earnings Call Transcripts—Exhibits
                F, G, and P

        Defendants cannot make the required showing for incorporation by reference for Exhibits

F, G, and P when Defendants admit that Exhibit F was only referenced once; Exhibit P was

referenced once; and Exhibit G was referenced three times. See MTS Opp. at 5. “A mere passing

reference or even references . . . to a document outside of the complaint does not, on its own,

incorporate the document into the complaint itself.” QED, LLC v. Faber Daeufer & Itrato, P.C.,

2021 WL 707073, at *2 (S.D.N.Y. Feb. 22, 2021) (quoting Williams v. Time Warner Inc., 440 F.

App’x 7, 9 (2d Cir. 2011)); see also Cosmas v. Hassett, 886 F.2d 8, 13 (2d Cir. 1989) (holding that

where “[t]he amended complaint merely discussed [certain] documents and presented short

quotations from them” the documents were not incorporated by reference because “[l]imited

quotation does not constitute incorporation by reference”). “As such, the few small quotations in

the Complaint do not incorporate the Statement by reference.” Bergensen, 2021 WL 3115170, at

*2 (finding documents not incorporated by reference when the plaintiff “makes several clear

references . . . and quotes it twice”).

        Even if the documents can be properly considered, Defendants’ argument that “[t]hese

documents provide context for Plaintiffs’ assertion that, ‘[e]ven prior to the Class Period,’

Defendants misleadingly ‘lauded FTAI’s purportedly strong and growing Aerospace Products’

EBITDA’” demonstrates exactly why the Court should not consider them for their truth. MTS

Opp. at 6. For instance, Defendants purportedly offer Exhibit G to add the additional context that

“FTAI was experiencing ‘a rapidly expanding backlog of aerospace products business.’” Id.

Likewise, according to Defendants, Exhibits F and P purportedly explain “why FTAI was seeing

a rapidly expanding backlog.” MTS Opp. at 6–7. However, if not offered for its truth that the

Company’s EBITDA grew because of organic customer demand (and not because of Defendants’


                                                 4


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fraudulent accounting improprieties, as the Complaint alleges), for what other purposes could this

document serve? None. Therefore, the Court should not consider Exhibits F, G, and P, or at the

least, not for the truth of the matter asserted therein. 5 MTS at 3–4.

        C.      The Court Should Not Consider Certain SEC Filings—Exhibits H, S, T, U

        As an initial matter, while Defendants concede that Exhibit T, which the Complaint neither

cites nor relies on, is not incorporated by reference, see MTS Opp. at 8–11, Defendants insist that

the Complaint’s passing reference to Exhibit H (2023 10-K) warrants incorporation by reference.

See MTS Opp. at 9. Not so. As explained, “[a] mere passing reference or even references . . . to a

document outside of the complaint does not, on its own, incorporate the document into the

complaint itself.” QED, LLC, 2021 WL 707073, at *2. In fact, the Complaint does not quote a

single word from Exhibit H. See ¶137 (quoting from Q2 Form 10-Q); ¶163 (quoting from Q3 Form

10-Q). Therefore, Defendants have no basis to claim that Exhibit H is “expressly incorporated by

reference.” MTS Opp. at 9.

        Next, to the extent that Defendants argue that the documents are judicially noticeable, the

Court may only judicially notice these documents for the limited purpose of determining “what

statements [they] contained.” Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007). This, however,

is not what Defendants are requesting, nor how the MTD uses these documents. Rather,

Defendants ask the Court to consider these documents for the truth of the matter asserted, which

is improper at this stage. See id. (“If the court takes judicial notice, it does so in order ‘to determine

what statements [they] contained’—but ‘again not for the truth of the matters asserted.’”).

Specifically, Defendants posit that Exhibits H and T were offered to show that FTAI’s accounting


5
  Kramer v. Time Warner Inc. is inapposite. As explained in n. 2, supra, Lead Plaintiffs never
asked that the Court should “refrain from considering such documents.” 937 F.2d 767, 774 (2d
Cir. 1991).
                                                    5


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or depreciation policies were not “unknown to investors.” 6 MTS Opp. at 9.

       Exhibits H and T were only offered to support Defendants’ counterfactual narrative: that

FTAI had properly and faithfully complied with its accounting policies. 7 See MTS Opp. at 8–11.

For instance, in their MTD Opposition, citing Exhibit H, Defendants argue that “FTAI also

disclosed that its Aerospace Products’ revenue is ‘accounted for within the scope of ASC 606.’”

MTD at 12–13. Similarly, Defendants cite Exhibit T to argue that “FTAI disclosed in each of its

annual reports that it depreciates engines carried as leasing equipment ‘using the straight-line

method’ over an estimated useful life of ‘2-6 years, based on maintenance adjusted service life.’”

Id. As such, Defendants improperly use these exhibits to proffer a competing factual narrative

unripe for consideration that FTAI had complied with ASC 606 and its depreciation policy. See

MTS at 4–5. Accordingly, the Court should not consider Exhibits H and T for the truth of the

matter asserted therein.

       Defendants’ argument with respect to Exhibit U is similarly flawed. Defendants offer

Exhibit U for its truth that customer demand fueled FTAI’s EBITDA growth and 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. Such factual

argument is in direct contention with the Complaint’s well-pled allegations concerning


6
  However, as already explained in Lead Plaintiffs’ MTD Opposition, “the fact that whether FTAI
fully disclosed its accounting policies is irrelevant to the inquiry of whether Defendants employed
those accounting policies in a deceptive manner designed to boost EBITDA, as the Complaint
alleges.”6 MTD Opp. at 14.
7
   Indeed, Defendants’ misinterpretation of the Complaint’s allegations is confirmed by
Defendants’ own admission that the exhibits were offered to “rebut[] other nondisclosure
allegations concerning FTAI’s accounting policies.” MTS Opp. at 9.
                                                6


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Defendants’ EBITDA accounting scheme. 8 See MTS Opp. at 12. Worse, Defendants’ assertion

attempts to factually rebut Lead Plaintiffs’ allegations concerning the falsity of Defendant

Adams’s October 31, 2024 statement that attributed the adjusted EBITDA growth to Aerospace

Products’ “tremendous growth” and “organic growth.” See ¶¶156–73. Accordingly, even if Exhibit

U is incorporated by reference, the Court should not consider the document for its truth. See Glantz

v. James River Group Holdings, Ltd., 2025 WL 278440, at *5 (S.D.N.Y. Jan. 23, 2025).

       Finally, as to Exhibit S, Defendants’ MTS Opposition’s arguments are moot. MTS Opp. at

12–13. Even if this Court takes judicial notice of Exhibit S, the sole purpose for which Defendants

seek to use it is for the truth of the matter asserted. Specifically, Defendants request that the Court

take the results of FTAI’s whitewashed internal investigation discussed in Exhibit S as gospel, an

approach wholly inappropriate at the pleading stage. See Lateral Recovery, LLC v. Cap. Merch.

Servs., LLC, 632 F. Supp. 3d 402, 436 (S.D.N.Y. 2022) (“[w]hen 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”). The means undertaken by and

purported accuracy of the investigation described in Exhibit S are in direct contention with the

factual allegations of the Complaint. Bedrock civil procedure holds that such factual dispute is

unripe for adjudication at the pleading stage. At bottom, whether or not the Court notices Exhibit

S simply has no bearing on the MTD based on Defendants’ inappropriate usage thereof.


8
  Defendants’ reliance on I. Meyer is misplaced. There, the court took notice of a prospectus that
plaintiff failed to submit as an exhibit to a complaint “based only on an alleged written
misrepresentation appearing within th[at specific] prospectus [and] no misrepresentations
stemming from any other source.” I. Meyer Pincus & Associates, P.C. v. Oppenheimer & Co., 936
F.2d 759, 762 (2d Cir. 1981) (emphasis in original).
                                                  7


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       D.      The Court Should Not Consider Certain Accounting Standards—Exhibits K,
               M, V

       To start, Defendants once again misrepresent the MTS by stating “the Court should not

consider copies of relevant topics of the FASB’s ASC (Exhibits K, M, and V).” MTS Opp. at 15.

The MTS makes no such argument. See MTS at 5–6. To be clear, the thrust of the MTS here is

that Defendants introduce Exhibits K, M, and V for the sole purpose of establishing: (i) the

accuracy of the fair value and book value of its inventory (MTD at 13; MTS Opp. at 16–18) and;

(ii) the accuracy of the Company’s financials (MTS Opp. at 17–18). In essence, Defendants use

these documents to factually rebut that Defendants’ accounting scheme had improperly inflated

the Company’s financial metrics. See MTS Opp. at 16–18. The existence of an accounting standard

is one matter, but seeking judicial notice of that standard to presume the sanctity of FTAI’s

accounting practices is a different beast entirely. Defendants take the latter approach, which is

improper. Roth, 489 F.3d at 509.

       Defendants’ remaining arguments parrot the MTD and are divorced from the analysis at

issue here. For instance, relying on Exhibit M, Defendants insist that “Plaintiffs do not allege that

FTAI failed to estimate the fair value of the noncash consideration received in connection with

engine exchanges with its customers.” MTS Opp. at 17. Yet the Complaint alleges that modules

awaiting repair in FTAI’s inventory (mainly consisting of lower value modules) were valued 50%

higher than those sold to customers. ¶¶106–12; see MTD Opp. at 14–15. Similarly, citing Exhibit

V, Defendants point out that the adjustment “shows, at most, that FTAI had $244.353 million in

gains from asset sales that it did not attribute to operating activities.” MTS Opp. at 18. However,

that again ignores the Complaint’s allegations that Aerospace Products obtained 80% of its


                                                 8


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EBITDA from gain on sales. 9 See MTD Opp. at 14–15. At a minimum, accepting all factual claims

in the complaint as true and drawing all possible inferences from those allegations in favor of Lead

Plaintiffs, the Court may infer that FTAI performed little repair on the engines. See Rombach v.

Chang, 355 F.3d 164, 169 (2d Cir. 2004).

       E.      The Court Should Not Consider FTAI Historical Stock Price Chart—Exhibit
               W

       Defendants’ MTS Opposition also perplexingly levies loss causation arguments that

FTAI’s stock price after the end of the Class Period should negate a finding of loss causation. MTS

Opp. at 13–15. However, the Second Circuit has already clarified that “determining why a stock’s

price rebounded after an initial drop requires the court to consider ‘a competing theory of causation

and raises factual questions not suitable for resolution on a motion to dismiss.’” 10 Acticon AG v.

China N. E. Petroleum Holdings Ltd., 692 F.3d 34, 39 (2d Cir. 2012). Here, Defendants’ invitation

to consider the competing “inference that the market agreed with the Audit Committee: the short-

sellers’ (and thus Plaintiffs’) allegations of accounting improprieties are meritless” is exactly the

type of factual question that the Court cannot resolve at the motion to dismiss stage. See MTS Opp.

at 14. Therefore, Lead Plaintiffs request that if the Court is nonetheless inclined to consider Exhibit

W, it should not consider it for the truth of the matter asserted as Defendants request.

III.   CONCLUSION

       For the foregoing reasons, Lead Plaintiffs’ Motion to Strike should be granted.


9
  Patel v. L-3 Commun. Holdings Inc. is inapposite. There, the plaintiffs concluded that because
“the Whistleblower wore a suit to work on one of the days of Strianese’s visit, . . .” “Strianese met
with the Whistleblower in Huntsville.” 2016 WL 1629325, at *9 (S.D.N.Y. Apr. 21, 2016).
10
   Defendants’ argument is also blind to the fact that Congress, through the passage of the PSLRA,
already accounted for post-class period stock price increases through the 90-day lookback period.
See 15 U.S.C § 78u-4(e)(1). Thus, any concerns allayed by Defendants are illusory.
                                                  9


      Case 1:25-cv-00541-JAV   Document 75     Filed 02/12/26     Page 11 of 12


Dated: February 12, 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

                                    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


                                      10


      Case 1:25-cv-00541-JAV            Document 75       Filed 02/12/26      Page 12 of 12


                           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 3,011 words, exclusive of the caption, table of contents, table of

authorities, signature blocks, and this certificate.


DATED:           February 12, 2026
                 New York, New York


                                                              /s/ James T. Christie
                                                                 James T. Christie