Tough to say definitively, but it sure looks that way. Hard to fathom that someone, somewhere in SEA or CHI didn't contemplate this, but proceeding with the lawsuit seems to affirm they either truly didn't consider it, or they simply accepted that this was a risk and still thought it wise to proceed.
I still expect Boeing to fight this and try to make it painful, but since Airbus has played the American jobs card with the MOB assembly site, the argument appears to be on thin(ner) ice.
I get what you guys are saying here, and don't necessarily disagree, but I think it's a lot more complex than simple innovation. For starters, Boeing, Airbus, and Embraer have all been playing the incremental-upgrade game vs. clean-sheet innovation game. Bombardier rolled the dice with a full clean-sheet design and that clearly did not pan out, for many reasons, which is how we got here. The 787 program for Boeing still hangs in the balance - some still doubt Boeing's ability to recoup the $30B deferred production costs in the existing accounting block, let alone recoup the full amount at all. While that cash has long since been spent, if you did a post-mortem on the business case, it may show that the program never generated a sufficient return relative to it's risk profile.
As for the 757 - I love the look of it as much as anybody else, but it's really not without it's own issues. Very few 757 departures utilize the transatlantic range, and even fewer use the superior takeoff performance, which means it's woefully overbuilt for the capacity/range it offers. This is why you see Delta, United, and American replacing them with 737-900ER's and A321's. A 757neo would not have fixed this either - the existing current-generation gap would simply translate to the next-generation aircraft. With the benefit of hindsight, Boeing probably missed the mark by not offering enough range or payload on the existing 757 design. The wing and engines have considerable room for growth in Max Takeoff Weight to either add a lot more gas to go farther, or to stretch it even further (woof). By not utilizing either, it's simply an overbuilt machine that gets killed inside the range of 739's and A321's.