A United States federal judge has rejected a deal that would have allowed Boeing to plead guilty to criminal conspiracy charges and pay fines for misleading US regulators about the 737 Max jetliner before two planes crashed and killed 346 people.
US District Judge Reid O’Connor in Texas said Thursday that the race could lead to the government and Boeing choosing an official to oversee compliance with the diversity, inclusion and equity — or DEI — policies of Boeing.
The ruling creates uncertainty surrounding the aerospace giant’s criminal prosecution over the development of its best-selling airliner.
The judge gave Boeing and the Justice Department 30 days to tell them how they plan to proceed. They may negotiate a new plea deal, or prosecutors may move to prosecute the company.
The Justice Department said it is reviewing the ruling. Boeing did not immediately respond.
Paul Cassel, an attorney for the families of passengers killed in the crash, called the decision a major victory for the rights of crime victims.
“No longer can federal prosecutors and high-powered defense attorneys craft backroom deals and expect judges to approve them,” Cassel said. “Judge O’Connor recognized that this was a cozy agreement between the government and Boeing that failed to focus on overlapping concerns — holding Boeing accountable for its deadly crime and ensuring that nothing like this happens in the future.”
Many relatives of passengers killed in crashes off the coast of Indonesia and in Ethiopia within five months of 2018 and 2019, respectively, have spent years demanding a public inquiry, prosecution of former company executives, and tougher financial punishment for Boeing.
The deal, rejected by a judge, was reached in July and sees Boeing plead guilty to defrauding regulators in approving pilot-training requirements for the 737 Max nearly a decade ago. Prosecutors said they did not have evidence to argue that Boeing’s fraud played a role in the accidents.
Role of DEI
In his ruling, O’Connor focused on the part of the agreement that called for an independent monitor to oversee Boeing’s actions to prevent violations of anti-fraud laws during the three-year probation period.
O’Connor expressed particular concern that the agreement “require parties to consider race when hiring an independent monitor … ‘consistent with the (Justice) Department’s commitment to diversity and inclusion.’
O’Connor, a conservative appointed to the bench by former President George W. Bush, questioned Justice Department and Boeing lawyers in October about DEI’s role in the monitor selection. The advocate of the department said that the selection will be open to all eligible candidates and on the basis of merit.
The judge wrote in Thursday’s ruling that he was “not convinced … that the government would not have selected the monitor without race-based considerations.”
“In a case of this magnitude, it is in the best interest of justice that the public have confidence that this monitor selection will be made solely on the basis of merit. The parties’ DEI efforts will only serve to undermine this confidence in the government’s and Boeing’s ethics and anti-fraud efforts,” he wrote.
O’Connor objected that the plea agreement called for the monitor to be selected and the appointee to report to the Justice Department, not the court. The judge noted that Boeing would be able to veto one of the six candidates selected by the government.
Todd Hogg, an expert in business law and ethics at Indiana University, could not recall any previous corporate solicitation cases rejected over DEI. A bigger problem, he said, was how the deal took sentencing powers away from the courts.
“It’s a legitimate argument to reject a plea deal, but this particular judge really stood by this DEI issue,” Hogg said. “It comes through loud and clear in order.”
He said the verdict binds prosecutors as they cannot ignore the government’s DEI policy going back to 2018.
Prosecutors must weigh the risks and uncertain outcomes before pushing for a trial.
Boeing negotiated the plea deal only after the Justice Department ruled this year that Boeing violated a 2021 agreement that shielded it from criminal prosecution on the same fraud-conspiracy charge.
Boeing lawyers have said that if the plea agreement is rejected, the company will challenge whether it violated the previous agreement. Without discovery, the government has no case.
A judge on Thursday backed Boeing’s position, writing that it was not clear what the company had done to violate the 2021 agreement.
The Justice Department accused Boeing of defrauding Federal Aviation Administration (FAA) regulators who approved pilot-training requirements for the 737 Max.
Acting on Boeing’s incomplete disclosures, the FAA approved minimal, computer-based training instead of more intensive training in flight simulators. Simulator training could raise costs for airlines to operate the Max and push some to buy planes from rival Airbus instead.
Outraged families
When the Justice Department announced in 2021 that it had reached a settlement and would not prosecute Boeing for fraud, the victims’ families were outraged. Judge O’Connor said last year that the Justice Department broke victim rights laws by not notifying relatives that it was negotiating with Boeing, but did not have the authority to cancel the deal.
A 2021 deferred-prosecution agreement was set to expire in January, and it was widely expected that prosecutors would try to drop the matter permanently. Just days before that, however, a door plug blew out a 737 Max during an Alaska Airlines flight over Oregon.
That incident renewed concerns about manufacturing quality and safety at Boeing and put the company under intense scrutiny from regulators and lawmakers.
The case is one of many challenges facing Boeing, which has lost more than $23bn since 2019 and has fallen behind Airbus in selling and delivering new planes.
The company halted most aircraft production for seven weeks earlier this year due to a strike by factory workers and announced it would lay off 10 percent of its workforce, about 17,000 people. Its shares have fallen nearly 40 percent in less than a year.
