Judge rejects Boeing plea deal that was opposed by families of crash victims

A US judge today rejected a Boeing plea agreement that was opposed by families of crash victims who say the deal would fail to hold Boeing accountable. The judge's ruling said the US "Government has monitored Boeing for three years now," and that, if US officials are correct that Boeing violated a previous agreement, "it is fair to say the Government's attempt to ensure compliance has failed." In July 2024, Boeing agreed to plead guilty to a criminal charge and pay $243.6 million for violating a 2021 agreement that was spurred by two Boeing 737 Max crashes in Indonesia and Ethiopia that killed a combined 346 people. If a new deal is not reached, Boeing could have to face trial over the charge for conspiracy to defraud the Federal Aviation Administration's Aircraft Evaluation Group. In his ruling today, Judge Reed O'Connor in US District Court for the Northern District of Texas objected to the process for selecting an independent monitor to oversee Boeing's ethics and anti-fraud compliance program. "As explained below, the plea agreement requires the parties to consider race when hiring the independent monitor," O'Connor wrote. "Additionally, the plea agreement marginalizes the Court in the selection and monitoring of the independent monitor. These provisions are inappropriate and against the public interest." In July, lawyers for victims' families said the deal struck with the federal government "unfairly makes concessions to Boeing that other criminal defendants would never receive and fails to hold Boeing accountable for the deaths of 346 persons."

Judge: Monitor’s recommendations would be toothless

"The victims' families opposing the plea agreement take issue with the process for selecting the monitor and with not requiring, as a condition of its probation, Boeing's compliance with the monitor's anti-fraud recommendations," O'Connor wrote today. "They argue, in essence, that the Government has monitored Boeing since the case was filed and yet failed to ensure Boeing's compliance. Because of this failure, they contend the monitor should be selected by and report to the Court to guarantee compliance." The compliance monitor is supposed to ensure that "Boeing implements a program designed to prevent and detect violations of US fraud laws," O'Connor wrote. Failing to retain a monitor would violate Boeing's probation, but O'Connor said that Boeing wouldn't actually have to comply with the monitor's recommendations. "[T]he plea agreement prohibits imposing as a condition of probation a requirement for Boeing to comply with the monitor's anti-fraud recommendations. Additionally, the independent monitor is selected by and reports to the Government, not the Court," O'Connor wrote. O'Connor also rejected the deal on the grounds that "Boeing will have the opportunity to prevent the hiring of one of the six monitor candidates chosen by the Government," and "the Government will select the independent monitor 'in keeping with the Department's commitment to diversity and inclusion.'"

Judge opposes diversity provision

O'Connor said that Boeing's court briefs and its diversity policies suggest that "Boeing will exercise its strike of one of the Government's six chosen monitor candidates in a discriminatory manner and with racial considerations." O'Connor said he is also skeptical that the government will consider all possible monitors and choose one based solely on merit and talent. "It seems fundamentally inconsistent for the Government to say 'in keeping with the Department's commitment to diversity and inclusion' means that the Government will not consider race," O'Connor wrote. "Otherwise, why would the Government represent to the Court in its briefing that the term 'diversity' in the plea agreement is 'generally consistent' with the 2021 Executive Order's definition, which explicitly includes race? Indeed, the Government must adhere to this Executive Order, and, consequently, that definition of 'diversity' controls what is required by the plea agreement." "In a case of this magnitude, it is in the utmost interest of justice that the public is confident this monitor selection is done based solely on competency," O'Connor also wrote. "The parties' DEI [diversity, equity, and inclusion] efforts only serve to undermine this confidence in the Government and Boeing's ethics and anti-fraud efforts." Boeing's alleged fraud is related to the 2021 deal in which Boeing signed a deferred prosecution agreement and agreed to pay $2.5 billion in penalties and compensation to airline customers and the victims' families. In May 2024, the Justice Department said it determined that Boeing violated the 2021 deferred prosecution agreement "by failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the US fraud laws throughout its operations."

US “attempt to ensure compliance has failed”

The DOJ made its determination after the January 2024 incident in which a 737 Max 9 used by Alaska Airlines made an emergency landing because a door plug blew off during a flight. The DOJ said that in addition to a $243.6 million fine, the deal would "require Boeing to invest at least $455 million in its compliance and safety programs, impose an independent compliance monitor, and allow the Court to determine the restitution amount for the families in its discretion, consistent with applicable law." Because of O'Connor's rejection, the parties will have to negotiate another deal or possibly go to trial over the government's allegation that Boeing violated the deferred prosecution agreement. O'Connor had the following to say about the government's allegations:

The Government has monitored Boeing for three years now. It is not clear what all Boeing has done to breach the Deferred Prosecution Agreement ("DPA"). The victims assert the "Government was forced to find that Boeing violated [the DPA] after the door fell off the Alaska airplane." Boeing hints that it may have legitimate arguments in opposition to the Government's determination of breach. Regardless, taken as true that Boeing breached the DPA, it is fair to say the Government's attempt to ensure compliance has failed.

O'Connor ordered Boeing and the US government to meet and confer and provide the court with an update on how they plan to proceed within 30 days.