Boeing plea deal related to Max crashes rejected by judge
By Chris Isidore, CNN
New York (CNN) — A federal judge on Thursday rejected a plea agreement between Boeing and the US government after the company said it would plead guilty to deceiving the Federal Aviation Administration ahead of two fatal 737 Max crashes.
The rejection by US District Court Judge Reed O’Connor citied his problems with the selection process for a independent monitor required in the plea deal to oversee safety and quality improvement at Boeing.
Boeing agreed in July to plead guilty to one charge of conspiracy to defraud the United States. Under the plea agreement it would pay up to $487 million in fines — a fraction of the $24.8 billion that families of victims of the two crashes want the company to pay.
O’Connor had problems with the idea that the Justice Department, not the court, would have approval over the selection of the monitor and how Boeing had performed under an earlier settlement with the Justice Department in January 2021 over the same charges. That agreement had deferred prosecution until the safety issues were again raised by a door plug blowing off a 737 Max plane flown by Alaska Airlines in January.
“It is fair to say the government’s attempt to ensure compliance has failed,” O’Connor wrote in his opinion. “At this point, the public interest requires the court to step in. Marginalizing the court in the selection and monitoring of the independent monitor as the plea agreement does undermines public confidence in Boeing’s probation.”
One of O’Connor’s problems with the plea agreement was that the Justice Department had said Boeing and Justice would have to consider race when hiring the independent monitor. But he also was upset that the court did not have a role in the selection process.
The families argued that the amount of the fine amounted to a sweetheart deal for Boeing, letting it off the hook for the two fatal crashes that were caused by a design flaw on the planes. They argue that Boeing’s previous profits on every plane sold would allow for a much larger fine than the one the Justice Department argues it can justify under the plea agreement.
“Rejection of the plea deal is an important victory of the families in this case and, more broadly, crime victims’ interests in the criminal justice process,” said Paul Cassell, attorney for family members of crash victims, in a statement. “No longer can federal prosecutors and high-powered defense attorney craft backroom deals and just expect judges to approve them. Victims can object – and when they have good reasons for striking a plea, judges will response.”
“This order should lead to a significant renegotiation of the plea deal to reflect the 346 deaths Boeing criminally caused and put in place proper monitoring of Boeing to ensure that it never again commits a crime like this in the future,” he added.
However it’s not clear that the families of the crash victims will be happier with any future plea agreement, said Todd Haugh, professor of business law and ethics at Indiana University’s Kelley School of Business. Any new plea agreement will be negotiated by the Justice Department in the incoming Trump administration and Boeing, not under the Biden administration. And it was the Trump administration’s Justice Department that originally reached a settlement with Boeing weeks before leaving office that deferred prosecution, allowed Boeing to pay a smaller fine and could have let the company eventually avoid a guilty plea or conviction on its record.
This could be a “be careful what you wish for” situation for the families, Haugh said.
Boeing did not immediately respond to a request for comment.
Under the July plea agreement Boeing also agreed to spend $455 million on its compliance and safety programs over the next three years, which the government said would represent a 75% increase over what the company was spending annually on those programs.
But the biggest change under the plea agreement was that Boeing agreed to operate under the supervision of a government-appointed monitor for a period of three years to make sure it improved the quality and safety of its aircraft.
The plea represented yet another black eye for the company after a series problems, ranging from embarrassing to tragic, for the company over the last six years. And it was a severe blow to the reputation of Boeing, a company once known for the quality and safety of its commercial aircraft.
According to the charges, the company defrauded the Federal Aviation Administration during the process of certifying the 737 Max to carry its first passengers.
The plane started service in 2017, but the two fatal crashes – in October 2018 and March of 2019 – led to a 20-month grounding of the jets, and investigations revealed a design flaw in its autopilot system. Boeing has admitted responsibility for the fatal crashes, and that its employees withheld information about the design flaw from the FAA during certification.
“Boeing profoundly regrets the accidents and the unspeakable losses that the crash victim representatives have suffered,” attorneys for the company said in an August filing in the case. “Boeing, for its part, has accepted responsibility for the Max crashes, publicly and in civil litigation, because the design of (a feature on the Max) contributed to those accidents.”
But Boeing argued in the filing that the misleading information it has admitted giving to the FAA during the certification process did not itself cause the crash.
And in its own filing in August, the Justice Department essentially agreed with that argument from Boeing.
“Yet in the end… (DOJ officials have) not found the one thing that underlies the families’ most passionate objections to the proposed resolution: evidence that could prove beyond a reasonable doubt that Boeing’s fraud caused the deaths of their loved ones,” said the Justice Department’s filing in support of the plea agreement.
This story has been updated with additional context and developments.
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