News Analysis

Months after the Department of Justice (DOJ) offered Boeing a plea deal to avoid criminal fraud charges, a U.S. judge threw a curveball in the case, rejecting the deal after taking issue with a “diversity and inclusion” provision in selecting a monitor to supervise the company’s safety practices, along with how the court would participate in that process.

The United States charged Boeing with fraud on Jan. 7, 2021, following the 2018 and 2019 737 MAX 8 crashes, which killed all 346 people onboard both flights. The DOJ accused the aerospace company of deliberately hiding its Maneuvering Characteristics Augmentation System software, which caused both planes to stall midair and fall to the ground, from Federal Aviation Administration regulators.

To avoid criminal charges, the DOJ offered Boeing a deferred prosecution agreement: a criminal settlement that required the plane manufacturer to pay a total of $2.5 billion in damages, including a $243.6 million penalty and a $500 million fund to compensate families of the 737 Max crash victims.

Boeing had to remain in compliance for three years after the agreement was signed—which ended on Jan. 7. But, two days prior, a door panel ripped off an Alaska Airlines Boeing 737 MAX 9 flight midair, changing the company’s fortunes overnight and thrusting its safety practices back into public scrutiny.

After the DOJ wrote in a May 14 court filing that Boeing had violated the criminal settlement, which the company denied, Boeing then pleaded guilty to defrauding the United States over the 737 MAX 8 crashes. The plea deal would have required Boeing to pay an additional $243.6 million fine, invest $455 million into safety and compliance programs, and submit to three years of independent monitoring over its safety and quality control.

Now that U.S. District Judge Reed O’Connor has rejected the deal, the aerospace giant faces several possible outcomes, aside from appealing the ruling, aviation and legal experts told The Epoch Times.

“[The DOJ] can sit down with Boeing and rework the plea deal so that the monitor selection process is more acceptable to the court. Or they can take Boeing to trial on the conspiracy charge,” Erin Applebaum, a partner at Kreindler & Kreindler LLP, which represents 34 families who lost loved ones on Ethiopian Airlines Flight 302, told The Epoch Times.

“I have no doubt that the first option is what will happen. I fully expect that DOJ and Boeing will rewrite the plea so that its terms are more favorable to the court.”

Judge Objects to ‘Diversity’ Provision

O’Connor wrote in a Dec. 5 order that he had concerns about a diversity and inclusion provision in Boeing’s plea deal with the DOJ. He targeted a single sentence in the plea agreement that referenced the DOJ’s diversity policy in selecting an independent monitor to monitor Boeing’s safety compliance practices.

“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 wrote. “The parties’ DEI efforts only serve to undermine this confidence in the Government and Boeing’s ethics and anti-fraud efforts.”

Shawn Pruchnicki, aviation safety expert and assistant professor at Ohio State University’s Center for Aviation Studies, said the monitor had an “amazingly important task” of supervising the company’s safety compliance practices.

“I stand fully behind [diversity], but I think many of us in aerospace and certainly in aviation, just like we do on the flight deck ... we want someone who is qualified, that can meet the same requirements that we get,” Pruchnicki told The Epoch Times.

Applebaum said she and the victims’ families are very appreciative of the court’s mandating that the DOJ and Boeing improve the monitor selection process.

“Though there is still much work to be done, the imposition of a highly qualified monitor who will hold Boeing’s feet to the fire is a good first step towards strengthening aviation safety and ensuring that there are no more Boeing crashes,” she said.

Other Plea Deal Objections

In rejecting the deal, O’Connor also criticized how the DOJ positioned the court in the monitor selection process.

“At this point, the public interest requires the Court to step in,” he wrote in his order.

“Marginalizing the Court in the selection and monitoring of the independent monitor as the plea agreement does undermines public confidence in Boeing’s probation, fails to promote respect for the law, and is therefore not in the public interest.”

He also noted that the families of the 737 MAX 8 crash victims took issue with the government’s role in the plea deal.

“They argue, in essence, that the Government has monitored Boeing since the case was filed and yet failed to ensure Boeing’s compliance,” O'Connor wrote. “Because of this failure, they contend the monitor should be selected by and report to the Court to guarantee compliance.”

Michael Stumo, who lost his daughter in the Ethiopian Airlines crash, told The Epoch Times earlier this year that he strongly objected to the deal the DOJ had offered Boeing.

“It’s a weak slap on the wrist for one of the biggest corporate death cases in U.S. history,” Stumo said.

In a Dec. 5 post on social media platform X, he said he was “very glad” the judge had rejected the deal.

“DOJ’s ‘coddling corporate criminals’ policy just got ... nailed,” he wrote.

Boeing and the DOJ now have 30 days to respond to the court on how they plan to proceed with the case, O’Connor said.

What Happens Next

Vikramaditya Khanna, a corporate law professor at the University of Michigan, told The Epoch Times that Boeing and the DOJ may go back to the negotiating table but that an appeal could be difficult given the trial court’s discretion in approving a settlement.

“I’m not sure if this affects Boeing’s government contracts—I presume they will be likely to renegotiate the plea, and that will likely include things on government contracts,” he said.

“If there is no plea, then there are several questions about government contracts if Boeing were to be found liable for fraud at some point.”

Applebaum said that Boeing’s sentence could change if the DOJ decides to take the company to trial on the conspiracy charge and convict it. Otherwise, the manufacturer would face the same charges after losing the plea deal.

“In a perfect world, the families would see Boeing executives put on trial and held accountable for the deaths of their loved ones. But we have accepted the reality that this outcome is unrealistic,” she said.

“The families want Boeing to significantly improve its safety and compliance culture. A weak plea deal will do nothing to effectuate major change within the company, which is why the families pushed so hard for DOJ to include stringent and punitive terms as part of the plea agreement.”

Pruchnicki, who testified before the U.S. Senate in April about the issues with Boeing’s safety culture, said individuals at the company should still be held accountable and there should not be a plea deal.

“This is what it comes down to at the end of the day; the DPA, the deferred prosecution agreement, they clearly, without a doubt, [violated it],” he told The Epoch Times.

“They need to be held accountable for that. It was an absolute joke with what they came up with, completely insulting to the American public and completely insulting to the courts.”

Sam Dorman contributed to this report.