US judge rejects Boeing plea deal in conspiracy case stemming from fatal plane crashes

DALLAS– A federal judge on Thursday rejected a deal that would have allowed Boeing pleads guilty to a criminal conspiracy charge and pay a fine for misleading U.S. regulators about the 737 Max airliner before two of the planes crashed, killing 346 people.

U.S. District Judge Reed O’Connor in Texas declared that diversity, inclusion and equity or DEI Policies in government and at Boeing could make race a factor in selecting an official to oversee Boeing’s compliance with the agreement.

The decision creates uncertainty around criminal proceedings against the aerospace giant in connection with the development of its best-selling airline plane.

The judge gave Boeing and the Department of Justice 30 days to tell him how they plan to proceed. They could negotiate a new plea deal, or prosecutors could decide to take the company to trial.

THE Ministry of Justice said it was reviewing the decision. Boeing had no immediate comment.

Paul Cassell, lawyer for passenger families who died in the accidents, called the decision an important victory for the rights of crime victims.

“Federal prosecutors and top defense attorneys can no longer make backroom deals and simply expect judges to sign off on them,” Cassell said. “Judge O’Connor recognized that this was a sweetheart deal between the government and Boeing that failed to focus on the major concerns: holding Boeing accountable for its deadly crime and ensuring that nothing such will not happen again in the future.”

Many relatives of the deceased passengers accidentswhich took place off the coast of Indonesia and in Ethiopia within five months of each other in 2018 and 2019, have spent years calling for a public trial, prosecution of former company executives and financial sanctions more severe against Boeing.

The agreement that the judge rejected was reached in July and allegedly let Boeing plead guilty to defrauding regulators who approved pilot training requirements for the 737Max almost a decade ago. Prosecutors said they had no evidence to suggest Boeing’s deception played a role in the crashes.

In his ruling, O’Connor focused on part of the agreement that called for an independent monitor to oversee Boeing’s actions to prevent violations of anti-fraud laws during three years of probation.

O’Connor said he was particularly concerned that the agreement “requires the parties to consider race when hiring the independent monitor…” consistent with the Department of Justice’s commitment in favor of diversity and inclusion.

O’Connor, a conservative appointed to the bench by President George W. Bush, questioned Justice Department and Boeing lawyers in October on the role of the DEI in the selection of the instructor. Department lawyers said the selection would be open to all qualified candidates and based on merit.

The judge wrote in his Thursday ruling that he was “not convinced … that the government will not choose a monitor without racial considerations.”

“In a case of this magnitude, it is in the best interests of justice for the public to be satisfied that the selection of monitors is made solely on the basis of their qualifications. The parties’ DEI efforts only undermine this trust in government and in Boeing’s ethical and anti-fraud efforts,” he wrote.

O’Connor also objected that the plea agreement called for the government to choose monitor and that the appointee reports to the Department of Justice, not the court. The judge also noted that Boeing could have vetoed any of the six nominees chosen by the government.

Todd Haugh, a business law and ethics expert at Indiana University, doesn’t recall any previous corporate plea deals being rejected over DEI. He said the bigger issue was how the agreement took away the court’s sentencing power.

“It’s a legitimate argument to reject a plea deal, but this particular judge really took a stand on this DEI issue,” Haugh said. “That comes through loud and clear in the order.”

The decision leaves prosecutors in a bind because they can’t simply ignore a government DEI policy that dates back to 2018, he said.

Prosecutors must also weigh the risks and uncertain outcome before seeking a trial.

Boeing negotiated the plea deal only after the Justice Department determined this year that Boeing violated a 2021 agreement that protected it from criminal prosecution for the same fraud conspiracy charge.

Boeing’s lawyers said that if the plea deal was rejected, the company would contest the finding that it violated the previous agreement. Without this conclusion, the government has no argument.

The judge upheld Boeing’s position Thursday, writing that it was unclear what the company did to violate the 2021 agreement.

Justice Department accuses Boeing of fraud Federal Aviation Administration regulators who approved pilot training requirements for the 737 Max.

Following Boeing’s incomplete information, the FAA approved minimal computer-based training in lieu of more intensive flight simulator training. Simulator training would have increased the cost of operating the Max for airlines and may have pushed some to buy planes from rival Airbus.

When the Justice Department announced in 2021 that it had reached a settlement and would not sue Boeing for fraud, victims’ families were outraged. Justice O’Connor ruled last year that the Justice Department violated a victims’ rights law by not telling those close to him that he was negotiating with Boeing, but he said he had no power to cancel the agreement.

The 2021 deferred prosecution agreement was set to expire in January and it was widely expected that prosecutors would seek to permanently drop the case. However, a few days earlier, a door jam caused a 737 Max to blow up during an Alaska Airlines flight on Oregon.

The incident renewed concerns about manufacturing quality and safety at Boeing and subjected the company to increased scrutiny from regulators and lawmakers.

The case is just one of many challenges facing Boeing, which has lost more than $23 billion since 2019 and has fallen behind Airbus in the sale and delivery of new planes.

The company experienced a strike by workers at the factory which closed its doors most aircraft production for seven weeks this fall, and announced that he lay off 10% of its employeesapproximately 17,000 people. Its shares have plunged about 40% in less than a year.