Should the Boeing Plea Deal on the 737 MAX Crashes Be Approved?

I have argued to Judge Reed O'Connor that he should reject the proposed "binding" plea deal because it obscures the relevant facts and fails to hold Boeing accountable for killing 346 people. A decision is expected soon.

For the last several years, I have represented families who lost loved ones in the crashes of two Boeing 737 MAX aircraft (see earlier posts here, here, and here). The families want Boeing held fully accountable for the harms caused by its federal conspiracy crime of defrauding the FAA about the safety of the 737 MAX. Last Friday, I argued before Judge Reed O'Connor (N.D. Texas) that he should reject the proposed plea agreement negotiated between Boeing and the Justice Department. Among other arguments, I explained that the proposed plea deal would improperly transform Boeing's conspiracy into a "victimless" crime rather than recognize the 346 deaths Boeing directly and proximately caused through its lies. This post summarizes a few of my arguments against the deal, along with linking to the main filings from both sides in the case--and the oral argument transcript--so that readers can see the competing positions. This post also includes an order from Judge O'Connor, issued yesterday, that directs DOJ and Boeing to provided additional briefing on a DEI provision in the proposed plea.

Some quick background to set the stage: In 2018 and 2019, two brand-new Boeing 737 MAX aircraft crashed in Indonesia and then Ethiopia, killing 346 passengers and crew. The Justice Department opened a criminal investigation into Boeing and soon developed compelling evidence that Boeing had defrauded by the FAA by concealing the capabilities of one of the plane's new software programs.

Faced with the Government's compelling evidence, in late 2020 and early 2021, Boeing secretly negotiated a lenient deferred prosecution agreement (DPA) with the Justice Department. The parties then filed the DPA with Judge O'Connor in the Northern District of Texas. Receiving no immediate objection to the DPA, Judge O'Connor allowed the agreement to move forward.

In December 2021, I filed an objection to the deal. I argued that the Justice Department had violated the rights of the families of the victims killed in the two crashes. In secretly negotiating the deal, DOJ violated the families right under the Crime Victims' Rights Act to confer with the prosecutors during the DPA negotiations. DOJ (and Boeing) responded that the families did not represent "crime victims," because the connection between Boeing's conspiracy crime and the crashes was too attenuated. But after two days of evidentiary hearings, in October 2022, Judge O'Connor disagreed—finding that the families represented "crime victims" and that the Justice Department had violated the families' CVRA rights to confer about the deal.

But ultimately, after a further hearing, in January 2023, Judge O'Connor ruled that while he had "immense sympathy for the victims and the loves ones of those who died in the tragic plane crashes resulting from Boeing's criminal conspiracy," he was unable to award them any remedy. I sought review in the Fifth Circuit. Last December, the Circuit concluded that, if a properly presented issue came before Judge O'Connor, he did have the power to take victims' rights into account in deciding how best to proceed.

Since then, in the wake of the Alaskan Air 737 doorplug blowout, in April the Justice Department concluded that Boeing breached its safety and compliance obligations under the DPA. Following that breach determination—which ended the deferral of prosecution provided by the DPA—in July Boeing and DOJ announced that they had reached a plea agreement to resolve the pending conspiracy charge.

When the parties unveiled the terms of their plea deal, the families were outraged. Previously I blogged about the families' objections to the plea and their motion to Judge O'Connor asking him to exercise his discretion to reject it. Both the Justice Department and Boeing have filed responses.

Here is an excerpt from the Justice Department's response, essentially arguing that this plea deal is the best they could do:

In the Government's judgment, the Agreement is fair and just, as well as a strong resolution of this matter that serves the public interest. And ultimately, the Government's decision to enter into this Agreement is dictated by what it can prove in court and what it cannot. The Government can prove beyond a reasonable doubt that Boeing defrauded the FAA, and that this fraud caused a gain of $243.6 million. For that conduct, the Government has secured the best criminal resolution possible. Yet despite exhaustive investigation—both prior to the 2021 DPA and more recently—the Government cannot prove beyond a reasonable doubt that Boeing's fraud directly and proximately caused the 737 MAX plane crashes, and it cannot prove beyond a reasonable doubt that the loss (or gain) arising from Boeing's fraudulent activity exceeded $243.6 million. Guided by the law, the evidence, and the Department's Principles of Federal Prosecution, the Government has obtained a resolution that sets out the facts it could prove at trial and carries a proposed sentence that satisfies each of the factors this Court must consider under 18 U.S.C. § 3553(a).

I filed a reply for the families.  One of the main points is that Boeing got special treatment through a "C-plea" (that is, a plea agreement under Fed. R. Crim. P. 11(c)(1)(C).) Under a C-plea, if the judge approves the deal, then he is required to impose the sentence that the parties stipulate.  As the argument is commonly phrased, the judge's "hands are tied" once he approves the C-plea.

The C-plea that the Justice Department and Boeing have presented to Judge O'Connor relies on a sentencing guidelines calculation that essentially assumes Boeing's crime caused no harm to anyone. But Judge O'Connor has already ruled that Boeing's crime killed 346 people, making the crime (by some measures) the "deadliest corporate crime in U.S. history."

The parties attempt to make the deaths vanish by arguing that Boeing must be sentenced based solely on facts that can be proven beyond a reasonable doubt. But at sentencing, under long-settled law, a defendant is conventionally held accountable for all harms that can be proven by a preponderance of the evidence. The introduction to my reply brief focuses on the Department's incorrect burden of proof:

The parties create a distorted record by misleadingly conflating the demanding proof-beyond-a-reasonable-doubt standard used in jury trials with the lower proof-by-a-preponderance-of-the-evidence standard applicable in sentencing proceedings. Under this lesser standard—which controls here—criminal defendants are responsible for all of their "relevant conduct," including all losses caused by their crimes. In this case, the Court has already found that Boeing's lies directly killed 346 people. For the parties, this is the truth that dare not speak its name. But faithfully determining the factual record on which to base Boeing's sentence requires considering these deaths. And with the deaths properly in mind, a host of features in the proposed plea agreement are revealed to be inadequate, such as its misleading guidelines calculations, paltry fine, non-transparent corporate monitor, insufficient remedial measures, and uncertain restitution awards. For all these reasons, the Court should reject the proposed plea.

To consider the competing positions, Judge O'Connor held a hearing last Friday. A  transcript of the two-hour argument is found here. The Justice Department argued that the plea was the best they could do:

This plea agreement is a strong and in-the-public-interest resolution. The plea agreement convicts Boeing of the felony crime it is charged with and compels the company to pay the maximum legal fine, the most the government could achieve if this case went to trial  and Boeing were convicted. It ensures that the Court can order Boeing to pay all lawful restitution to the families of the crash victims, the same as if Boeing were convicted at trial. It requires Boeing to continue to improve its compliance and ethics program, to better integrate that with its safety and quality, while respecting the jurisdiction of the FAA in that space and to have a monitor to oversee the improvements to compliance and ethics and to back up these efforts with an investment of almost half a billion dollars.

Were this case to go to trial, there's no guarantee that the Court could or would impose  these conditions or similar ones, but this agreement guarantees them.

The government acknowledges the deep disagreement that the families have with the plea agreement, though we endeavor[ed] through our conferrals to incorporate their voices and their views as much as was appropriate and feasible in the document.

Boeing agreed with the Government and argued that a "C" plea (a binding plea) was required to provide certainty to the outcome of the case:

[A]s the Court may know, the Boeing Company is a pillar of the American economy and a  pillar of the national defense. The Boeing Company employs 170,000, approximately, people. And it is not subdivided. In other words, the Boeing defense business is within the same company as Boeing commercial airplanes and Boeing global supply. It's all within one business that provides commercial airplanes, but also defense platforms.

And so, as the Court already said and knows and any guilty plea resulting in a felony offense, obviously, the DOD relevant personnel would review that. But it certainly has, under the federal regulations, debarment consequences. And that will be for the DOD programs to decide.

But what the "C" plea advances and accomplishes here is setting forth the record, if the  Court accepts it, that those officials would have and can proceed to make their decisions on that record. I would submit that's important, not just for Boeing, but for the national defense, because it will enable to them to proceed with their decisions.

I argued for the families that the plea deal was "rotten" because it concealed the truth that Boeing's lies killed people:

Let me go straight to the heart of the matter, which is that the parties are swallowing the gun in this case--that is, they are concealing, through legal maneuvering,  … the truth of the case.

Now, it's a well-established principle that in sentencing the Justice Department is  supposed to provide the Court all relevant facts, but they failed to do that here.  … I know that I'm making a strong assertion there and sometimes attorneys come in and make assertions that they can't back up -- but see, right here on the table is our 44-page Statement of Facts with redlining for the convenience of Your Honor and for the parties, showing exactly the facts that the Justice Department and Boeing are leaving out. And those are facts that go directly to the culpability of this company for the deadliest corporate crime in U.S. history.

And indeed, let's talk specifically about the deaths. Your Honor has already found that Boeing's crime directly and proximately caused the deaths of 346 people, making it the deadliest corporate crime in U.S. history. You would think that that fact would somewhere show up in the plea agreement that the parties are asking you to bless, but it doesn't. That is the fundamental reason why the families are here today asking you to reject this plea. It would be one thing if the parties said, 346 people died and now let's discuss with Judge O'Connor what the appropriate response is in terms of a criminal sentence. But they want you to go to sentencing in this case as though 346 people did not die.

At the end of the Friday hearing, Judge O'Connor promised a ruling quickly. And then, the next business day (yesterday, October 15), Judge O'Connor ordered the Justice Department and Boeing to file additional briefing on a DEI provision in the proposed plea related to the selection of a corporate monitor for Boeing. Judge O'Connor explained (footnotes omitted):

The Government has confirmed Boeing's fraudulent misconduct has burdened safety and compliance protocols. Accordingly, the corporate monitor's role centers precisely on  Boeing's "current and ongoing compliance with U.S. fraud laws," specifically focusing "on the integration of [Boeing's] compliance program with [Boeing's] safety and quality programs as necessary to detect and deter violations of anti-fraud laws or policies."

Given this, the Court needs additional information to adequately consider whether the Agreement should be accepted. Specifically, it is important to know: how the provision  promotes safety and compliance efforts as a result of Boeing's fraudulent misconduct; what role Boeing's internal focus on DEI impacts its compliance and ethics obligations; how the provision will be used by the Government to process applications from proposed monitors; and how Boeing will use the provision and its own internal DEI commitment to exercise its right to strike a monitor applicant. Accordingly, the parties should address the following:

• The Government SHALL provide the Court with the specific DOJ policy it referenced during the October 11 hearing and in the Agreement; definitions for the terms "diversity" and "inclusion" as stated in the Agreement; supplemental briefing explaining how the provision furthers compliance and ethics efforts; and how it will use the provision in selecting a proposed monitor.
• Boeing SHALL provide supplemental briefing explaining what it understands the provision to require; an explanation of how its existing DEI policies are used in its current compliance and ethics efforts; and how it intends to use DEI principles in exercising its strike of a proposed independent monitor.

Judge O'Connor directed the parties to file their briefs on the DEI issues by October 25. A ruling on whether he will accept or reject the plea will likely follow soon thereafter.

Note: I have been joined in representing the families by (among other excellent lawyers) Bob Clifford and Tracy Brammeier at Clifford Law Offices, Erin Applebaum at Kreindler & Kreindler, Pablo Rojas at Podhurst Orseck, and Warren Burns and Darren Nicholson at Burns Charest (very capable local counsel in Dallas).