Boeing Plea Deal Rejected by Judge O'Connor

Today Judge Reed O’Connor rejected a proposed plea bargain between federal prosecutors and Boeing. The deal would have resolved Boeing’s criminal liability for its crime of lying to the FAA about the safety of the Boeing 737 MAX—lies that led directly and proximately to two crashes killing 346 people. The victims’ families objected to the deal, and Judge O’Connor agreed with them. He concluded the provisions in the proposed resolution concerning a corporate monitor of Boeing were not in the public interest. According, Judge O’Connor rejected the proposed plea. He gave the parties (Boeing and DOJ) thirty days to advise the court as to how they want to proceed now—via a trial or (as seems more likely) a new plea deal.

I’ve blogged about the Boeing case a number of times before. (See earlier posts here, here, here, and here.) For the last several years, I have represented families who lost loved ones in the two crashes of Boeing 737 MAX aircraft. 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 and made subject to an independent corporate monitor to ensure that no other plane will crash because of concealed safety issues. In July, DOJ and Boeing negotiated a sweetheart plea deal that did not meet these objectives. And so, in October, I argued before Judge Reed O’Connor (N.D. Texas) that he should reject the proposed plea agreement.

Today, Judge O’Connor agreed with the families and used his authority to reject the proposed plea deal. He gave two reasons.

First, Judge O’Connor was concerned about a DEI provision in the proposed plea. He concluded that, based on DOJ’s current policies, race would be part of a selection process for a corporate monitor under the plea: “[A] fair reading of the Executive Order’s text, the history of DOJ’s diversity-and-inclusion requirement, and the parties’ DEI policies—taken in totality—requires the Government to prioritize, among other things, race as part of the corporate monitor-selection process in furtherance of the goal to turn the federal workforce into ‘a model for diversity.’”

Judge O’Connor further concluded that, “[i]n 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. The parties’ DEI efforts only serve to undermine this confidence in the Government and Boeing’s ethics and anti-fraud efforts. Accordingly, the diversity-and-inclusion provision renders the plea agreement against the public interest.”

Even more significant was Judge O’Connor’s broader concern about structure of the corporate monitor. Judge O’Connor also rejected “the plea agreement because its compliance-monitor provisions erroneously marginalize the Court.” Under federal sentencing law, a judge must impose a sentence that “promotes respect for the law.” Both DOJ and Boeing had agreed that a corporate monitor was needed as part of the sentence. But the plea deal essentially made the corporate monitor an internal matter between DOJ and Boeing—improperly excluding a judicial role. As Judge O’Connor explained:

The plea agreement’s process for selecting the anti-fraud monitor, including prohibiting the Court from considering violations of the monitor’s anti-fraud recommendations, improperly marginalizes the Court. 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.

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, fails to promote respect for the law, and is therefore not in the public interest. Accordingly, the Court cannot accept the plea agreement.

In referring to the plea’s provision “prohibiting the Court from considering violations of the monitor’s anti-fraud recommendations,” Judge O’Connor adopted a key part of the arguments I made for the victims’ families. A provision in the proposed plea allowed Boeing to exempt itself from even having to follow the monitoring provisions. Specifically, Boeing’s “compliance obligations” under the plea were not actually made “conditions of probation.” Here’s the critical language in the proposed plea (paragraph 25(f) (emphasis added)):

A condition of probation shall be that the Defendant retain an Independent
Compliance Monitor, as provided in Paragraph 7(j). However, the condition of
probation is limited to the retention of the Independent Compliance Monitor—not
oversight of the Independent Compliance Monitor or the Company’s compliance
with the Independent Compliance Monitor’s recommendations. Rather, the
Independent Compliance Monitor will report to and be overseen by the Offices.
The Independent Compliance Monitor’s selection process, mandate, duties, review,
and certification as described in Paragraphs 29-37 and Attachment D, and the
Defendant’s compliance obligations as described in Paragraphs 7(k), 8, and 9 and
Attachment C, are not conditions of probation.

I explained the problems at greater length in my objection for the victim’s families at pp. 37-38 of my brief for the families. This language basically gave Boeing (quite literally) a get-out-of-jail free card:

By statute and Guidelines, a court is permitted to impose conditions of probation on a corporation that pleads guilty to an offense. See 18 U.S.C. § 3563; see also U.S.S.G. § 8D1.1. In addition to standard conditions, the Court may impose any other conditions that the court believes “are reasonably related to the nature and circumstances of the offense or the history and characteristics of the organization….” U.S.S.G. §8D1.3(c). Against this backdrop, it is hard to understand why the parties are proposing in their plea agreement a non-standard provision setting out “compliance obligations” for Boeing and then specifically indicating that these purported “obligations” are “not conditions of probation.” Are the “obligations” really “obligations”? This non-standard language seems rife with complicated interpretation issues.

As the families understand these provisions, if Boeing willfully decides to ignore the monitor’s recommendations, nothing can be done about it. The “breach” provision in the plea agreement ties back into conditions that are “conditions of probation.” Proposed Plea Agreement ¶ 38. Because Boeing’s “compliance obligations” are not conditions of probation, the standard enforcement mechanisms for breach are unavailable.

Judge O’Connor’s emphatic 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. Gone are the days when federal prosecutors and high-powered defense attorneys could just cook up backroom deals and expect judges to just blindly approve them. Victims can object—and when victims have good reasons for opposing plea deals, judges can and will reject them as against the public interest.

In this case, Judge O’Connor has correctly recognized that the pending agreement was a cozy deal between the Government and Boeing that failed to focus on the overriding concerns: holding Boeing accountable for its deadly crime and ensuring that nothing like this happens in the future. This order should lead to a significant renegotiation of the plea deal to directly reflect the 346 deaths Boeing criminally caused and put in place proper monitoring of Boeing to ensure that it never again criminally conceals safety issues with its aircraft. As the victims’ families have told me, a main goal here is: no third crash. A judicially appointed monitor—responsible to the court—is critical to achieving that goal.

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