The judge is reviewing the Boeing settlement and will make a decision “soon.”

Fort Worth, Texas and New York
CNN
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Boeing and the families of the victims of two deadly 737 Max crashes that occurred more than five years ago will have to wait to see what punishment the company will face for its misdeeds leading up to the crash.

A federal judge on Friday pressed U.S. Department of Justice officials to justify the terms of the Boeing deal and admit fraud after two fatal crashes of the Boeing 737 Max, but stopped short of deciding whether to accept the deal.

Boeing’s lawyers and federal prosecutors argued before U.S. District Judge Reed O’Connor in Fort Worth, Texas, that he should accept the settlement, while lawyers for relatives of crash victims urged him to reject it. In July, Boeing agreed to plead guilty to conspiring to defraud regulators.

Judge O’Connor said Friday that he would issue a ruling as soon as possible.

Over the past few weeks, the judge presented hundreds of pages of legal submissions from the parties. In the courtroom Friday, Paul Cassell, one of the lawyers representing the families of 346 people who died in the plane crashes that occurred in 2018 and 2019, said there were “eight reasons to reject this disastrous settlement.”

These included his claims that the deal allowed a cash-strapped corporation to impose pre-judgment penalties and that the deal didn’t go far enough to hold Boeing or its executives liable for the deaths of close relatives.

Sean Tonolli, senior deputy chief of the fraud section in the Justice Department’s criminal division, defended the settlement as “fair and equitable” and said the government had modified its approach to the settlement to address the families’ concerns.

Prosecutors reached the plea agreement after an extensive investigation and a series of meetings with the families, prosecutors say.

“Ultimately,” prosecutors said in an August court filing, Justice Department officials “failed to find the one thing that underlies the families’ most passionate opposition to the proposed resolution: evidence that could prove beyond a reasonable doubt that Boeing’s fraud caused the deaths of their loved ones.”

Boeing “deplores the untold losses suffered by the families,” Mark Filip, a lawyer representing Boeing, told the judge. In his opinion, the judge should accept the settlement. The company has already said in a court filing that it “is prepared to plead guilty and thereby accept ultimate responsibility for the crime” of conspiring to defraud regulators. Boeing said the planemaker has significantly strengthened and increased investment in its safety and compliance practices.

In July, Boeing agreed to plead guilty to one count of conspiracy to defraud the United States. Under the settlement, it will pay up to $487 million in fines, a fraction of the $24.8 billion that the families of victims of the two crashes are seeking from the company.

The families argued that the size of the fine represented a sweetheart deal for Boeing, allowing it to avoid two fatal crashes caused by a design flaw in the planes. They argue that Boeing’s past profits from each plane sold would allow for a much higher penalty than what the Justice Department says it can justify in the settlement.

Boeing also agreed to spend $455 million on its compliance and safety programs over the next three years, which the government said would be a 75% increase over the company’s annual spending on those programs.

But the biggest change from the settlement is that Boeing has agreed to operate under a court-appointed monitor for a period of three years to ensure it improves the quality and safety of its planes.

The allegation was another black eye for the company after a series of problems, ranging from embarrassing to tragic, that have befallen the company over the past six years. It was a major blow to the reputation of Boeing, a company once known for the quality and safety of its commercial aircraft.

In addition to the deadly 737 Max crashes, the company has faced a number of questions about the safety and quality of its planes. In January, a door plug on a 737 Max operated by Alaska Airlines exploded early in the flight, leaving a huge hole in the side of the plane, further damaging Boeing’s reputation.

The Justice Department argued that the penalties Boeing agreed to were the most severe available. He argued that he also won other improvements, including monitor oversight and a demand that Boeing spend more on safety and regulatory compliance when building planes.

The allegations allege that the company defrauded the Federal Aviation Administration during the process of certifying the 737 Max to carry its first passengers. The plane began service in 2017, but two fatal crashes grounded the planes for 20 months. The investigation revealed a design defect in the autopilot system. Boeing admitted responsibility for the fatal crashes and that its employees withheld information about the design defect from the FAA during certification.

In January 2021, federal prosecutors and Boeing reached an agreement to settle the criminal charges and postpone any prosecutions in the case. During a three-year trial period, Boeing agreed to improve quality and transparency issues in its dealings with the government.

But the Alaska Airlines incident occurred just days before the end of the trial period, prompting a series of federal investigations into the carrier’s practices and opening the door to prosecution under the original contract.