Judge rejects Boeing's plea deal with DOJ, citing diversity issue

A federal judge on Thursday rejected a plea deal that had been inked between Boeing and the Justice Department earlier this year alleging the planemaker had committed fraud related to 737 MAX crashes overseas more than five years ago.

The decision by Judge Reed O’Connor in the Northern District of Texas effectively sends the matter back to the Justice Department to be sorted out, including potentially by the incoming administration of President-elect Donald Trump, which could elect to simply let the matter die.

In rejecting the deal, which was reached after DOJ alleged that the airplane manufacturer had violated a previous plea agreement related to two 737 MAX crashes in Indonesia and Ethiopia in 2018 and 2019 that killed 346 people, O’Connor said his decision was rooted in concerns about diversity policies at both Boeing and DOJ that may have influenced the government’s decision in selecting an independent monitor to oversee Boeing.

“The Court is concerned with the Government’s shifting and contradictory explanations of how the plea agreement’s diversity-and-inclusion provision will practically operate in this case,” O’Connor said in the 12-page decision. Overall, O’Connor said the general monitor provisions are against the public interest; he also noted that victims’ families also objected to the oversight process (some families of crash victims have said they want to have final say over the independent monitor).

O’Connor’s concern appears to have stemmed from a previous request from the victims’ families asking that they have final say on who should monitor Boeing, “in keeping with the Department’s commitment to diversity and inclusion.”

In October, O’Connor determined it was important to know how diversity policies, if a factor, still ensure “safety and compliance efforts as a result of Boeing’s fraudulent misconduct” and how the company’s internal focus on diversity and equity “impacts its compliance and ethics obligations.”

In its response, DOJ defended its policies, repeatedly stressing that regardless of the broad pool of candidates considered for the role, it “must select and does select the most qualified candidate irrespective of race or gender, or any other non-merit factor.”

In its own filing, Boeing at the time said the aerospace company “does not compromise on merit or talent in pursuit of those aspirations and has a merit-based performance system with procedures aimed at encouraging an equality of opportunity, not of outcomes,” adding that it strictly observes the law prohibiting discrimination and “does not employ racial quotas in hiring or promotion decisions.”

Boeing did not immediately respond to requests for comment. A DOJ spokesperson said it is reviewing the opinion. DOJ and Boeing have 30 days to let O’Connor know how they wish to proceed.

In 2021, Boeing and DOJ reached a plea agreement that allowed the planemaker to avoid prosecution for a fraud charge related to the earlier crashes. That agreement included a probationary period during which it was to pay millions of dollars in fines and improve various internal business and manufacturing practices, among other conditions.

But in May, following a high-profile incident in January where a door plug blew off an Alaska Airlines 737 MAX jet in midair, DOJ ruled that Boeing had not honored the agreement.

Boeing first accepted DOJ’s terms in July, and O’Connor has been considering the petition since, a process that has included petitions from victims’ families to reject the plea and documents submitted by Boeing whistleblowers related to the crashes.

O’Connor finally heard from families, DOJ and Boeing in early October to discuss the plea.

Following the hearing, O’Connor, a George W. Bush appointee, in October said before he could rule, he’d need information from DOJ and Boeing on how much of a factor diversity practices would be in selecting a third-party monitor as part of the plea deal, and how diversity policies are applied in Boeing’s business practices.

The families have argued that Boeing long neglected its manufacturing and production lapses that could have contributed to the calamity, though investigators have concluded that faulty flight control software on the 737 MAX contributed to the crashes. In court documents related to the crashes, Boeing admitted that two of its employees had deceived the FAA about the flight control software implicated in those crashes.

Regardless of how DOJ proceeds, whether this year or under Trump, Boeing remains under a microscope from the Federal Aviation Administration, the National Transportation Safety Board, and lawmakers on Capitol Hill.