Emotions ran high as relatives of passengers who died in Boeing 737 MAX crashes in both Indonesia and Ethiopia faced off last week against officials from the Chicago-based Boeing Co.
The basis for the case is a complex legal issue that will be decided by federal judge Reed O’Connor in Fort Worth.
The relatives are asking the judge to throw out a settlement that the company reached in January 2021 with the federal government to avoid prosecution. In the case, the relatives request that the government appoint a special monitor to examine safety issues at the aerospace giant.
The judge’s eventual ruling could have an impact on deferred prosecution agreements, a method of resolving disputes against a company by not prosecuting in exchange for the defendant agreeing to abide by certain conditions.
Although usually used in criminal cases, the Department of Justice began using these agreements in corporate cases in the 1990s, said Peter Reilly, professor of law at Texas A&M School of Law, who has studied their use for business cases. Reilly has consulted with Clifford Law Firm, who is representing the relatives in the case.
The Department of Justice has entered into the agreements with a variety of corporations, such as Herbalife Nutrition, Goldman Sachs and JP Morgan, according to a study by the Gibson Dunn law firm. There were 38 corporate deferred agreements, or the similar non-prosecution agreements, in 2020, according to the Gibson Dunn study.
Investigations into the two crashes focused on a flight-control system Boeing had added to the 737 MAX. The investigations led to a 20-month grounding of those aircrafts and prompted Congress to pass legislation to strengthen airplane certification.
In 2021, the federal government issued fraud conspiracy charges to the company because of the 737’s faulty design. Boeing agreed to pay $2.5 billion in fines — including $500 million to the families — in a deferred agreement with the Department of Justice. As a result of the agreement, the company was granted immunity from further lawsuits regarding the flawed design of the aircraft.
O’Connor of the U.S. District Court of Northern Texas ordered the Jan. 26 hearing after he rescinded Boeing’s immunity from prosecution by the U.S. Department of Justice on Jan. 19. Now, lawyers and families are trying to impose restrictions on Boeing they say could help prevent future crashes.
This hearing followed a ruling in October 2022 when O’Connor said the relatives’ representatives were crime victims.
The judge ruled that the Crime Victims’ Rights Act was violated in the agreement between the Justice Department and Boeing. That is significant, said Reilly.
“That’s a federal statute specifically saying, in the law, that the families must be conferred with by the Justice Department if they’re going to make a deal with the company and give them” a deferred agreement, he said.
Most deferred agreements are “bulletproof,” Reilly said. “Even if a judge thinks they are too lenient, usually toward the company, judges are obliged to approve them. There’s hardly any judicial review of these agreements.”
But in this case, the Crime Victims’ Rights Act, a federal statute, came into play when the families of those killed in the two crashes were recognized as victims by the judge in his October 2022 ruling, he said.
“If they’re going to make a deal with the company … they’ve got to confer with the families,” he said.
The hearing in Fort Worth on Jan. 26 was the first opportunity for many of the relatives to confront the airplane maker some four years after the two crashes that killed 346 passengers and crew. The planes crashed in Indonesia in 2018 and in Ethiopia in 2019. Most of the relatives live overseas and traveled a great distance to get to the Fort Worth courtroom.
Zipporah Kuria, who lost her father, Joseph Kuria, in a flight to Nairobi that killed 157 people in 2019, traveled from her home in London and spoke at the hearing, expressing distrust of Boeing and the deferred agreement. She and several other relatives spoke to the press after the court session ended.
“For all of these people, we are still stuck at March 10, still stuck on that day, and the injustice that just keeps unveiling,” she said outside the courthouse.
“It’s been four years of not knowing whether you’re coming or going, of trying to understand and wrap your mind around it,” she said. “It’s been a frustrating four years to see the DOJ, the FAA and Boeing, and wonder when common sense stops being common. When right and wrong stops being plain and understandable.”
Boeing and Justice Department representatives said in court that the families’ proposal for a special monitor is unnecessary because of existing oversight by the Federal Aviation Administration and the deferred agreement.
Families and lawyers expect O’Connor will make a ruling following a review of documents from the Department of Justice. The timing of that ruling is unknown.
Bob Francis is business editor for the Fort Worth Report. Contact him at bob.francis@fortworthreport.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
Seth Bodine is a business and economic development reporter for the Fort Worth Report. Contact him at seth.bodine@fortworthreport.org and follow on Twitter at @sbodine120.
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