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Judge rejects Boeing's ( BA ) plea deal over diversity provision

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Victims' families had called plea deal a 'sweetheart'

agreement

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Boeing ( BA ) faces potential renegotiation or appeal of plea

deal

(Adds details on plea deal, judge's ruling and judge's

background throughout)

By Mike Spector, Allison Lampert and David Shepardson

Dec 5 (Reuters) - A U.S. judge on Thursday rejected

Boeing's ( BA ) agreement to plead guilty to fraud in the wake of two

fatal 737 MAX crashes, faulting a diversity and inclusion

provision in the deal.

Boeing ( BA ) did not immediately comment. The U.S. Department of

Justice, which brokered the plea bargain with Boeing ( BA ), is

reviewing the opinion, a spokesperson said. Boeing ( BA ) and the DOJ's

options could include appealing the judge's rejection of the

plea deal or presenting a renegotiated agreement for court

approval.

U.S. District Judge Reed O'Connor in Fort Worth, Texas, who

has a record of ruling in favor of conservative causes, seized

on a single sentence in the plea agreement mentioning the DOJ's

diversity policy regarding the selection of an independent

monitor to audit the planemaker's compliance practices. He had

asked both Boeing ( BA ) and prosecutors to further brief him on it in

October.

Boeing ( BA ) and the DOJ now have 30 days to update the

court on how they plan to proceed in the case, O'Connor ruled.

Judges weighing plea deals typically do not upend them over

issues that the parties to the agreement have not disputed. In

the rare cases that they do, it is usually because the judge

wants to impose a different punishment than prosecutors have

agreed to.

The plea bargain also "marginalizes" the judge in the

selection and oversight of the independent monitor, and forbids

imposing a probation condition requiring Boeing ( BA ) to comply with

the monitor's anti-fraud recommendations, O'Connor said in his

decision. He said the agreement was "not in the public

interest."

Relatives of the victims of the two 737 MAX crashes, which

occurred in 2018 and 2019 and killed 346 people, have called the

plea agreement a "sweetheart" deal that failed to adequately

hold Boeing ( BA ) accountable for the deaths of their loved ones.

The two plane crashes occurred in Indonesia and Ethiopia

over a five-month period. The families had briefly referenced

the DOJ diversity and inclusion policy in court filings opposing

the plea agreement, but did not detail concerns about it.

"Judge O'Connor's emphatic rejection of the plea deal is an

important victory" for the victims' families, said Paul Cassell,

a lawyer representing them.

"Judge O'Connor has recognized that this was a cozy deal

between" the government and Boeing ( BA ) "that failed to focus on the

overriding concerns: holding Boeing ( BA ) accountable for its deadly

crime and ensuring that nothing like this happens again in the

future," Cassell said.

Cassell said he hoped the decision would result in the

agreement being renegotiated to specifically address the

passengers and crew who perished in the plane crashes.

An accepted plea deal would have branded Boeing ( BA ) a convicted

felon for conspiring to defraud the U.S. Federal Aviation

Administration about problematic software affecting the flight

control systems in the planes that crashed.

Boeing ( BA ) had agreed to pay a fine of up to $487.2 million and

spend $455 million to improve safety and compliance practices

over three years of court-supervised probation as part of the

deal.

Victims' relatives want Boeing ( BA ) and its executives charged

with crimes holding them responsible for the deaths of their

loved ones and any evidence of wrongdoing presented in a public

trial. They have also argued Boeing ( BA ) should have to pay up to

$24.78 billion in connection with the crashes.

In May, the DOJ found Boeing ( BA ) had violated the terms of a

2021 agreement that had shielded it from prosecution over the

crashes. Prosecutors then decided to criminally charge Boeing ( BA )

and negotiate the current plea deal.

The decision followed a Jan. 5 in-flight blowout of a door

panel on an Alaska Airlines jet that exposed ongoing

safety and quality issues at Boeing ( BA ).

The judge's objections largely centered on the government's

diversity and inclusion policy covering the selection of the

independent monitor to oversee Boeing ( BA ) for three years.

Such policies are commonly known as diversity, equity and

inclusion, or DEI. DEI policies have become a flashpoint in

America's culture wars, which refer to conflicts between liberal

and conservative values.

Supporters contend the policies combat unconscious bias,

inequity and discrimination in hiring while opponents argue they

focus on characteristics such as race and gender at the expense

of core job qualifications.

"The plea agreement requires the parties to consider race

when hiring the independent monitor," O'Connor wrote in his

decision. "In 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."

O'Connor, appointed to the federal bench in 2007 by

Republican then-President George W. Bush, has gained prominence

for rulings favoring conservative litigants challenging

government policies, including finding Obamacare

unconstitutional in a decision the U.S. Supreme Court later

reversed.

He also previously invalidated a Biden administration

attempt to deter schools from discriminating against students

based on gender identity or sexual orientation.