US court rejects Boeing’s Max plea deal over company’s DEI policies

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A US judge has rejected Boeing’s guilty plea agreement stemming from twin crashes of the 737 Max, citing diversity, equity and inclusion considerations in selecting a monitor to oversee compliance with the agreement.

Judge Reed O’Connor in northern Texas said the inclusion of DEI considerations in selecting a corporate monitor for Boeing would “undermine confidence” that the selection was based on competency.

The ruling prolongs a chapter in Boeing’s history that the company wants to end, as it will continue to face families of those killed in the 2018 and 2019 crashes in court. Boeing has been struggling in the years since, bleeding cash and drawing scrutiny from regulators, lawmakers and the flying public.

The judge also said the July deal’s provisions “erroneously marginalise” the court in picking and overseeing the monitor. Boeing did not immediately comment on the judge’s decision. The Department of Justice said it was reviewing the opinion.

The ruling injects a hot US culture war issue into one of the country’s most significant corporate criminal prosecutions ever. Conservatives have taken to attacking corporate and governmental policies promoting racial diversity, many of which were adopted four years ago after a police officer murdered George Floyd, a black Minneapolis resident.

Boeing agreed in January 2021 to pay $2.5bn to defer prosecution on a single fraud charge related to the crashes. The charge stemmed from misleading federal aviation regulators about the safety of a flight control system on the Max. The system was later implicated in the crashes, five months apart, that killed a combined 346 people.

The justice department returned to the deferred prosecution this year after a door panel blew off a Max at 16,000 feet during a commercial flight. Prosecutors argued Boeing failed to live up to the terms of its earlier agreement.

The company pleaded guilty in July and agreed to the appointment of a corporate monitor, but victims’ families challenged both Boeing and prosecutors over the monitor’s role and selection.

O’Connor said the magnitude of the case against Boeing demanded “that the public is confident this monitor selection is done based solely on competency. The parties’ DEI efforts only serve to undermine this confidence.”

O’Connor also said that if Boeing had violated the 2021 deferred prosecution agreement, “the government’s attempt to ensure compliance has failed”, and the court, rather than prosecutors, should have a greater role in selecting and overseeing Boeing’s corporate monitor.

Boeing and prosecutors have 30 days to confer and update the court on how they plan to proceed.

Families of the crash victims had opposed the DEI considerations and asked O’Connor to block the deal worked out this summer, saying it was too lenient towards the company. Lawyers for the victim families hailed the ruling as a victory on Thursday.

Erin Applebaum, one of the lawyers representing the families, called the ruling “an excellent decision”, and said her clients “anticipate a significant renegotiation of the plea deal that incorporates terms truly commensurate with the gravity of Boeing’s crimes”.