US judge to hold hearing on family objections to Boeing plea deal

By David Shepardson

(Reuters) -U.S. District Judge Reed O’Connor said Friday he will hold a hearing on Oct. 11 to consider objections from relatives of those killed in two Boeing (NYSE:) 737 MAX crashes to the planemaker’s agreement to plead guilty to criminal fraud conspiracy.

On July 24, the planemaker finalized an agreement to plead guilty to conspiring to defraud the Federal Aviation Administration and pay up to $487 million after breaching a 2021 deferred prosecution agreement.

Family members of some of the 346 people killed in two Boeing 737 MAX crashes in 2018 and 2019 argue the fine is too low and raised other objections to the plea deal. O’Connor will also consider objections to the agreement filed by Polish national airline LOT before he decides whether to accept the plea deal.

LOT previously argued it should have the same rights in the case as victims’ families, and said it sustained at least $250 million in damages related to the 14 737 MAX aircraft it owned and leased at the time that model was grounded worldwide in March 2019 following the two crashes.

Boeing and the Justice Department did not immediately comment on O’Connor’s announcement. The Justice Department in August urged the judge in Fort Worth, Texas, to accept the deal it says “is a strong and significant resolution that holds Boeing accountable and serves the public interest.”

Family members have cited O’Connor’s statement in a February 2023 ruling in seeking harsher penalties: “Boeing’s crime may properly be considered the deadliest corporate crime in U.S. history.”

The planemaker allowed potentially risky work at its factories and did not ensure key airplane record-keeping was accurate or complete, the Justice Department said in July in outlining why it believed Boeing violated the 2021 agreement.

The finding followed a January in-flight panel blowout on an Alaska Airlines 737 MAX that exposed continuing safety and quality issues at Boeing, just two days before the 2021 agreement shielding it from prosecution expired.

The plea deal requires Boeing to spend $455 million to strengthen its compliance, safety and quality programs over three years of court-supervised probation. Boeing will also face oversight from an independent monitor for three years.

O’Connor can also decide to require Boeing to pay restitution, which could include compensation to victims’ families beyond what many have already received in settlements or as part of $500 million for relatives under the 2021 agreement.