By Mike Spector
NEW YORK (Reuters) - A federal judge is set to hold a hearing on Friday to consider objections from relatives of people killed in two Boeing (NYSE:BA) 737 MAX crashes to the U.S. planemaker's agreement to plead guilty to conspiring to defraud regulators.
U.S. District Judge Reed O'Connor in Fort Worth, Texas, is slated to hear arguments from Boeing and federal prosecutors arguing he should accept the plea deal, and lawyers for the relatives urging him to reject it. The judge may decide on Friday whether to accept the plea deal or rule on it later.
The judge has fielded hundreds of pages of legal briefs from the parties over the past several weeks. The families of the 346 people who perished in the plane crashes, which occurred in 2018 and 2019, contend the plea agreement is a "sweetheart" deal that doesn't go far enough in holding Boeing or its executives accountable for the deaths of their loved ones.
Boeing and the U.S. Department of Justice declined to comment. The Justice Department has defended the agreement, describing it in a court filing as "fair and just, as well as a strong resolution of this matter that serves the public interest."
Prosecutors arrived at the plea agreement after an extensive investigation and a series of meetings with the families, they said. "Yet in the end," the prosecutors said in an August court filing, DOJ officials have "not found the one thing that underlies the families’ most passionate objections to the proposed resolution: evidence that could prove beyond a reasonable doubt that Boeing’s fraud caused the deaths of their loved ones."
Boeing "profoundly regrets the accidents and the unspeakable losses" the families suffered, the company said in its own August court filing. Boeing is "prepared to plead guilty and thereby accept ultimate responsibility for the crime" of conspiring to defraud regulators, the company said. The planemaker has significantly strengthened, and increased investment in, its safety and compliance practices, Boeing said.
Boeing in July finalized the agreement with prosecutors requiring the planemaker to plead guilty to fraud in connection with the two fatal plane crashes.
The planemaker agreed to pay up to a $487.2 million fine and spend at least $455 million on improving safety and compliance practices over three years of court-supervised probation as part of the plea deal. The agreement allows the judge to cut the fine in half by crediting Boeing for money it previously paid in the case.
Justice Department officials pushed Boeing to take the plea deal after finding the company had violated the terms of a 2021 agreement that had shielded it from prosecution over the crashes, which effectively reopened the case.
That finding followed a separate January in-flight blowout that exposed ongoing safety and quality issues at Boeing. A panel blew off a new Boeing 737 MAX 9 jet during a Jan. 5 Alaska Airlines flight, just two days before the 2021 agreement shielding Boeing from prosecution over the previous fatal crashes expired.
In the criminal case over the fatal crashes, prosecutors contend they have extracted an agreement from Boeing to plead guilty to the most serious charge they could prove, along with payment of the maximum legally allowed penalty.
The two crashes at the center of the criminal case against Boeing occurred in Indonesia and Ethiopia over a five-month period.
A guilty plea, should the judge accept it, would brand Boeing a convicted felon for conspiring to defraud the U.S. Federal Aviation Administration (FAA) about problematic software affecting the flight-control systems in the planes.
On top of the plea deal's financial implications, the agreement also imposes a monitor to audit Boeing's safety and compliance efforts and allows the judge at sentencing to force the company to pay additional compensation to families whose relatives died in the crashes.
Polish national airline LOT also opposes the plea deal and has argued it should have the same rights as the crash victims' families.
Victims' relatives want Boeing 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 should have to pay up to $24.78 billion in connection with the crashes.
Judge O'Connor, considered one of the most conservative judges in the country, has previously expressed strong sympathy for the families of the 737 MAX crash victims and called the Boeing case "the deadliest corporate crime in U.S. history."