Boeing’s Deferred Prosecution Agreement In Question After Court Rules 737 Max Crash Victims’ Families May Assert Rights Under The Crime Victims’ Rights Act

A recent ruling from a federal district judge in Texas has called into question the finality of deferred prosecution agreements.  Deferred prosecution agreements are negotiated and entered into by the government and criminal defendants (typically corporations) and allow the defendant to avoid a criminal conviction.  In exchange, defendants are often required to accept responsibility for charges, pay fines, cooperate with ongoing investigations, and engage in ongoing compliance processes, such as monitorships.  Given the obligations that arise from deferred prosecution agreements, which are generally quite costly, corporations rely on their finality.  On October 21, 2022, however, a Texas federal court concluded that families and representatives of victims of the 2018 and 2019 crashes of Boeing’s 737 MAX airplanes had standing to assert rights under the Crime Victims’ Rights Act (“CVRA”) to challenge and potentially undo the deferred prosecution agreement Boeing and the government entered into 18 months prior.

The United States and Boeing Enter into a Deferred Prosecution Agreement

Shortly after the second Boeing 737 MAX crash in March 2019, the U.S. Department of Justice began investigating Boeing.  In January 2021, the government charged Boeing with conspiracy to defraud the United States under 18 U.S.C. § 371.  On the same day, the government filed the parties’ deferred prosecution agreement (the “DPA”), which the court approved.

In the DPA, Boeing admitted to the government’s statement of facts and accepted responsibility for the acts charged.  The DPA also imposed conditions on Boeing, requiring it to (i) pay a criminal monetary penalty of $243.6 million; (ii) provide $1.77 billion in compensation to its airline customers; (iii) set up a fund of an additional $500 million to be paid to the heirs, relatives, and beneficiaries of those who died in the crashes; and (iv) meet with and report to the government to ensure Boeing’s compliance with the DPA and other federal law.  In exchange, Boeing was immunized from criminal prosecution for all conduct described in the statement of facts, and if Boeing complies with the DPA’s requirements for three years, the government will dismiss the charge with prejudice.

Non-Party Family Members of Crash Victims File Motion for Victim Rights

The docket remained quiet until almost a year later, when on December 16, 2021, a group of family members and representatives of crash victims filed motions arguing that the government and Boeing violated their rights under the CVRA by finalizing the terms of the DPA without first consulting them.

The CVRA provides crime victims with certain rights in criminal proceedings, including the right to be heard at any public proceeding involving the release, plea, sentencing, or parole of the defendant; the right to confer with the government attorney in the case; and the “right to be treated with fairness.” 18 U.S.C. § 3771(a).  The government must make “best efforts to see that crime victims are notified of, and accorded, the[ir] rights,” and “[i]n any court proceeding involving an offense against a crime victim, the court shall ensure that the crime victim is afforded the rights” described above.  § 3771(b) & (d).  Crime victims, representatives of crime victims, or government attorneys may assert the crime victims’ rights, and courts must “take up and decide any motion asserting a victim’s right forthwith.”  § 3771(d).

Here, the movants asked the court to find that the DPA was negotiated in violation of their rights, withhold approval of the DPA pending their involvement, and hold an arraignment of Boeing in which the movants could participate.  In opposition, the government and Boeing argued that (i) the crash victims are not “crime victims” under the CVRA, (ii) the court does not have authority to supervise, modify, or reject a deferred prosecution agreement, (iii) the CVRA does not provide for a motion to reopen a deferred prosecution agreement, and (iv) equitable considerations preclude modifying the DPA.

The Court Decides the Movants May Assert Rights Under the CVRA

On October 21, the court—Judge Reed O’Connor—addressed the first major point of dispute, ruling that the movants qualify as victims and may assert rights under the CVRA.  Earlier this year, Judge O’Connor held that the movants fell within the definition of “crime victims” under the CVRA, but that they could only actually assert rights under the CVRA if they could first establish that they were “directly and proximately harmed” by Boeing’s federal offense.  Following an evidentiary hearing on the issue, the court concluded that the movants had established this causation requirement.[1]

This decision thus resolved the threshold issue of standing in the movants’ favor, but the court must next consider the proper remedy for the families and representatives of the crash victims.  Whether the court has the authority to reject or modify this DPA has not yet been decided.

Broader Implications: The Role of Victims in Corporate Enforcement

Judge O’Connor’s ruling comes at a time when the executive branch is pressing for continued aggressive corporate enforcement.  For example, the Department of Justice (“DOJ”) recently announced that it would request $250 million from Congress next year for corporate crime initiatives.  Deferred prosecution agreements will likely continue to be a major part of the DOJ’s strategy for resolving allegations of corporate wrongdoing.

At the same time, the decision falls within a broader push by the DOJ to increase the presence and role of victims in law enforcement.  On the same day as the Boeing decision, the Department of Justice released revised AG Guidelines for Victim and Witness Assistance to “improve[] and expand[] the Department’s policies for engaging with victims and witnesses of crime throughout the criminal justice process.”  Notably, the new guidelines, which go into effect on March 31, 2023:

  • Expand the scope of support for those “significantly harmed” by crime, regardless of whether they meet the statutory definition of “victim” in the CVRA;
  • Require DOJ personnel to provide notice to and consult individuals with rights under the CVRA “as early in the criminal justice process as is feasible and appropriate,” which, as the new guidelines make clear, often means that victims should be notified of plea agreements, deferred prosecution agreements, and non-prosecution agreements even before a charging document is filed; and
  • Address recent technological developments to more effectively use technology to “identify, notify, and support victims.”

According to Attorney General Garland, these updates “will ensure that [the DOJ] continue[s] to fulfill [its] obligations to victims and witnesses through an approach that is victim-centered and trauma-informed.”  Judge O’Connor’s decision and the new Guidelines together suggest that going forward, crime victims, and others significantly harmed by crime, will now have a greater ability to meaningfully participate in investigations and negotiations from before the DOJ files an indictment through and even after a deferred prosecution agreement has been entered into.

We will continue to monitor this case closely as the court now turns to questions concerning its ability to modify or undo a deferred prosecution agreement and the appropriate remedy for the crash victims’ families and representatives.  Whether the Boeing case represents a broader attempt to unsettle previously-entered deferred prosecution agreements remains to be seen.

[1] According to the court, the movants successfully demonstrated that “but for Boeing’s criminal conspiracy to defraud the FAA, 346 people would not have lost their lives in the crashes” and that “the tragic loss of life that resulted from the two airplane crashes was a reasonably foreseeable consequence of Boeing’s conspiracy to defraud the United States.”

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