Federal prosecutors are facing a new hurdle as they urge a judge to sign off on Boeing’s (BA) criminal fraud plea: defending the Justice Department’s diversity, equity, and inclusion (DEI) policies.
DOJ argued in a court filing Friday that DEI considerations should factor into the selection of a corporate monitor for Boeing if this pact were to be approved.
The plea deal would insulate Boeing from facing a criminal trial on the government’s allegation that the jet maker misled FAA officials before two 737 Max fatal crashes at the end of last decade that killed 346 people.
The DEI defense came in response to a request from the federal district judge in Texas who is weighing whether to approve the deal Boeing reached with the Justice Department in July.
That judge, Reed O’Connor, ordered DOJ and Boeing to explain how DEI would impact the plea agreement — specifically, how DEI considerations would apply to selecting a third-party monitor to oversee Boeing's safety reporting compliance.
U.S. District Judge Reed O'Connor, in a still image from a U.S. Courts video released December 13, 2018. Photo: U.S. Courts/handout via REUTERS ·via REUTERS / Reuters
O’Connor, a former President George W. Bush appointee, has a track record of siding with conservative litigants against the government, according to reporting from Reuters.
Boeing, in its own court filing Friday, did not object to the requirement of a monitor — a common condition in plea agreements between the DOJ and corporate wrongdoers — though it told the judge that it was “unusual” for the DOJ to have sole discretion over selecting a pool of candidates.
Boeing would be able to toss out one of the 6 final monitor candidates and told the judge it did not intend to make DEI a determining factor for its own part in the selection process.
A Justice Department seal at Justice Department headquarters, in Washington. REUTERS/Kevin Lamarque/File Photo ·Reuters / Reuters
"To be clear, DEI principles would not and will not play any part in the [Boeing’s] very limited role in this process," the company said in the filing, "that is to say, Boeing will be solely focused on the capabilities, professional background, and experience of the candidates."
It added that "while Boeing has published aspirations related to diversity and inclusion," the company "does not compromise on merit or talent in pursuit of those aspirations and has a merit-based performance system with procedures aimed at encouraging an equality of opportunity, not of outcomes."
Boeing is looking to put this legal crisis behind it as it faces challenges on several other fronts.
It announced Tuesday that it had raised $21.1 billion in an expanded share sale, an attempt to bolster its balance sheet while mired in a labor dispute and trying to avoid a potential credit rating downgrade to junk.
Boeing has agreed to pay $486.6 million in fines as part of its pact with DOJ, in addition to the oversight from a third-party monitor.
A Boeing 737 MAX sits outside the hangar during a media tour of the Boeing 737 MAX at the Boeing plant in Renton, Wash., in 2015. REUTERS/Matt Mills McKnight/File Photo ·Reuters / Reuters
Victims of the passengers who died in the two 737 Max crashes objected to the deal and asked Judge O’Connor in court filings to reject it. They argued that the agreement did not adequately punish Boeing and its executives for the deaths of their relatives.
On Oct. 15, O'Connor ordered Boeing and the DOJ to explain how the DOJ would follow the plea agreement's mandate for the Justice Department to follow its "commitment to diversity and inclusion."
Prosecutors argued that DEI considerations were necessary to fulfill a department policy that has evolved over the past 16 years.
In 2008, the DOJ said, its then-acting deputy attorney general Craig Morford issued a first-ever department-wide guidance for selection monitors. The guidance, they said, was born out of criticism from the Government Accountability Office that the selection process was based on favoritism or bias.
That guidance, the prosecutors said, formed the foundation for the DOJ’s latest policy adopted in March 2023.
And that policy, they explained, requires candidates for monitoring positions to be qualified through a transparent, merit-based process. It also requires the DOJ to select monitors "in keeping with [its] commitment to diversity and inclusion" and to "consider monitors from a diverse set of backgrounds."
Boeing told the judge it "must defer to the government on what that commitment entails. Boeing’s understanding, however, is that this provision is intended to ensure a broad base of candidates from which the government will make its ultimate monitor selection."
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.
