American Marconi Wireless News - US judge rejects Boeing 737 MAX accord over diversity policies

In the ruling, US District Judge Reed O'Connor blocked Boeing's guilty plea under a deferred prosecution agreement in the case which dates back to two fatal crashes in 2018 and 2019 that killed 346 people.

The agreement would have seen the Justice Department choose a monitor to ensure that Boeing complies with the agreement.

But O'Connor wrote that diversity, equity and inclusion (DEI) policies at the Justice Department left him "skeptical" of its assurances that it will pick a monitor solely based on skill.

"The court is not convinced ... that the Government will not choose a monitor without race-based considerations," said O'Connor, who gave the parties 30 days to update the court on next steps in the case.

Under the agreement, the Justice Department was to choose six candidates to serve as monitor, and Boeing had the option to strike one of them.

But, O'Connor wrote in the 12-page ruling, he feared Boeing would decide which one to strike "in a discriminatory manner and with racial considerations."

He cited Boeing policies committing to goals such as adequate representation of Black people in company leadership.

His ruling criticized the DEI policies at Boeing and the Justice Department as "against the public interest."

"In a case of this magnitude, it is in the utmost interest of justice that the public is confident this monitor selection is done based solely on competency," O'Connor said.

"The parties' DEI efforts only serve to undermine this confidence in the Government and Boeing's anti-fraud efforts."

Neither Boeing nor the Justice Department had immediate comment on the ruling.

- Agreement 'marginalizes' court -

The ruling comes as DEI policies face increasing attack in US corporate and government spheres, with backers of the initiatives -- which seek to correct bias in US workplaces -- on the defense even more after Donald Trump's win in the US presidential election.

Paul Cassell, a law professor at the University of Utah who represents families of MAX victims cheered O'Connor's ruling, calling the agreement a "cozy deal" between Boeing and the Justice Department.

"This order should lead to a significant renegotiation of the plea deal to reflect the 346 deaths Boeing criminally caused and put in place proper monitoring of Boeing to ensure that it never again commits a crime like this in the future," said Cassell in a statement.

The Justice Department and Boeing reached deferred prosecution agreement in 2021 after the two crashes, but in May Justice Department officials said Boeing had violated it, raising the possibility of a new prosecution.

Over the summer, Boeing and DOJ reached a new agreement in which Boeing agreed to pay an additional $243.6 million in fines. Boeing has faced renewed scrutiny since January when a panel blew out mid-flight on an Alaska Airlines flight of a 737 MAX.

O'Connor cited a second basis for rejecting the agreement, concluding that the Justice Department's process for restricting the court's oversight of the monitor inappropriately "marginalizes" the court in light of the Justice Department's record on the case.

"It is fair to say the Government's attempt to ensure compliance has failed," he wrote. "At this point, the public interest requires the Court to step in."

Shares of Boeing dropped 0.7 percent in afternoon trading.

C.Garcia--AMWN