Featured Expert Contributor, White Collar Crime and Corporate Compliance
Gregory A. Brower is a Shareholder with Brownstein Hyatt Farber Schreck, LLP. He also serves on WLF’s Legal Policy Advisory Board. William E. Moschella is a Shareholder with Brownstein Hyatt Farber Schreck, LLP where he serves as co-chair of the Government Relations Department. Jason R. Dunn is a Shareholder in the Denver, CO office of Brownstein Hyatt Farber Schreck LLP where he co-chairs the State Attorneys General practice group and the Government Investigations & White Collar Defense practice group.
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The U.S. Department of Justice’s (DOJ) investigation of Boeing for alleged fraud associated with the company’s 737 MAX crashes in 2018 and 2019 has been full of unexpected developments over the past couple of years. The latest is DOJ’s recent announcement that it has entered into a Non-Prosecution Agreement (NPA) with Boeing to resolve the matter. But what are the terms of the deal? And will it be approved by the court?
The DOJ – Boeing History
In 2021, the parties agreed to resolve DOJ’s criminal investigation by way of a deferred prosecution whereby DOJ filed a criminal information charging Boeing with one count of conspiracy to commit fraud, but with a promise to dismiss the charge if Boeing complied with a range of terms over a three-year period. Then, in May of 2024, as the DPA’s term was about to expire, DOJ prosecutors informed the judge presiding over the case that Boeing was in breach of certain of the terms of the agreement and that the Department was considering requiring Boeing to actually plead guilty to felony charges or go to trial. Several weeks later, despite Boeing’s objections to the allegations of breach, DOJ did exactly that, filing new charges and leaving Boeing with a dilemma that corporations rarely face: plead guilty to a felony or go to trial.
This was an extraordinarily aggressive move by DOJ which, at the time, seemed to be motivated as much by the intervening incident involving a door malfunction on an Alaska Airlines Boeing aircraft, than by any material breach of the Deferred Prosecution Agreement (DPA) by Boeing. Nevertheless, Boeing resolved its dilemma by agreeing to plead guilty to one count of conspiracy to commit fraud and to be subject to a host of new compliance terms, including the imposition of a corporate monitor. Then, in a surprising move, in December of 2024, the federal district judge presiding over the case declined to approve the parties’ plea agreement, aiming his concern primarily at the monitorship term, with criticism of DOJ’s policy for the appointment of a corporate monitors as being too focused on diversity, equity, and inclusion considerations. The judge also expressed concern that Boeing’s own policies would contribute to the selection of a monitor that would include racial considerations and would therefore be discriminatory.
Disappointment Leads to Opportunity For Boeing
Despite the parties’ expectations of a resolution being dashed by the judge’s surprising rejection of their plea agreement, this actually presented Boeing with an unexpected opportunity to seek a different, less onerous type of resolution. Fortuitously for Boeing, with the new Trump administration and new leadership at DOJ came a decidedly friendlier approach to corporate criminal enforcement. The change gave Boeing a chance to re-plead its case that the Biden DOJ’s insistence on a guilty plea was overly aggressive and not appropriate given all the facts and circumstances. This effort was apparently successful as DOJ has now agreed to not only go back to the original DPA, but to dismiss the case entirely and enter into NPA. As with most corporate NPAs, this one includes some expensive, if not overly onerous, terms, but the bottom line is that, short of a declination, an NPA is as good as it gets for a corporate target, let alone one that has already been charged.
The terms of the new agreement require Boeing to admit to obstructing federal oversight and to pay or invest more than $1.1 billion, consisting of a $487.2 million criminal penalty (with a credit for $243.6 million previously paid pursuant to the original DPA), contribute approximately $445 million to a fund for the families of victims (in addition to $500 million already paid), and invest approximately $455 million to strengthen the company’s safety, quality, and compliance programs. Boeing has also agreed to retain an independent compliance consultant who will make recommendations for further improvements and will report directly to DOJ. In addition, Boeing’s board of directors must meet with the crash victims’ families to hear directly from them about the impact of the company’s conduct.
Next Steps Toward a Final Resolution
Because NPAs are typically entered into after an investigation but before a criminal case is filed, they are, in effect, an alternative to prosecution, and do not require judicial approval. Such agreements are reserved mostly for corporate targets, when the facts and circumstances reveal a potential criminal case against the company based on a respondeat superior theory of liability for the criminal misconduct of an agent or employee, but where evidence of intentional wrongdoing by the company itself is lacking. In such a situation, an NPA is agreed upon and has the effect of a contract between the parties with no court case being filing and thus no judicial supervision. Here, however, the parties find themselves in the unusual position of having entered into an NPA with a court case actively pending, thus requiring the court’s involvement because the pending case must be dismissed before the NPA can be given effect and the judge must approve DOJ’s motion to dismiss the case. While such motions are typically granted even when there may be some question about the propriety of DOJ’s motivation for dismissal—see, e.g., the Michael Flynn and Eric Adams cases, a judge doesn’t have any practical alternative to granting DOJ’s motion. This is because the constitutional reality is that even a federal judge cannot force DOJ to prosecute a case simply does not want to prosecute. So, despite the vigorous objections of the crash victims’ families and their representatives, certain members of Congress, and others, a dismissal seems inevitable and the DOJ-Boeing saga appears to be finally near its end.
Implications for Other Cases
Boeing’s experience shows that this DOJ is inclined, some would say motivated, to give a second look at the last DOJ’s charging decisions and agreements. In the first 100 days of this second Trump administration we have seen declinations, dismissals, early terminations of monitorships, and even pardons in a way that is unprecedented. Supporters of this approach argue that this is a necessary response to the Biden administration’s overcharging and hyperaggressive approach to not only corporate criminal investigations, but criminal prosecutions generally. The president ran, in large part, on a “weaponization of DOJ” platform and DOJ seems to be intent on reversing examples of prosecutorial overreach wherever it thinks it has found them. Detractors see nothing but politics, and worse, as the reason behind these moves to undo past prosecutorial decisions. Whatever the motivation, it is clear that DOJ is currently operating differently from what the white-collar bar has grown accustomed to over the past several decades and practitioners are well advised to adapt to this new reality.