Boeing Set to Settle With Families in Ethiopian 737 MAX Crash, Avoiding Punitive Damages


Boeing and lawyers for the families of nearly all 157 people who died in the 737 MAX crash in Ethiopia are poised to announce an agreement that will effectively end almost all the civil suits against the plane-maker, according to multiple people familiar with the details.

For families spread across the world, the deal will provide compensation determined in the U.S. rather than leaving African families to scramble in their home countries for likely much lower payouts.

For Boeing, it will limit the scope of the damages and the amount of further investigation into the causes of the accident.

Lawyers for both sides are expected to file a motion as soon as Wednesday or Thursday in federal court in Chicago.

Only two of the Flight ET 302 families have not signed on to the proposed agreement at this point, holding out for more accountability for the company and its executives. However, it's legally uncertain how they can pursue Boeing further.

In the proposed deal, known as a "stipulation," Boeing admits "liability for the compensatory damages proximately caused by the ET 302 accident," in which 157 people died in March 2019. Excerpts of the stipulation were read to a Seattle Times reporter by a person with a copy of the document.

No set amount of compensation is specified.

The agreement allows each family, including many from Ethiopia and Kenya, to pursue compensatory damages in Illinois. The financial award in each individual case would be decided either through mediation or, if necessary, in a jury trial.

However, signing the stipulation explicitly eliminates the option of seeking punitive damages against Boeing.

The stipulation firmly closes the door on legal efforts that seek to uncover wrongdoing beyond that of the two Boeing pilots that was identified in the criminal case brought by the Department of Justice.

"No evidence or argument about punitive damages will properly be the subject of discovery or be admitted," the stipulation states.

A successful punitive damages trial would typically result in a much larger financial award and would also entail a legal discovery process that could demand internal Boeing documents and depositions of executives and other employees to explore the full extent of the company's liability.

Illinois, where Boeing is headquartered, is one of the many jurisdictions that don't allow punitive damages in wrongful death cases. Washington state, where the 737 MAX was designed and built, is another.

Among the Boeing executives named on a list to be deposed in the ET 302 civil cases are CEO Dave Calhoun, the CEO at the time of the crashes, Dennis Muilenburg, and the former head of the Commercial Airplanes unit, Kevin McAllister.

Those depositions are now unlikely to happen.

According to multiple people familiar with the details, Boeing's lawyers wielded the threat that if its stipulation was not accepted by the vast majority of the plaintiffs, they would seek to move each case to the country or state of domicile of the individual victims.

That would have deprived most of the overseas families of jury trials and legal discovery and ensured much lower compensation than the U.S. families.

Elizabeth Burch, a professor at the University of Georgia School of Law and an expert in mass tort cases and multidistrict litigation, who has talked with one of the plaintiffs in the case, said the imminent deal with the Ethiopian crash victim families will all but clear the legal decks for Boeing.

"Anytime you have really egregious behavior that you don't want to put in front of the jury, you're going to settle on some basis," said Burch. "Certainly settling the bulk of cases is going to go a long way towards reassuring shareholders."

Boeing wrapping up litigation

The consolidated ET 302 civil suits are the last big batch of outstanding litigation from the two 737 MAX crashes that killed a total of 346 people.

All but four of the families of those who died in the prior Lion Air Flight JT 610 crash in Indonesia have already settled, with two of those in mediation this week, according to people with knowledge of those cases.

One of the Lion Air families still to settle is that of 31-year-old Indian national Captain Bhavye Suneja, who commanded Flight JT 610.

Last week, Boeing's board settled for $237.5 million a lawsuit filed by pension funds representing major shareholders.

In January, Boeing reached a deferred prosecution agreement with the Department of Justice in the criminal case, paying a $244 million fine.

In that deferred prosecution agreement, Boeing admitted to fraud in how the MAX was certified and presented to airlines, so the admission of liability in the ET 302 stipulation is not a big concession.

Alan Morrison, associate dean at the George Washington University Law School in Washington, D.C., another expert in mass tort cases, said corporate defendants typically require plaintiffs to give up any claim to punitive damages as part of a settlement.

"Whether one likes it or not, it's the reality. It's not unusual," said Morrison.

"Boeing is doing what it thinks is in its own best economic interest, long term and short term," he said. "They want to get this thing over and done with. That's perfectly understandable."

"Having all these cases heard in Illinois certainly benefits the non-U.S. victims," Morrison added.

Although no family can be forced to accept the stipulation, Boeing's requirement that it would take effect only if most of the plaintiffs signed on put pressure on the families to agree.

Plaintiffs in developed Western nations were put in the position of having to consider the impact on bereaved families in Africa if the deal fell through and the Africans were forced to seek compensation in their home countries.

Almost three years after the ET 302 crash, most were ready to bring the litigation to an end.

Burch said it's "relatively routine, though troublingly so, for the defendant to ask the plaintiffs' lawyers to settle through a global deal."

"Their idea behind doing this is to try to create an enormous pressure on the plaintiffs' counsel, to try to twist the arms of the plaintiffs into taking a deal that they might prefer not to take," she said.

"What's particularly troubling in a situation like this is when you have such diverse interests," Burch said. "If the Ethiopian plaintiffs are going to have to go back and litigate in their home country and get very little money there, then that's a pretty significant difference between someone (in the U.S.) who would like to take their case to trial and see further discovery take place."

"That is a perpetual problem that comes up in multidistrict litigation," she added.

According to people with knowledge of the cases, the two families that have not signed the stipulation are those of Samya Rose Stumo of Massachusetts and of a Kenyan married couple, Jared Babu Mwazo and Mercy Ngami Ndivo, who left behind a baby.

The legal options open to these families are unclear.

"Punitive damages are never a slam dunk," said Burch. "And plaintiff outcomes are never a slam dunk."

The two families can certainly choose to continue to plead their cases before Judge Jorge Luis Alonso in federal court in Chicago. But since Illinois doesn't allow punitive damages, that may not result in a different outcome.

Boeing's lawyers can fight on jurisdictional grounds any attempt to move those cases to a court in a different state that does allow punitive damages.

The two families also have the option to join the stipulation agreement later.

On Tuesday, Boeing declined to comment.

Contacted by phone on Tuesday, Nadia Milleron, mother of Samya Rose Stumo, said she couldn't comment on the litigation. The Kenyan family could not be reached.

Boeing has already made some initial payments to the families of the victims of the crashes.

In 2019, it provided $50 million, or $144,500 to each of the 346 bereaved families.

This year, the Justice Department's Deferred Prosecution Agreement required Boeing to pay out another $500 million, or $1.45 million per family.

Attorneys Kenneth Feinberg and Camille Biros, who administered the compensation funds for the families of those who died in the 9/11 terrorist attacks as well as the 2010 Deepwater Horizon oil spill, are overseeing the distribution of checks to the families.

While some families have already received the latest payout from the $500 million fund, the complexities of those with multiple dependents and with trust funds required to be set up for minors have slowed the distributions for others.

Any award of compensation in Illinois granted as a result of the stipulation agreement will be on top of those prior amounts.

After the lawyers for both sides present the stipulation in court, Judge Alonso will have to approve it. He may choose to hold a hearing or a teleconference to go over the details.