Victims' Rights May Have More of an Impact on Future Corporate Settlements With the U.S. Government

Deferred Prosecution Agreements

A DPA is a contractual arrangement in which the government agrees not to pursue a criminal case against a defendant in exchange for the defendant’s acceptance of various conditions, which generally include admission of relevant facts, payment of a fine, cooperation with any ongoing investigations, and compliance commitments. For example, Boeing’s DPA, filed with the court in January 2021, settled a charge for conspiracy to defraud the government for, among other conditions, over $2.5 billion in criminal penalty and compensation payments.

After negotiation of a DPA, the prosecutor will file a charging document — typically an information — and the DPA with the court. If the defendant complies with the DPA’s conditions for the term of the agreement, then the prosecutor will move to dismiss the charges, but if the defendant breaches the agreement, the prosecutor may restart the case. DPAs have clear advantages for corporations because they (1) allow the company to avoid a conviction and related collateral consequences and (2) provide a relatively quick resolution that limits negative public attention and media scrutiny.

Historically, judicial review or supervision of DPAs has been extremely limited, and as a practical matter, it is incredibly rare for a court to interfere with the government’s agreement with the defendant. As a result, once a company has negotiated a DPA with the government, there is generally very little risk that the court will reject the DPA as too lenient or that the court, in addition to the government, will monitor the company’s compliance with the DPA. Generally, courts that have addressed the review of DPAs have done so in connection with the Speedy Trial Act and have found that their supervisory authority consisted principally of determining whether the agreement was reached for a legitimate or illegitimate purpose.

The Crime Victims’ Rights Act

For victims to request relief under the CVRA, they must first establish that they are “crime victims” who were “directly and proximately harmed” by a federal offense. Here, the court determined that those who died in the Lion Air Flight 610 crash of October 2018 and the Ethiopian Airlines Flight 302 crash of March 2019 were directly and proximately harmed as a consequence of Boeing’s conspiracy to defraud the United States as set forth in its DPA. The court thus ruled in October 2022 that those who died on those flights were “crime victims” under the CVRA and that family members of the deceased, as representatives of the crime victims, could assert rights under that Act.

The CVRA guarantees crime victims certain rights including the “reasonable right to confer with the attorney for the Government in the case,” the “right to be informed in a timely manner of any plea bargain or deferred prosecution agreement,” the “right to be treated with fairness,” and the “right to be reasonably heard at any public proceeding in the district court involving release, plea, sentencing, or any parole proceeding.” Here, the court found that the negotiation of Boeing’s DPA violated the victims’ rights because the government failed to confer with them prior to entering into a DPA.

The statute obligates the district court to enforce compliance with the CVRA by stating that the courts “shall ensure that the crime victim is afforded the rights described in” the CVRA. But the statute does not otherwise establish specific statutory remedies. The families in the Boeing case proposed various remedies for the CVRA violation, including the court’s exercising supervisory powers over the DPA and excising the DPA’s immunity provision. The victims’ families also argued that the DPA was “grossly inadequate” and should be rejected or substantially modified.

In its February 9 order, the court denied all pending relief requested by the victims. In concluding that it lacked statutory authority to substantively review the DPA, the court agreed with the Second Circuit’s holding that “in the absence of any clear indication that Congress intended courts to evaluate the substantive merits of a DPA or to supervise a DPA’s out-of-court implementation, the relative functions and competence of the executive and judicial branches counsel against” any finding that a federal district court may do so. Moreover, the court held that it lacked inherent supervisory authority to opine on the terms of the DPA. The representatives of the victims argued that the DPA was necessarily improper in light of the court’s finding that the government violated the CVRA. But the court concluded that a showing of bad faith would be required and that even if it were established that the government had acted in bad faith, the court asserted that wielding judicial sanctions to discipline the government “would likely violate separation of powers principles this Court is duty-bound to preserve.”

Finally, the court found that it likely did have authority to grant the victims’ families’ other requests — that the court order the government to turn over evidence and information about Boeing’s crimes and the DPA’s negotiation history — but found that the representatives were not entitled to that remedy. Specifically, the court concluded that the victims’ statutory rights were substantially and meaningfully satisfied by the public arraignment and conferral with the government after the DPA had already been entered into, such that no additional judicial relief was required.

Implications of the Boeing Case

The court’s rulings tread new ground. Although the court reaffirmed that substantive revisions to DPAs by courts will not be permitted, it ordered Boeing to appear for a public arraignment long after a DPA was entered and left open the possibility that future victims might successfully seek the sort of discovery denied in the Boeing case in connection with future DPAs. The U.S. Court of Appeals for the Fifth Circuit will ultimately decide whether the district court erred in denying the victims’ families’ request to substantively revise the DPA. The victims’ representatives’ petition for a writ of mandamus, filed on February 23, argues that the district court had authority to excise the immunity provision in the DPA, which they assert would allow them to truly have an opportunity to confer with the government regarding whether Boeing should be prosecuted. The petition also contends that the district court failed to consider whether the CVRA’s enforcement provision provides a basis for relief independent of the Speedy Trial Act and the court’s supervisory authority.

These legal developments coincide with the enhanced focus on crime victim engagement by the Department of Justice (DOJ) and the new rules that went into effect on March 31. Given the DOJ’s revised Guidelines and potential legal developments surrounding the pending request for mandamus relief, corporations should take into account the risk of enhanced victim participation in negotiations and potential challenges to future agreed resolutions when negotiating and entering into DPAs or other negotiated settlements with the government. These developments will be especially relevant where there is a potential for individuals to argue that a corporation’s behavior that is the basis of the DPA is a direct and proximate cause of harm to those individuals.