Behind Boeing's offer to settle with victims' families in the 737 Max crash is a hardball legal strategy that could leave them with nothing

boeing 737 max ethiopian airlinesAn Ethiopian police officer walks past debris of the Ethiopian Airlines Flight ET 302 plane crash in March 2019.REUTERS/Baz Ratner

  • Boeing is in talks with the families of the victims of the first fatal 737 Max crash about reaching a settlement that cold prevent the case from ever reaching court.
  • There are reasons the families would agree: it saves them a painful trial and gets a quick resolution.
  • But legal experts told Business Insider that Boeing has leverage in the talks to settle.
  • The company is in the process of arguing for the cases to be moved from the US to Indonesia.
  • Experts say having a trial in another country with a different legal culture, and less scope for close scrutiny of Boeing, would render the cases "worthless."
  • This prospect looms over the settlement talks, and could prompt the families - with far fewer resources than Boeing - to take the safe option of a smaller payout.
  • Visit Business Insider's homepage for more stories.

Behind Boeing's offer this week to explore settling out of court with bereaved relatives of the Lion Air 737 Max crash is an implicit threat that could drastically devalue their cases, a lawyer involved in the case told Business Insider.

The hardball legal strategy - which an independent expert said could render the cases "worthless" - is to switch the jurisdiction of the families' lawsuits from the US to Indonesia, where outcomes for the plaintiffs are likely much worse.

Fighting the case overseas would also likely place Boeing under less scrutiny for its conduct around the crash, given the different legal culture and the logistical difficulty of meaningfully prosecuting Boeing thousands of miles from its US base.

On Thursday, Boeing made public that it is in talks to settle with families of victims of Lion Air flight JT610, the first of two 737 Max jets to crash and kill everyone on board.

In a statement to Business Insider, it said its intention is to avoid a prolonged court battle "so that those affected can receive compensation without the need for prolonged litigation."

Reaching a settlement is something Boeing had privately raised with the plaintiffs before this statement.

Brian Kabateck, attorney for 14 of the families, told Business Insider that it could ultimately prove the best way to get the relatives a meaningful amount of compensation and allow them to move on with their lives.

However, rather than the conventional choice that a settlement offers - reach a deal, or see you in court - Boeing has been also pursuing a third option, which looms over the entire dispute.

Documents submitted to the United States District Court for the Northern District of Illinois, seen by Business Insider, show that Boeing said in March that it would propose moving the forum in which the case is heard from US federal court to Indonesia.

A decision on that point is on hold until talks with the families over settling are complete. If the two sides fail to agree, Boeing could request to move the cases as soon as mid-July.

Lawyers for the families say the cases msut be heard in the US, where Boeing is headquartered and the 737 Max was designed and built.

Read more: Here are all the investigations and lawsuits that Boeing and the FAA are facing after the 737 Max crashes killed almost 350 people

Mike Danko, an aviation attorney and pilot, who is not involved in these cases, told Business Insider that if Boeing successfully pursues this strategy, the families could be left with almost nothing.

"If Boeing can get the cases sent back to either Indonesia or Ethiopia those cases really become worthless."

(The venue-switch strategy is also available the second crash, which took place in Ethiopia, but has yet to be explored.)

Boeing 737 Max familyMichael Stumo and Nadia Milleron, the parents of Samya Stumo, who was killed in the crash of Ethiopian Airlines Flight 302, at a press conference announcing their lawsuit against Boeing, Ethiopian Airlines, and Boeing supplier in April 2019.Scott Olson/Getty Images

Danko continued: "Essentially, at the very outset of the case, Boeing can win the case or cases by getting them sent back to the countries where the crashes occurred," Danko said.

The families could be left with almost nothing if the cases are moved

Danko told Business Insider that "under the US legal system, the compensation for wrongful death cases in particular is quite a bit more generous compared to the legal systems of most other countries."

The cases, he said could, "become too expensive to pursue in [Indonesia and Ethiopia] given the [low] likelihood of any substantial compensation coming out of the cases."

Matt Clarke, a second aviation attorney not involved in the actions, told Business Insider that moving the cases would be "a big win, because it usually means a substantial reduction in the potential damages."

Joe Power, an attorney who is representing Ethiopian Airlines victims said he is preparing for Boeing to attempt to switch jurisdictions, which his firm would resist "with all our power and talent."

Read more: The payouts to families of Boeing 737 Max victims could depend on whether and how long they knew they were about to die, lawyers say

He described such a hypothetical move as "attempting to save on how much the families of those killed by its misconduct are compensated for their loss."

Robert Clifford, an attorney representing a different group of Ethiopian Airlines families, said he too would "resist efforts" to get the cases moved.

Trying to get cases moved is a common strategy after air disasters

The strategy of moving litigation from the US to the country where crashes occurred is a "very, very common strategy in air disaster litigation," Danko, the pilot and lawyer, told Business Insider.

The US system is less favorable to Boeing meaning there was "no question" that Boeing would look to get the cases moved, he said.

ethiopian airlines boeing 737 max crashFamily and friends of victims of the Ethiopian Airlines Flight ET 302 plane crash look at the crash site in March 2019.REUTERS/Baz Ratner

Read more: Nearly half of Americans say they won't fly on Boeing's embattled 737 Max plane until it safely returns to service for at least six months

Describing the strategy, Danko said: "There's zero question. It is not an unusual move or a clever move or a move that anyone at Boeing has to think about. It's essentially automatic. There's no question that Boeing will seek to do it for both crashes."

Kabateck said that if Boeing seeks to move the Lion Air cases, it will also have to do the same for the Ethiopian Airlines cases or the lack of consistency could count against the company.

boeing 737 max familyPaul Njoroge, who lost several family members in the Ethiopian Airlines crash, reads a statement at a press conference announcing a lawsuit against Boeing and Rosemount Aerospace Inc, a Boeing supplier.Scott Olson/Getty Images

Families: Boeing should be held accountable in the US

Boeing said in its filing to federal court in Chicago that it would argue the cases should be heard by courts in Indonesia as it is "the nation with the greatest interest in the matter."

Read more: Boeing left engineers, pilots, and regulators in the dark about a late-stage overhaul to 737 Max software responsible for two fatal crashes, says report

"The accident flight was operated by an Indonesian airline and took off from the capital of Indonesia, scheduled to fly to another Indonesian city," the company said.

FILE PHOTO: An aerial photo shows Boeing 737 MAX airplanes parked on the tarmac at the Boeing Factory in Renton, Washington, U.S. March 21, 2019.  REUTERS/Lindsey WassonAn aerial photo shows Boeing 737 MAX airplanes parked on the tarmac at the Boeing Factory in RentonReuters

But the lawyers representing the families say Boeing's base in the US is why the cases should stay there.

Kabateck said the cases should stay as "these aircrafts were designed in the US, conceived in the US, built in the US, sold in the US."

"I think everything critical that went wrong on that aircraft happened as a result of something that happened in the United States."

Pursuing a case on these grounds - interrogating the design and manufacture of the 737 Max - could prove impossible in any country except the US, lawyers involved in the cases said.

boeing 737 max victimnited Nations workers hold a portrait photograph as they mourn their colleagues during a commemoration ceremony for the victims at the scene of the Ethiopian Airlines Flight ET 302 plane crash, near the town Bishoftu, in March 2019.REUTERS/Tiksa NegerI/File Photo

"[Boeing] would say they would do it for the convenience of the families, to which I say 'don't worry about the families.' I'll worry about the families, Boeing, thank you very much," Kabateck said.

Power accused Boeing of preparing to "argue it is more convenient to have the cases in a far off land far away from their backyard where these horrific decisions were made."

Read more: 'We are sorry': Boeing CEO personally apologizes to victims of 737 Max crashes but says he will 'continue to lead the company'

"Far away from where the engineers decided to cut corners in the interest of their profit driven motive. This is a thinly veiled strategy with the hope to limit their loses."

"It is disingenuous for it to argue that being sued in its home state and country is inconvenient.

"Boeing allowed fellow human beings to get on their planes without warning, knowing that another plane would sooner or later crash to the ground killing all these innocent passengers.

"This all happened in the US and here they should be held to answer for this reprehensible conduct."

FAA house transportation committee daniel elwellDaniel Elwell, acting administrator of the Federal Aviation Administration, talks to the parents of Ethiopian Air crash victim Samya Stumo before the House Transportation Committee holds a hearing on the Boeing 737 Max on May 15, 2019.Chip Somodevilla/Getty Images

But the strategy could work

Clifford told Business Insider that he "feels strongly" that he could force Boeing to fight the case in the US.

And Kabateck also said he "doesn't think that Boeing is going to be successful in those efforts."

Read more: Boeing could have prevented 2nd 737 Max crash by listening to pilots, a union said as it accused the company of a 'poisoned, diseased philosophy'

He said that it would have even less of a chance in getting the Ethiopian cases moved, as the victims came from more than 35 countries, including the US, France, and Canada, rather than just Ethiopia.

Clarke, the independent aviation lawyer, said that he "would not bet on Boeing being able to succeed" because the cases are "absolutely product liability claims."

"They come down to design of the 737 Max, the inadequacies and the failure to warn, all of that activity by Boeing, who is headquartered in the US, occurred in the US and US courts are going to be very mindful of that."

But the decision rests with Judge Thomas Durkin, who may decide that focusing on Boeing's processes is less relevant in the cases, or can be achieved from abroad.

And Danko, who has previously successfully stopped such cases from being moved abroad, said Boeing now "has a very good argument that the cases should be sent away."

Lion Air flight relatives debrisFamilies of passengers on the Lion Air flight look at the belongings of passengers in Jakarta's Tanjung Priok port.REUTERS/Beawiharta

While Danko said that lawyers would argue that everything that resulted in the crash is "right down the street from the courthouse," Boeing could have a compelling response.

"Boeing for its part would say look, all of the witnesses to the crash and all of the witnesses and the family members who will testify about their loss are in the countries of origin where the crash occurred.

"All of the evidence, wreckage, flight data recorders and so forth, none of that is in the United States, that's all in other countries."

Read more: The FAA is so concerned about the future of Boeing's 737 Max that it is bringing in NASA and the Air Force to help ensure it is safe to fly again

Boeing, he said, could promise to send any engineers or employees that are asked to testify to other countries.

Boeing 737 Max ethiopian airlines familyKenyans mourn family and friends, who were victims of the Ethiopian Airlines Flight ET 302 plane crash, at the crash scene in March.REUTERS/Baz Ratner

He said that Boeing "can't say it's more convenient to have this case elsewhere. All of their documents, all of their engineering documents and the engineers are right down the street."

"But their ace in the hole is that Boeing could say it agrees to send any witness you want to Ethiopia or Indonesia."

Boeing did not answer when Business Insider asked if it would do that.

Boeing could also use the strategy to drive down the costs of settlements

Danko said that the prospect of moving cases abroad can be used to negotiate a lower settlement.

Often, he said, parties will then meet to try and find a "reasonable settlement" that rests somewhere between what they might get in the US and what they would get in other country.

Kabateck said that he felt Boeing might pursue this. "It's not uncommon for parties to use something like the threat of moving the cases to somewhere like Indonesia as a negotiating tactic," he said. "I believe that is their strategy one way or another, to leverage that attempt to move the cases."

Boeing declined to comment on its strategy.

Boeing 737 Max Ethiopian Airlines familyTom Kabau and Esther Kabau-Wanyoike the brother and sister of Kenyan George Kabau who died in the Ethiopian Airlines crash sit next to his picture during a news conference where their lawyers announced they plan to file a wrongful-death lawsuit against Boeing in April.REUTERS/Baz Ratner

Moving the cases could mean a less-thorough examination of Boeing

Clarke said that the lawyers working in the US, where they are granted more access to evidence and documents, "could potentially be players in terms of exposing and figuring out everything that's wrong with the 737 Max.

"Part of Boeing's strategy might be to avoid that by settling these claims out."

He said that Boeing would be motivated to settle or move the cases to avoid this sort of investigation, as it has "an interest in keeping the plaintiffs from digging to deeply into all of the issues with the 737 Max."

"With what we know about these crashes ... Boeing's got a huge problem."

"I'm afraid there's not going to be enough eyes looking closely enough at whether they really have fixed the underlying problems with the aircraft."

Read more: Boeing's nightmare year gets even worse as it admits hundreds of planes - including 159 737 Maxes - may have defective parts on their wings

Lawyers representing the families say that Boeing's own workings is a focus of their cases.

Power said: "Boeing is the entity at fault for this tragedy, " while Kabateck said that a "major focus" of his case is "what evidence, what information," Boeing had.

Kabateck said a settlement would be best for for Boeing, as it would stop the cases from generating publicity as the company attempts to regain public trust.

But he said, he said, a downside to settling is that the public would know less.

In a settlement, he said, "there wouldn't be any findings that Boeing acted with a reckless disregard for life or otherwise."

Do you work at Boeing or the FAA, or are you a pilot? Got a tip or a story to share? Contact this reporter via encrypted messaging app Signal at +353 86 335 0386 using a non-work phone, or email her at, or Twitter DM her at @sineadbaker1.

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