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Boeing Must Turn Over Some Privileged Documents in 737 Max Suit

The Boeing Co. must hand over dozens of privileged documents to plaintiffs’ counsel in a consumer class action alleging it colluded with Southwest Airlines to cover up defects in 737 Max 8 airplanes, after the Eastern District of Texas denied the aircraft maker’s motion for immediate appeal of the order.

A stay and immediate appeal of the order is unwarranted because Boeing is unlikely to succeed on the merits of its argument, the U.S. District Court for the Eastern District of Texas ruled.

Boeing’s challenge lacks merit because the court followed Fifth Circuit law regarding the crime-fraud exception “to the letter and exercised its discretion over factual discovery matters only where permitted,” the court said.

Under the crime-fraud exception, the U.S. Court of Appeals for the Fifth Circuit has clarified that a court may order that a party produce otherwise privileged documents if the party seeking production first shows “that the attorney-client relationship was intended to further criminal or fraudulent activity.” The trial court then must examine the documents to determine whether the materials hold “some valid relationship to the prima facie violation such that they ‘reasonably relate to the fraudulent activity.’”

Here, the court said, it “engaged in a comprehensive, document-by-document analysis and diligently applied the facts to governing law to reach its ultimate conclusion—only thirty-four of the 232 documents under in camera review fell within the scope of the crime-fraud exception.”

The complaint, filed in July 2019, alleges that Boeing rushed the defective 737 MAX 8 to market and Southwest helped to cover up the defect by assuring customers the plane was safe.

The proposed class members are passengers who claim they wouldn’t have purchased tickets to fly on Southwest had they known about the fatal flaws in the 737 MAX 8.

The plaintiffs allege the conspiracy, which hid safety issues with the airplane, also caused passengers to fly on other airlines that flew the MAX 8, including American Airlines.

The complaint charges the companies with violations of the Racketeer Influenced and Corrupt Organizations Act, California consumer law, fraud and negligence.

Judge Amos L. Mazzant III issued the ruling Thursday.

Pierce Bainbridge P.C., Bathaee Dunne LLP, Capshaw DeRieux LLP, and Dovel & Luner LLP represent the passengers.
McGuireWoods LLP and Siebman, Forrest, Burg & Smith LLP represent Boeing.

Norton Rose Fulbright US LLP represents Southwest.

The case is Earl v. Boeing Co., 2021 BL 97269, E.D. Tex., No. 19-cv-507, 3/18/21.