Boeing and its insurers are likely to pay an amount of money to the families of those who died in the 737 Max crashes that is directly proportional to one grim measure: how long the victims knew they were plunging to their deaths. Additionally, as part of a legal fight to determine Boeing’s financial liability after the 737 Max crashes in Ethiopia and Indonesia, passenger’s families could be paid compensation based on grief, sorrow, loss of companionship and lost future paychecks.
According to an estimate from Bloomberg, the claims could total as much is $1 billion, and some legal experts believe the final amount could be even more, if evidence shows that Boeing knew about flaws in their planes prior to the tragedies taking place. This idea has already prompted investor lawsuits against the company, claiming it hid safety risks.
Brian Alexander, a New York aviation lawyer for victims of the Ethiopian Airlines jet said: “The bottom line is Boeing’s exposure is much more substantial than in any other case that I’ve been a part of in my quarter-century of representing families. You get into ‘What did you know and when did you know it’.”
The crash in Ethiopia, which followed an October crash in Indonesia, led to the worldwide grounding of the 737 Max, a plane that accounts for a third of Boeing’s operating profit. Among multiple ongoing investigations is a Justice Department probe on how American regulators wound up certifying a flawed part of the plane’s flight control system.
Even though the precise cause of the crashes is still being investigated, preliminary evidence is heightening the liability risk for Boeing. Robert Rabin, a Stanford University law professor said: “It would be in Boeing’s best interest to settle.’’
It would be far more expensive for the company to go to trial. Cases involving airliner crashes are rarely decided by juries because companies want to avoid the risk of massive awards, as well as the bad publicity of a trial: “There is a tendency for defendants to settle and get on with their business,” Rabin said.
Most of the lawsuits against Boeing have been filed in Chicago, where the company is headquartered. Juries in Chicago have traditionally been generous to plaintiffs, like last year when two personal injury verdicts came down to the tune of $50 million and $45 million in favor of the plaintiffs.
A mourner lays a flower at portraits of victims of the Ethiopian Airlines crash. Photo: Getty Images
The length of time that victims were in fear prior to the crash presents a risk of an unpredictably large award. An appellate court in New York recently approved a $2.5 million award in a case involving a crane operator who plunged 200 feet to his death. However, not all cases have gone the way of the plaintiff. For instance, a case against Pan Am in the early 1980s saw parents of a crash victim awarded just $15,000 for the anguish their son suffered when the plane rolled, eventually hitting a tree before crashing.
The Ethiopian flight crashed six minutes after it took off and the prior crash on Lion Air went down about 11 minutes into its flight. In both instances, preliminary reports showed that pilots struggled for several minutes to try to regain control of planes that were in uncontrolled dives as fast as 600 miles an hour. Lawyers will contend that victims knew their fate was coming as a result.
Joe Power, a personal-injury lawyer in Chicago representing some Ethiopian victims said: “There’s a better chance of recovery if it took minutes rather than seconds for the plane to crash.”
Damages against Boeing would likely be paid out by the company’s insurers, except for what amounts to a large deductible that is common among major manufacturers. Some defendants are already offering cash settlements in exchange for a pledge not to pursue legal claims. Families in Indonesia have been approached by Lion Air with an offer of about $90,000. The average annual income in the country is about $3,400.
Power continued: “It’s unconscionable that someone would take advantage of these poor people who have just lost loved ones. The problem is when you’re going to these third world countries, you don’t have much of a justice system. Power dominates. Not the individual.”
For the Lion Air crash, 40 cases are currently pending in federal court. Boeing has indicated it plans to ask the judge to move the cases to Indonesia under the argument that the victims lived and died there. Plaintiffs contend that the strategy would be unfair to their clients because their legal system takes “years and years” and it would allow Boeing to delay any resolution.
“Boeing would have a much better chance of limiting their liability,” plaintiff attorney Kabateck said.
The investor lawsuits against Boeing allege that the company artificially inflated the value of its stock by withholding knowledge of safety problems. Shareholders are seeking as much as $4.76 billion for losses from January to March 21. According to the plaintiff’s attorney, that amount may increase.
Recent public reports about Boeing’s missteps related to the manufacturing of the 737 Max, including reports that we have published about shoddy quality control and manufacturing, could add another $1.2 billion in losses.
Plaintiff attorney Reid Kathrein concluded: “Now they’ve admitted they knew before the crash, it strengthens our position tremendously.”