ICO Global has filed a petition with the California Supreme Court to appoint a new appellate panel after the California Court of Appeal denied the company’s petition to seek a rehearing in its lawsuit against Boeing.
In mid-April, the appeals court…
ICO Global has filed a petition with the California Supreme Court to appoint a new appellate panel after the California Court of Appeal denied the company’s petition to seek a rehearing in its lawsuit against Boeing.
In mid-April, the appeals court overturned the 2008 verdict by the California Superior Court to fine Boeing US$603m plus interest in damages for fraud, tortious interference and breach of contract.
ICO, which is part of Pendrell Corp, subsequently sought a rehearing of the case but the same panel of justices that issued the Court of Appeal’s decision denied the request.
ICO now claims that this violated its constitutional due process rights and that the appellate court should have been ‘reconstituted with three unbiased justices who had not deliberated with the conflicted justices’.
ICO’s initial motion for a rehearing contended that its rights to due process were violated because two of the four Court of Appeal justices, including the Presiding Judge (Elizabeth Grimes), recused themselves more than two years after the appeal was filed and as such had participated in the deliberations for an extended period during which the panel reviewed the record, prepared memoranda about the case, held an oral argument and began drafting an opinion.
In contrast, a third justice, Tricia Bigelow, who was appointed after the two conflicted justices had both withdrawn, joined the panel only 12 business days before the it held a second oral argument. ICO contends that the new justice would have had to review an appellate record that contained more than 55,000 pages in this period.
In addition, while no reason for the judges recusal has been given, ICO claims that state records reflect that one justice owned as much as US$1m in Boeing stock, and a second justice acquired Boeing stock while the case was pending before the court. ICO added that the court refused its request for the court’s internal documents and correspondence relating to the recusals.
Barry Lee, partner at ICO’s legal counsel Manatt, Phelps and Philips, said: “If this were a jury trial, and two jurors were found to have engaged in deliberations while they had a conflict of interest, there is no doubt a mistrial would have been declared, and the process would have started over. The same fundamental due process concerns exist now given the last minute recusals. This isn’t just a case where the justices recused themselves at the 11th hour – the clock had already struck midnight. The damage resulting from extended participation by two conflicted justices had already been done.”
ICO also asks the Supreme Court to correct the Court of Appeal’s conclusion that the company had waived its claim for Boeing’s breach of contract, as well as the court’s conclusion that the jury’s decision to award ICO damages for Boeing’s fraud was not supported by substantial evidence.
The decision in 2008 of the California Superior court jury to award ICO US$603m in compensatory and punitive damages was, at the time, the largest award in the US that year and one of the largest jury verdicts in California court history. In the period between the award and the appeals decision the size of the award has grown to nearly US$800m.
The dispute dates back to Boeing taking over the US$2bn construction and launch contract for ICO’s twelve MEO satellites. A rocket carrying the first satellite exploded shortly after launch, destroying the payload. A second satellite reached orbit, but the remaining satellites were never completed and litigation ensued with ICO alleging that Boeing demanded an additional payment of around US$400m to make necessary modifications to the satellites.
Boeing would not comment on the ICO petition.
Law firm Arnold and Porter is leading the appeals team for ICO, while Manatt, Phelps & Phillips was counsel to it during the court case. Boeing was represented by Munger, Tolles & Olson, while Adorno, Yoss, Alvarado & Smith advised ICO’s largest shareholder Eagle River Investments.
