A California appeals court has overturned the October 2008 ruling that awarded ICO Global US$603m in compensatory and punitive damages from Boeing over the long running contract dispute between the two regarding the construction and launch of ICO’s 12…
A California appeals court has overturned the October 2008 ruling that awarded ICO Global US$603m in compensatory and punitive damages from Boeing over the long running contract dispute between the two regarding the construction and launch of ICO’s 12 satellite MEO constellation. The court also awarded Boeing its appellate costs.
In summing up the court’s decision, judge Emilie Elias stated: “Because the undisputed evidence showed that ICO waived its claim for breach of the satellite contract, and because there was insufficient evidence that Boeing Satellite’s alleged misrepresentations and concealments caused ICO’s alleged damages under the launch contract, we reverse the order denying Boeing Satellite’s motions to set aside the verdicts on those grounds.
“Similarly, because the undisputed evidence showed that the Boeing parent corporation’s alleged acts of tortious interference with the launch contract caused ICO no harm, we reverse the order denying Boeing’s motion to set aside the verdict on that ground.
“Finally, because the undisputed evidence showed that ICO was aware of the facts it claims Boeing Satellite misrepresented or concealed in connection with the price of an amended version of the satellite contract, we affirm the trial court’s order setting aside the fraud and negligent misrepresentation verdicts against Boeing Satellite. As a result, we direct entry of judgment for the Boeing entities on all causes of action.”
The dispute dates back to Boeing taking over the US$2bn construction and launch contract for ICO’s 12 ‘s MEO satellites following its acquisition of rocket manufacturer McDonnell Douglas Corporation in 1997 and then Hughes Electronics Corp’s space business in 2000. ICO alleged that Boeing demanded an additional payment of around US$400m to make necessary modifications to the satellites. Boeing countered that having agreed to ICO’s request to an extension to the payment schedule of the contract, ICO then terminated the contract as it could not raise the necessary funding.
In a statement to SatelliteFinance, Boeing said: “Boeing is pleased with today’s win and the court’s decision to overturn the jury verdict. It has always been our view that there was no basis in law or fact for the judgment against the company.”
Commenting on the court’s verdict, Ben Wolff, chief executive officer of ICO’s parent company Pendrell, stated: “We are clearly disappointed with the court’s decision and we are evaluating our options for further review.”
In its post-verdict statement, Pendrell pointed to ‘significant delays in the appeals court proceedings, most recently by the highly unusual recusal of two appellate justices without explanation’.
Pendrell can appeal the decision to the California Supreme Court, although if the court does not agree to the appeal then the protracted case would finally come to an end.
Boeing was represented by Munger, Tolles & Olson in the case, while Manatt, Phelps & Phillips was counsel to ICO Global/Pendrell. Adorno, Yoss, Alvarado & Smith advised ICO’s largest shareholder Eagle River Investments.
