The California Court of Appeal has denied ICO Global’s petition to seek a rehearing of its decision to overturn the 2008 verdict by the California Superior Court to fine Boeing US$603m plus interest in damages. The Court also denied ICO’s request for…
The California Court of Appeal has denied ICO Global’s petition to seek a rehearing of its decision to overturn the 2008 verdict by the California Superior Court to fine Boeing US$603m plus interest in damages. The Court also denied ICO’s request for publication of the Court’s opinion.
The denials were issued by the same panel of justices that issued the Court’s decision overturning the Superior Court’s jury verdict against Boeing for fraud, tortious interference and breach of contract.
In a statement, ICO said that it now plans to file a petition to the California Supreme Court, arguing: “Given the significant due process issues resulting from the late recusal of two appellate court justices from the case, and other errors contained in the Court’s decision, ICO intends to file a petition for review with the California Supreme Court no later than 23 May 2012.”
ICO’s initial motion to the appellate court contended that its rights to due process were violated by the participation of two court justices who determined that they were required to recuse themselves late in the appellate process, after the oral arguments had already occurred. ICO, which is now part of Pendrell Corp, also asserts that the court erred in substituting its own interpretation of the evidence for the jury’s conclusions.
In its petition, ICO argued: “California law requires that the court issue a decision within 90 days of the submission of the case, which typically occurs at the conclusion of oral arguments. Because of this requirement, the practice in California is that appellate decisions are largely developed and drafted prior to oral argument. In the ICO case, two of the four justices serving on the court, including the Presiding Judge (Elizabeth Grimes), recused themselves after oral argument without explanation.
“After the two highly unusual recusals, a third justice (Tricia Bigelow) from a different division was appointed, and was given just 12 business days to review the appellate record containing more than 55,000 pages before a second round of oral argument took place. The written decision was issued seventy business days after the new justice had been appointed – giving little time for the new justice to digest the extensive record and materially participate in the decision-making process.”
ICO is also seeking a rehearing of the court’s conclusion that ICO had waived its claim for Boeing’s breach of contract, and the court’s conclusion that the jury’s decision to award ICO damages for Boeing’s fraud was not supported by substantial evidence.
To that end, ICO contends that “notably, the (appeals) court did not overturn the jury’s conclusion that Boeing had engaged in fraud, but rather it determined that a reasonable jury could not have concluded that Boeing’s fraud caused damage to ICO.”
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.
