Calif. appeals court overturns $603 million verdict against Boeing

Jessica M. Karmasek Apr. 16, 2012, 3:15pm


LOS ANGELES (Legal Newsline) - A California appeals court last week overturned a $603 million jury verdict against Boeing Co. over contracts for its construction of a satellite communications network.

The California Court of Appeal, Second Appellate District, Division Eight, reversed a 2008 superior court jury verdict in a lawsuit brought against Pendrell Corp.'s subsidiary, ICO Global Communications Limited, by Boeing.

The appeals court also awarded Boeing -- the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems -- its appellate costs.

At issue were separate agreements, worth an estimated $2 billion, that called for one of Boeing's subsidiaries, Boeing Satellite Systems Inc., to build and then oversee the launch of an ICO satellite communications network.

In January 2004, ICO terminated the two contracts under provisions allowing it to do so for its convenience, subject to the payment of agreed-upon termination liabilities.

ICO then demanded arbitration, claiming that the final contract amendments had been procured by fraud, and that Boeing Satellite had breached certain contractual obligations.

Instead of accepting arbitration, Boeing Satellite sued for declaratory relief, contending that ICO had no right to arbitrate its claims because it had terminated the launch and satellite contracts.

ICO cross-claimed that the company committed fraud, breach of contract, and tortious interference with contract.

Following a lengthy trial, ICO was awarded $603 million in October 2008.

The jury had found that Boeing Satellite had committed fraud and breach of contract, and that it had tortiously interfered with ICO's contractual rights.

The $603 million verdict was later entered and affirmed by the superior court with post-judgment interest of 10 percent.

Boeing then appealed the verdict in early 2009.

After much delay, the Court of Appeal filed its unanimous decision Friday.

The three-judge panel said the trial judge should have granted Boeing's request to set aside the jury's verdict.

"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," Justice Laurence D. Rubin wrote in the court's 52-page ruling.

"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."

Rubin concluded, "As a result, we direct entry of judgment for the Boeing entities on all causes of action."

Both sides weighed in following the ruling Friday.

"We are clearly disappointed with the court's decision and we are evaluating our options for further review," Ben Wolff, chief executive officer of Kirkland, Wash.-based Pendrell, said in a statement.

Boeing spokeswoman Diana Ball told Bloomberg the company was "pleased" with its "win" and with the court's decision to overturn the jury verdict.

From Legal Newsline: Reach Jessica Karmasek by email at

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