April 14 (Bloomberg) -- Boeing Co., in a case in which it was accused of breaching a contract to build a satellite communications network, won reversal of a $604 million verdict awarded ICO Global Communications Holdings Ltd.
“We remand the matter with directions to enter judgment for Boeing Satellite and Boeing on all causes of action,” the California state appeals court in Los Angeles said yesterday, unraveling what was the biggest jury award in 2008, according to data compiled by Bloomberg. “Boeing Satellite and Boeing Corp. shall recover their appellate costs.”
A Los Angeles jury in 2008 found Boeing and its Boeing Satellite Systems International unit liable for breaking an agreement to build and launch 12 satellites for ICO.
The jury awarded ICO, now called Pendrell Corp., $371 million in compensatory damages and, finding that Boeing had acted fraudulently, $236 million in punitive damages.
The trial judge cut the total verdict by $3 million to $604 million, not including post-judgment interest of $181 million as of Dec. 31, 2011, according to a Boeing regulatory filing.
The three-judge appellate panel in a unanimous decision said the trial judge should have granted Boeing’s request to set aside the jury’s verdict. The undisputed evidence showed ICO waived its claim for breach of the satellite contract, and there was insufficient evidence that Boeing Satellite’s alleged misrepresentations caused ICO’s alleged damages, they said.
Also, the undisputed evidence showed Boeing’s alleged interference with the launch contract caused ICO no harm, the judges said.
The panel upheld the trial judge’s order setting aside the fraud and negligent-misrepresentation verdict against Boeing Satellite.
“We’re pleased with today’s win and with the court’s decision to overturn the jury verdict,” Diana Ball, a spokeswoman for Boeing, said yesterday.
ICO claimed Boeing unfairly demanded additional money to finish and launch the satellites, which ICO had ordered in 1995 from Hughes Electronics Corp. Boeing’s 2000 acquisition of Hughes made it a competitor of ICO, causing it to add more than $400 million in costs for what were supposed to be fixed-price contracts, ICO argued.
Lawyers for Chicago-based Boeing said during the trial that ICO gambled on a market for satellite phones that didn’t materialize and was trying to blame its mistakes on Boeing after investors fled.
ICO’s North America satellite communications business filed for Chapter 11 bankruptcy protection in 2009 and last year was sold to Dish Network Corp. The company, based in Kirkland, Washington, renamed itself Pendrell in June and focuses on intellectual-property investments and advice.
“We are clearly disappointed with the court’s decision and we are evaluating our options for further review,” Ben Wolff, chief executive officer of Pendrell, said in a statement.
Pendrell fell as much as 33 percent to $1.45 after the close of regular trading yesterday on the Nasdaq Stock Market. The shares had fallen 45 cents, or 17 percent, to $2.17 before trading in the stock was halted because of “pending news.”
The case is Boeing Satellite Systems International v. ICO Global Communications, B214649, California Court of Appeals, Second Appellate District (Los Angeles.)
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