Boeing Satellite Systems International Inc. v. ICO Global Communications (Operations) Ltd.
In the largest U.S. damages award of 2008 to date, a California Superior Court jury awarded Analysis Group client ICO Global Communications Holdings, Ltd. (“ICO”) nearly $371 million in compensatory damages in a long-pending contract dispute with Boeing Satellite Systems International (“BSSI”). After nearly four months of trial and several weeks of deliberations, the jury found BSSI liable for breach of contract and misrepresentation, and parent Boeing Co. (“Boeing”) liable for tortious interference. The jury further found that Boeing and BSSI had acted with “malice, oppression or fraud” in dealing with ICO, and in the punitive phase of the trial awarded additional damages of more than $236 million. Including prejudgment interest, the total amount to be levied against Boeing and BSSI is expected to exceed $700 million.
At trial, ICO argued that Boeing and BSSI interfered with and misrepresented information concerning contracts to build and launch a fleet of 12 communications satellites designed to enable voice and data services to customers operating in locations where a terrestrial communications infrastructure was unavailable. Specifically, ICO contended that the Delta III rockets to be used to launch ICO’s satellites were unreliable and ICO rightfully terminated those launches, and that BSSI then unfairly demanded additional money to complete the project. ICO further alleged that Boeing’s and BSSI’s wrongful conduct ultimately forced ICO to terminate the contracts – leaving the satellites uncompleted, un-launched, and therefore useless to ICO.
ICO counsel Manatt, Phelps & Phillips and partners Robert A. Zeavin and Barry W. Lee retained Analysis Group to examine various economic issues relating to Boeing’s and BSSI’s wrongful conduct. Managing Principal Jeffrey H. Kinrich led a team including Vice President Kevin Gold to evaluate BSSI’s pricing methodology for the completion and subsequent launch of the satellites, the impact of Boeing’s interference in ICO’s contracts with BSSI, and the value of the completed satellites. Mr. Kinrich filed an expert report, and delivered expert testimony at trial that BSSI’s pricing was excessive under the terms of the contract, and that the wrongful conduct of Boeing and BSSI led to ICO losses relating to overcharge, inadequate refund, and the satellites’ remaining uncompleted.
Analysis Group also supported our affiliate William H. Lehr of MIT. As a telecommunications industry expert, Professor Lehr provided analyses of the mobile satellite services market, ICO’s lost opportunities in that market, and Boeing’s incentives as a competitor with ICO for the limited allocation of wireless spectrum rights.