Boeing Vs Satellite Communications Client ICO

Boeing was declared not guilty by the California state appeals court in Los Angeles last week over the alleged breach of contract case filed by former satellite communications network company ICO. Boeing had been found guilty by a trial court in 2008 and was ordered to pay $604 in damages to ICO.



A Los Angeles jury ruled that Boeing and its Boeing Satellite Systems International unit were liable for not honoring an agreement to manufacture and launch 12 satellites for ICO. ICO, which is now known as Pendrell Corp, were entitled to $371 million in compensatory damages and $236 million reward for punitive damages.The trial judge cut the total damages to $604 million, which excludes post-judgment interest of $181 million as of December 31, based on a Boeing regulatory filing. But Boeing managed to reverse the verdict which was considered to be the biggest jury award in 2008, based on Bloomberg data.


 The defendant is now set to recover its appellate costs. The three-member appellate jury agreed unanimously that Boeing should have been granted request to set aside the verdict given the undisputed evidence of ICO waiving its claim for breach of the satellite communications contract. Furthermore, the appellate court said the evidence linking Boeing Satellite's alleged fraudulent act with the demise of ICO was insufficient. Moreover, there is an undisputed evidence that Boeing's alleged interference with the launch contract did not result into significant damages to ICO, ruled the appellate court. The panel upheld the trial judge's order which set aside fraud and negligent-misrepresentation verdict against the defendant. ICO accused Boeing of overpricing the satellites it had ordered in 1995 from Hughes.

Boeing acquired the satellite company five years later, causing a possible conflict of interests since the two firms are in the business of satellite communications. Boeing added $400 million on top of the fixed-cost contracts. Diana Ball, a spokeswoman for Boeing, said the satellite maker is so pleased with the verdict. The defense panel accused ICO of turning Boeing into its scapegoat, referring to the risky investment made by ICO in the satellite phone market which went astray.

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ICO sought bankruptcy protection in 2009 and was acquired by satellite communications firm Dish Network Corp. in 2011. It was renamed Pendrell in June and changed its line of business into intellectual-property investments and consultancy. Pendrell CEO Ben Wolff said the company was so upset with the decision and was evaluating other options. Pendrell share price dropped by 33% to $1.45 after the close of regular trading on Nasdaq. Pendrell share lost 45 cents (17 percent%), closing at $2.17 before trading in New York was stopped due to "pending news".