Top Appellate Reversals -- Boeing Satellite Systems International v. ICO Global Communications

After finding themselves on the wrong end of a massive $600 million verdict defending aerospace giant Boeing in a contract dispute over satellite construction in 2009, attorneys from Munger, Tolles & Olson LLP believed they still had the winning hand but knew they had no room for error.

"We really had to be perfect," said Daniel P. Collins, the Munger attorney who led the appeal in the case. "If we mischaracterized one document or one statement on the transcript we would have lost all credibility."

But perfection doesn't come easily. The trial lasted more than four months and, according to Collins, the relevant records compiled in the appendix of the appeal filled a dozen bankers boxes and included approximately 25 to 30 exhibits.

The case centered on a contract between a Boeing subsidiary, Boeing Satellite International Inc., and ICO Global Communications Ltd. Boeing inherited the contract when it merged with the McDonnell Douglas and Hughes companies during the late 1990s and early 2000s.

ICO terminated the contract in 2004 and sued, alleging Boeing had acted fraudulently. ICO alleged that Boeing intentionally stalled in building satellites called for in the contract because it had a competing program. Boeing countered that ICO owed some $400 million in payments to have the work completed.

The case went to trial in 2008 with ICO's legal team from Manatt, Phelps & Phillips LLP asking for $1.5 billion in actual and punitive damages. After the four-month trial and nearly a month of jury deliberations the verdict hit Boeing with the bill of more than $608 million. Boeing Satellite Systems International Inc. v. ICO Global Communications (Operations) Ltd., B214659 (2nd Dist. Ct. App., filed April 13, 2012).

But Munger attorneys were convinced the jury got the decision wrong in a case that was highly technical, and Boeing appealed the verdict.

"We thought we were right on the legal issues so we knew we had a good chance on appeal," said Brad D. Brian, Munger's lead trial attorney on the case. "But we had to bring it all together in a clear and coherent way."

In order to make the voluminous record in the case more manageable, Collins said the firm decided to try something a bit out of the ordinary. Normally there is only a single copy of the official record - in this case the 12 bankers boxes of material - submitted to the court.

"It's not easy for anyone to read those documents," Collins said. "The odds were not high that individual justices would have read them.

"So we put compiled the key trial exhibits and documents, put them together in one volume and said, 'This is really what you need to look at.'"

They filed a motion and submitted copies of the streamlined record to each of the panelists on the case.

The justices themselves became an issue for a time, with two recusing themselves from the case. When the appeal concluded, financial disclosure forms showed that both Justice Elizabeth A. Grimes and her replacement, Tricia A. Bigelow, presiding justice of the 2nd District Court of Appeal's Division 8, held stock in Boeing at the time of the appeal. During the appeal, Ventura-based Justice Steven Z. Perren ultimately replaced them on the final panel, which heard a re-argument of the case in January 2012.

Despite the confusion and turnover of jurists, Munger managed to make its case and the panel unanimously ruled in Boeing's favor on appeal. The justices overturned the entire jury award, which had ballooned to around $785 million with accrued interest. The firm's attorneys said the ruling was a sign the justices got into the minutiae of the case.

"We had to have an appeal court and clerks that were willing to dig into the record," Brian said. "And they did. The opinion was very in-depth."

After some post-appeal scuffling between the two sides, Boeing ended up settling with ICO's new corporate iteration Pendrell Corp. for $10 million.

It was a result Munger attorneys said would not have been possible without a cohesive effort by both the trial and appellate lawyers.

"It was a good combination to have some of the trial team working on the appellate case," Brian said. "Having a fresh pair of eyes and the experience from the trial group really made for a compelling team."

- HENRY MEIER

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