|[May 01, 2012]
ICO Global Cites Denial of Due Process Resulting from Justices' Recusals, Substantive Errors in Appellate Decision in Petition for Rehearing
KIRKLAND, Wash. --(Business Wire)--
Citing procedural irregularities and the participation in deliberations
of two California appellate court justices who later determined they
were required to recuse themselves, ICO Global Communications
(Operations) Ltd. ("ICO"), a subsidiary of Pendrell Corporation, filed a
petition yesterday seeking a rehearing of the decision of Division 8 of
the California 2nd District Court of Appeal (the "Court") that
overturned one of the largest jury verdicts in the state's history.
The motion, filed as part of ICO's ongoing litigation with The Boeing (News - Alert)
Company and certain of its affiliates ("Boeing"), contends that ICO's
rights to due process were violated by the participation of two justices
who determined that they were required to recuse themselves late in the
appellate process, after oral argument had already occurred. The motion
also asserts that the Court erred in substituting its own interpretation
of the evidence for the jury's conclusions.
On April 13, the Court issued an unpublished opinion overturning a 2008
California Superior Court jury verdict in the case. The jury had found
Boeing liable for fraud, breach of contract and tortious interference,
and after finding that Boeing engaged in "malice, oppression or fraud,"
they also assessed punitive damages against Boeing. The jury's
verdict-the largest in the nation that year?was entered as a final
judgment in the amount of $603 million, after extensive post-trial
practice in the trial court. With interest, the award had grown to
nearly $800 million over the three years that the appeal has been
pending. The jury reached its verdict after twelve weeks of trial and
four weeks of deliberation, which included a review of testimony and
evidence reflected in thousands of pages of records and testimony from
many witnesses. Notably, the Court did not overturn the jury's
conclusion that Boeing had engaged in fraud, but rather it determined
that a reasonable jury could not have concluded that Boeing's fraud
caused damage to ICO.
ICO had paid Boeing more than $2 billion dollars to construct and launch
a next generation communications satellite constellation consisting of
twelve medium earth orbit satellites. A rocket carrying the first
satellite exploded shortly after launch, destroying the payload. A
second satellite reached orbit, but the remaining satellites were never
completed and litigation ensued.
At trial, the jury heard evidence of a multi-faceted plan on the part of
Boeing and its subsidiaries to drive ICO out of business. The evidence
presented at trial included efforts by Boeing to capture ICO's S-band
radio spectrum to support Boeing's own competitive satellite program,
efforts to damage ICO's prospects by lobbying regulatory authorities,
and secret agreements among vendors intended to coerce ICO to abandon
California law requires that the Court issue a decision within 90 days
of the submission of the case, which typically occurs at the conclusion
of oral arguments. Because of this requirement, the practice in
California is that appellate decisions are largely developed and drafted
prior to oral argument. In the ICO case, two of the four justices
serving on the Court, including the Presiding Judge, recused themselves
after oral argument without explanation.
After the two highly unusual recusals, a third justice from a different
division was appointed, and was given just 12 business days to review
the appellate record containing more than 55,000 pages before a second
round of oral argument took place. The written decision was issued
seventy business days after the new justice had been appointed - giving
little time for the new justice to digest the extensive record and
materially participate in the decision-making process.
"Our petition for rehearing raises several serious issues about the
process by which this case was resolved and the decision reached by the
appellate court," stated Jerry Falk, a partner at Arnold and Porter who
is leading the appellate team for ICO. "We believe the court
misapprehended key facts and reached erroneous conclusions of law in
deciding to overturn the jury's verdict. We are hopeful that upon
further consideration the court will correct the mistakes we identified
and reach a different result."
In addition to the due process issues raised by ICO, ICO is seeking
rehearing of the Court's conclusion that ICO had waived its right to
recover for Boeing's breach of contract, and the Court's conclusion that
the jury's decision to award ICO damages for Boeing's fraud was not
supported by substantial evidence.
Separately, ICO has filed a Public Records Act request under California
law seeking records that might shed light on the reasons for the
justices' recusals. Given ICO's substantial concerns that opinions may
have been influenced by justices who were later compelled to recuse
themselves, ICO is seeking a new panel of justices to hear its case.
A copy of ICO's petition can be found at www.investor.pendrell.com.
Information regarding the Court proceedings can be found on the Court's
website, case number B214659: http://appellatecases.courtinfo.ca.gov/search/case/disposition.cfm?dist=2&doc_id=1559734&q=163673&f=163799054
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