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October 22, 2008 2:35 PM

Manatt Over Munger in $370 Million Verdict Against Boeing

Posted by Zach Lowe

Barry Lee and Robert Zeavin of Manatt, Phelps & Phillips waited three weeks for the phone to ring as a Los Angeles trial court jury deliberated over whether Boeing violated its contract to build and launch 12 satellites for ICO Global Communications.

They got the call Monday, and it was good news: the jury found for ICO and ordered Boeing's satellite subsidiary to pay $370.6 million to ICO, the Reston, Va.-based company that cell phone pioneer Craig McCaw saved from collapse in 2000. "I've never had a jury out this long," Zeavin says with a laugh. "Ten days was my prior record. Waiting 21 days felt like the Bataan Death Match."

The Manatt team had asked for $1.5 billion in damages--not including punitive damages, which will be the subject of a hearing Tuesday, the lawyers say.

"We're very pleased with the result," Lee says. "It's less than what we asked for and less than what we feel ICO is entitled to. But it's still a substantial amount of money."

It is the third-largest jury verdict of 2008, Bloomberg reports. It might jump to number two when Judge Emilie H. Elias of Los Angeles County Superior Court decides how much interest to tack onto the damages, Zeavin says.

Boeing has said it plans to appeal, though it's unclear if they would call on the same Munger, Tolles & Olson team they relied on for trial. Brad Brian, the lead Munger attorney on the case, did not immediately respond to messages seeking comment.

ICO signed the contract at issue with Hughes Electronics Corp. in the mid-1990s. Boeing assumed the contract after they purchased Hughes in 2000, but only built and launched two of the twelve satellites. ICO terminated the deal in 2004.

Boeing initially sued for declaratory judgment, claiming ICO's termination of the deal got Boeing off the hook for any additional responsibilities.

ICO countersued, claiming they only nixed the deal because Boeing wanted an additional $400 million to finish the 10 satellites, Lee says.

ICO believed Boeing was over-charging them to get ICO out of the satellite communications business, which Boeing was entering at around the same time. Lee and Zeavin told the court during trial that Boeing wanted ICO "dead and gone."

Boeing denied those allegations and blamed the $400 million cost increase on delays in the project taken at ICO's request. In a statement, Boeing said the company has "significant grounds for appeal" because of "fundamental errors" in jury instructions and the judge's interaction with the jury during deliberations.

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