Boeing 2007 Annual Report Download - page 76

73
Notes to Consolidated Financial Statements
U.S. Northern District of Illinois (a spin-off from Williams alleg-
ing race discrimination), plaintiffs dropped their promotions
claim on June 6, 2006, and put their compensation claims on
hold pending the outcome of the Williams appeal.
In addition, on March 2, 2006, we were served with a com-
plaint filed in the U.S. District Court for the District of Kansas,
alleging that hiring decisions made by Spirit Aerospace near
the time of our sale of the Wichita facility were tainted by age
discrimination and violated ERISA. The case is brought as a
class action on behalf of individuals not hired by Spirit. We are
indemnified by Spirit for all claims relating to the 2005 sales
transaction pursuant to the terms of the asset purchase agree-
ment with Spirit. Spirit has not agreed to indemnify us for one
claim, which alleges that layoffs in Wichita from 2002–2005
were part of an overall scheme to eliminate older workers and
reduce the cost of benefits.
A second alleged class action involving our sale of the
Wichita facility to Spirit was filed on February 21, 2007, in the
U.S. District Court for the District of Kansas. The case is also
brought under ERISA, and, in general, claims that we have
not properly provided benefits to certain categories of former
employees affected by the sale. Plaintiffs have been exhaust-
ing their administrative remedies by making appeals to our
benefits committee; that phase of the case has been com-
pleted, and it is expected that the case will move into the early
stages of discovery.
On September 13, 2006, two UAW Local 1069 retirees filed a
class action lawsuit in the Middle District of Tennessee alleging
that recently announced changes to medical plans for retirees
of UAW Local 1069 constituted a breach of collective bargain-
ing agreements under §301 of the Labor-Management
Relations Act and §502(a)(1)(B) of ERISA. On September 15,
2006, we filed a lawsuit in the Northern District of Illinois
against the International UAW and two retiree medical plan
participants seeking a declaratory judgment confirming that the
Company has the legal right to make changes to these med-
ical benefits. On June 4, 2007, the Middle District of
Tennessee ordered that its case be transferred to the Northern
District of Illinois. The two cases were consolidated on
September 24, 2007. The UAW filed a Motion to file a Second
Amended Complaint on October 26, 2007 in which it sought
to drop the retirees’ claim for vested lifetime benefits based on
successive collective bargaining agreements and instead allege
that the current collective bargaining agreement is the sole
alleged source of rights to retiree medical benefits. We
opposed the motion. On January 17, 2008, the court granted
the motion to amend the complaint on the condition that the
lifetime retiree benefits claims are to be dismissed with preju-
dice. The plaintiff’s counsel is now considering whether to
accept the condition or withdraw the amended complaint. In
addition, both parties filed Motions for Class Certification on
November 16, 2007. It is not possible at this time to determine
whether an adverse outcome would have a material adverse
effect on our financial position.
On October 13, 2006, we were named as a defendant in a
lawsuit filed in the U.S. District Court for the Southern District
of Illinois. Plaintiffs, seeking to represent a class of similarly
situated participants and beneficiaries in the Boeing Company
Voluntary Investment Plan (the VIP Plan), alleged that fees and
expenses incurred by the VIP Plan were and are unreasonable
and excessive, not incurred solely for the benefit of the VIP
Plan and its participants, and were undisclosed to participants.
The plaintiffs further alleged that defendants breached their
fiduciary duties in violation of §502(a)(2) of ERISA, and sought
injunctive and equitable relief pursuant to §502(a)(3) of ERISA.
Plaintiffs have filed a motion to certify the class, which we
have opposed. On September 10, 2007, the court issued an
order staying class certification pending resolution by the
U.S. Court of Appeals for the Seventh Circuit of Lively v.
Dynegy, Inc. On December 14, 2007, the court granted plain-
tiffs leave to file an amended complaint, which complaint
added our Employee Benefits Investment Committee as a
defendant and included new allegations regarding alleged
breach of fiduciary duty. It is not possible at this time to deter-
mine whether an adverse outcome would have a material
adverse effect on our financial position.
BSSI/ICO Litigation
On August 16, 2004, Boeing Satellite Systems International,
Inc. (BSSI) filed a complaint for declaratory relief against ICO
Global Communications (Operations), Ltd. (ICO) in Los Angeles
County Superior Court. BSSI’s suit seeks a declaration that
ICO’s prior termination of two contracts for convenience extin-
guished all claims between the parties. On September 16,
2004, ICO filed a cross-complaint alleging breach of contract,
economic duress, fraud, unfair competition, and other claims.
ICO added us as a defendant in October 2005 to some of
these claims and also sued us for interference with contract
and misappropriation of trade secrets. On January 13, 2006,
BSSI filed a cross-complaint against ICO, ICO Global
Communications (Holdings) Limited (ICO Holdings), ICO’s
parent, and Eagle River Investments, LLC, parent of both ICO
and ICO Holdings, alleging fraud and other claims. In its
claims, ICO seeks to recover damages significantly in excess
of the $2,400 contract price. More specifically, ICO seeks to
recover all monies paid to BSSI and Boeing Launch Services;
the costs it incurred in shutting down certain aspects of its
business; substantial damages for alleged diminution in the
value of its business; and other unspecified damages and
relief. We believe that we have defenses to ICO’s causes of
action and damage claims and are pursuing our own claims.
Trial is set for April 2008.
BSSI/Thuraya Litigation
On September 10, 2004, a group of insurance underwriters for
Thuraya Satellite Telecommunications (Thuraya) requested arbi-
tration before the International Chamber of Commerce (ICC)
against BSSI. The Request for Arbitration alleges that BSSI
breached its contract with Thuraya for sale of a model 702
satellite that experienced power loss anomalies. The arbitration
hearing has been scheduled for April 2008 and the arbitration
decision is expected to be issued later in 2008. The claimants
seek approximately $199 (plus claims of interest, costs and
fees) consisting of insurance payments made to Thuraya, and
they further reserved the right to seek an additional $38 that
has been in dispute between Thuraya and some insurers and
The Boeing Company and Subsidiaries