Boeing 2011 Annual Report Download - page 115

On October 21, 2008, the jury returned a verdict awarding ICO compensatory damages of $371 plus
interest, based upon findings of contract breach, fraud and interference with contract. On October 31,
2008, the jury awarded ICO punitive damages of $236. On January 2, 2009, the court entered
judgment for ICO in the amount of $631 which included $24 in prejudgment interest.
On February 26, 2009 the trial court granted in part and denied in part post-trial motions we filed
seeking to set aside the verdict. As a result, on March 3, 2009, the court entered an amended
judgment for ICO in the amount of $604, which included $371 in compensatory damages, $207 in
punitive damages and $26 in prejudgment interest. Post-judgment interest will accrue on the judgment
at the rate of 10% per year (simple interest) from January 2, 2009. As of December 31, 2011, the
amount of post-judgment interest totaled $181.
We filed a notice of appeal and ICO filed a notice of cross-appeal in March 2009. We believe that we
have substantial arguments on appeal, which we are pursuing vigorously. Oral argument took place on
January 25, 2012, and a decision could be issued during the first quarter of 2012. Following this
decision, either of the parties may seek discretionary review in the California Supreme Court.
BSSI/Telesat Canada
On November 9, 2006, Telesat Canada (Telesat) and a group of its insurers served BSSI with an
arbitration demand alleging breach of contract, gross negligence and willful misconduct in connection
with the constructive total loss of Anik F1, a model 702 satellite manufactured by BSSI. Telesat and its
insurers initially sought over $385 in damages and $10 in lost profits, but revised their total demand to
$263. BSSI has asserted a counterclaim against Telesat for $13.1 in unpaid performance incentive
payments plus late charges. BSSI also asserted a $180 contingent counterclaim on the theory that any
ultimate award to reimburse the insurers for their payments to Telesat could only result from Telesat’s
breach of its contractual obligation to obtain a full waiver of subrogation rights barring recourse against
BSSI. We believe that the claims asserted by Telesat and its insurers lack merit, but we have notified
our insurance carriers of the demand. The arbitration was stayed pending an application by Telesat to
the Ontario Superior Court on a preliminary issue. On July 16, 2010, the court denied Telesat’s request
to exclude certain evidence, but granted its alternative request to remove the Chairperson from the
arbitration panel. A new Chairperson was appointed on August 19, 2010, and the stay has been lifted.
The arbitration hearing is currently scheduled for November 12, 2012.
On April 26, 2007, a group of our insurers filed a declaratory judgment action in the Circuit Court of
Cook County, Illinois asserting certain defenses to coverage and requesting a declaration of their
obligation under our insurance and reinsurance policies relating to the Telesat Anik F1 arbitration. On
June 12, 2008, the court granted the insurers’ motion for summary judgment, concluding that our
insurance policy excluded the kinds of losses alleged by Telesat. On January 16, 2009, the court
granted Boeing’s motion for reconsideration, ruling in favor of Boeing to require the insurers to provide
insurance coverage to defend the claim. The case has been stayed pending completion of the
underlying arbitration.
Civil Securities Litigation
On November 13, 2009, plaintiff shareholders filed a putative securities fraud class action against The
Boeing Company and two of our senior executives in federal district court in Chicago. This lawsuit
arose from our June 2009 announcement that the first flight of the 787 Dreamliner would be postponed
due to a need to reinforce an area within the side-of-body section of the aircraft. Plaintiffs contended
that we were aware before June 2009 that the first flight could not take place as scheduled due to
issues with the side-of-body section of the aircraft, and that our determination not to announce this
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