Boeing 2012 Annual Report Download - page 115

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Court of Appeals upholding the default termination, and remanded the case to the Court of Appeals. On
July 7, 2011, the Court of Appeals remanded the case to the trial court for additional factual determinations.
On July 3, 2012, the trial court set a briefing schedule, which, absent extensions, we expect to be completed
in March 2013. On December 29, 2009, the Navy sent letters to the Team requesting payment of $1,352
in unliquidated progress payments, plus applicable interest. On November 15, 2011, the Navy sent a letter
confirming that it would not pursue payment from the Team pending all trial court and appellate proceedings
adjudicating the issues remanded by the Supreme Court.
We believe that the termination for default is contrary to law and fact and that the loss provision established
by McDonnell Douglas Corporation in 1990, which was supported by an opinion from outside counsel,
continues to provide adequately for the reasonably possible reduction in value of A-12 net contracts in
process as of December 31, 2012. Final resolution of the A-12 litigation will depend on the outcome of
further proceedings or possible negotiations with the U.S. government. If after all legal proceedings are
concluded, the court determines, contrary to our belief, that a termination for default was appropriate, we
could incur an additional loss of up to $275, consisting principally of $237 of remaining inventory costs.
If the courts further hold that a money judgment should be entered against the Team, we could be required
to pay the U.S. government up to one-half of the unliquidated progress payments of $1,350 plus statutory
interest from February 1991 (currently totaling up to $1,585). In that event, our loss would total
approximately $1,741 in pre-tax charges. Should, however, the March 31, 1998 judgment of the U.S. Court
of Federal Claims in favor of the Team be reinstated, we could be entitled to receive payment of
approximately $1,187, including interest from June 26, 1991.
Employment, Labor and Benefits Litigation
We have been named as a defendant in two pending class action lawsuits filed in the U.S. District Court
for the District of Kansas, each related to the 2005 sale of our former Wichita facility to Spirit AeroSystems,
Inc. (Spirit). The first action involves allegations that Spirit’s hiring decisions following the sale were tainted
by age discrimination, violated ERISA, violated our collective bargaining agreements, and constituted
retaliation. The case was brought in 2006 as a class action on behalf of individuals not hired by Spirit. The
court granted summary judgment in 2010 in favor of Boeing and Spirit on all class action claims, and during
the third quarter of 2012 the Tenth Circuit Court of Appeals affirmed the summary judgment. The individual
plaintiffs will all have to decide during the first quarter of 2013 whether or not to pursue individual age
discrimination claims.
The second action, initiated in 2007, alleges collective bargaining agreement breaches and ERISA
violations in connection with alleged failures to provide benefits to certain former employees of the Wichita
facility. Written discovery closed by joint stipulation of the parties on June 6, 2011. Depositions concluded
on August 18, 2011. Briefing of Boeing’s and Plaintiffs’ respective summary judgment motions was
completed on June 4, 2012. On December 11, 2012 the court denied plaintiffs’ motion for summary
judgment and granted Boeing’s motion for summary judgment on plaintiffs’ claim that amendment of The
Boeing Company Employee Retirement Plan violated the IAM collective bargaining agreement, as well
as individual ERISA §510 claims for interference with benefits. The court denied Boeing’s motion for all
other claims. Spirit has agreed to indemnify Boeing for any and all losses in the first action, with the
exception of claims arising from employment actions prior to January 1, 2005. While Spirit has
acknowledged a limited indemnification obligation in the second action, we believe that Spirit is obligated
to indemnify Boeing for any and all losses in the second action. The Company cannot reasonably estimate
the range of loss, if any, that may result from these matters given the current procedural status of the
litigation.
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), alleged that fees and expenses
incurred by the VIP were and are unreasonable and excessive, not incurred solely for the benefit of the