Lockheed Martin 2007 Annual Report Download - page 96

Legal Proceedings
On November 30, 2007, the Department of Justice filed a complaint in partial intervention in a lawsuit filed under the
qui tam provisions of the Civil False Claims Act in the U.S. District Court for the Northern District of Texas, United States
ex rel. Becker and Spencer v. Lockheed Martin Corporation et al., alleging that we should have known that a subcontractor
falsified and inflated invoices submitted to us that were passed through to the government. We dispute the allegations and are
defending against them.
On February 22, 2007, we received a subpoena issued by a grand jury in the United States District Court for the District
of Columbia. The subpoena requests documents related to our participation in a competition conducted in 2004-2005 by the
National Archives and Records Administration for a $3 million contract to provide Electronic Document System (eDOCS)
Support Services. We are cooperating with the investigation.
On March 27, 2006, we received a subpoena issued by a grand jury in the United States District Court for the Northern
District of Ohio. The subpoena requested documents related to our application for patents issued in the United States and the
United Kingdom relating to a missile detection and warning technology. In August 2007, the investigation was closed, with
no charges to be filed.
On February 6, 2004, we submitted a certified contract claim to the United States requesting contractual indemnity for
remediation and litigation costs (past and future) related to our former facility in Redlands, California. We submitted the
claim consistent with a claim sponsorship agreement with The Boeing Company (Boeing), executed in 2001, in Boeing’s role
as the prime contractor on the Short Range Attack Missile (SRAM) program. The contract for the SRAM program, which
formed a significant portion of our work at the Redlands facility, had special contractual indemnities from the U.S. Air Force,
as authorized by Public Law 85-804. On August 31, 2004, the United States denied the claim. Our appeal of that decision is
pending with the Armed Services Board of Contract Appeals.
On August 28, 2003, the Department of Justice (the DoJ) filed complaints in partial intervention in two lawsuits filed
under the qui tam provisions of the Civil False Claims Act in the United States District Court for the Western District of
Kentucky, United States ex rel. Natural Resources Defense Council, et al v. Lockheed Martin Corporation, et al, and United
States ex rel. John D. Tillson v. Lockheed Martin Energy Systems, Inc., et al. The DoJ alleges that we committed violations
of the Resource Conservation and Recovery Act at the Paducah Gaseous Diffusion Plant by not properly handling, storing,
and transporting hazardous waste and that we violated the False Claims Act by misleading Department of Energy officials
and state regulators about the nature and extent of environmental noncompliance at the plant. We dispute the allegations and
are defending against them.
Nine lawsuits were filed against us as a result of an incident in July 2003 at our aircraft parts manufacturing facility in
Meridian, Mississippi, which resulted in the deaths of seven employees and the wounding of eight others. Claims were
brought against us by the estates of deceased employees, wounded employees, and employees and their relatives who
claimed, among other things, tort and race discrimination causes of action. All claims have been settled or dismissed by the
U.S. District Court for the Southern District of Mississippi. The U.S. Court of Appeals for the Fifth Circuit has affirmed all
but two of those dismissals, both of which remain pending before that Court.
On October 19, 2005, Space Exploration Technologies Corporation (SpaceX) filed a complaint in the United States
District Court for the Central District of California in Los Angeles alleging that we and Boeing violated Federal and
California antitrust and other statutes by attempting and conspiring to eliminate competition in, and by monopolizing and
attempting to monopolize, the government Evolved Expendable Launch Vehicle (EELV) launch vehicle market, including
through the proposed formation of the ULA joint venture. SpaceX sought monetary damages and to enjoin creation of the
ULA joint venture. We and Boeing moved to dismiss. On February 17, 2006, the District Court dismissed the first amended
complaint. SpaceX then filed a second amended complaint. On May 12, 2006, the District Court dismissed with prejudice
SpaceX’s second amended complaint for lack of jurisdiction, finding that SpaceX failed to allege a case or controversy
because its inability to compete in the EELV market arises from SpaceX’s inability to offer a qualified launch vehicle and
not from any actions by the defendants. SpaceX has appealed the dismissal to the United States Court of Appeals for the
Ninth Circuit.
As described in the “Environmental Matters” discussion below, we are subject to federal and state requirements for
protection of the environment, including those for discharge of hazardous materials and remediation of contaminated sites.
As a result, we are a party to or have property subject to various other lawsuits or proceedings involving environmental
matters and remediation obligations.
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