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Hi Paulee,
U r Right.
1st Court allows jury to decide what motive for case facts disappearing at B whilst knowing they were under challenge
from Pemco.
2nd order 539 deny B's limme 505
gives pemco right to those arguments in court .
Conclusion : aaiiq started w/ 100 mil law-suit ....
B will put on the 'we will win face' but cave with
offer just before court date they have have any sense.
w/ fingers crossed ...
how bout u?
Sounds like a double negative,
Could you go slowly and explain that
feb 10 / 2020 is the DATE
****....if no brains at BA wake up to face the music ...
"don't know what you had --- till 'Da Judge' sings why it is gone" ........****
539 ORDER denying 505 Motion in Limine to Exclude Argument That Boeing Improperly Underbid AAI by Switching to a Continuous Learning Curve. Signed by Judge R David Proctor on 1/28/2020. (KAM) (Entered: 01/28/2020)
01/27/2020 538 Transcript of Proceedings held on 1/21/2020, before Judge R. David Proctor. Court Reporter/Transcriber Risa L. Entrekin. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. NOTICE: The parties have seven (7) calendar days to file with the Court a Notice of Intent to Request Redaction of this transcript. If no such Notice is filed, the transcript will be made remotely electronically available to the public without redaction after 90 calendar days. (A copy can be obtained at http://www.alnd.uscourts.gov/local/court%20forms/transcripts/Transcript% 20Redaction%20Policy.pdf) See Transcript Redaction Policy Redaction Request due 2/17/2020. Redacted Transcript Deadline set for 2/27/2020. Release of Transcript Restriction set for 4/26/2020. (KAM) (Entered: 01/27/2020)
01/24/2020 537 NOTICE of Appearance by Kasdin Miller Mitchell on behalf of Boeing Aerospace Operations Inc, Boeing Aerospace Support Center, Boeing Company, The (Mitchell, Kasdin) (Entered: 01/24/2020)
01/23/2020 536 NOTICE by Boeing Aerospace Operations Inc, Boeing Aerospace Support Center, Boeing Company, The Proof of Service of Subpoena to Appear to Timothy Walker (Warburton, Reed) (Entered: 01/23/2020)
Looks like the trial started
Boeing Undercut $1.3B Air Force Deal Trial, Aircraft Co. Says
By Sarah Martinson
Law360 (January 31, 2020, 5:07 PM EST) -- A defunct Alabama aircraft maintenance company has urged a federal court to again sanction Boeing for backtracking on trade secret documents its legal department retained less than two weeks before trial in a dispute over a $1.3 billion Air Force deal.
Alabama Aircraft Industries Inc., formerly known as Pemco, said Thursday that Boeing lied to it about its in-house attorney Mark Rabe's having disclosed all the proprietary information it possessed about Pemco in a July 2014 attachment.
Boeing now says that some of the documents were disclosed in an August 2014 attachment after AAI had already deposed all but one of Boeing employees in preparation for their Feb. 10 trial, AAI said.
“The result of Boeing’s current position, therefore, is to undermine the usefulness of virtually every deposition AAI took of a Boeing witness in this case, as well as to set the table for lengthy and unnecessary use of precious trial time to straighten this out,” AAI said.
AAI launched its legal battle in 2011, shortly after filing for Chapter 11 bankruptcy, alleging that Boeing was directly responsible for its bankruptcy by stealing trade secrets and pulling strings with corrupt U.S. Air Force officials to cut AAI out of the $1.3 billion plane-servicing contract that its survival depended on.
Boeing canceled their agreement to jointly bid on the contract for maintenance of the Air Force’s KC-135 tanker fleet after the military branch reduced the anticipated scope of the project, AAI said. Both companies ended up bidding separately, and Boeing was awarded the contract in May 2008, even though AAI's submission was about $15 million lower, according to the complaint.
AAI previously asked the court to sanction Boeing in July 2016, alleging that there was solid evidence Boeing’s chief financial officer at the time instructed staff to delete certain emails related to Pemco even after written directions were issued by Boeing to collect and send such information to its law department for preservation, AAI claimed.
Boeing argues in response to the July sanctions bid that AAI had failed to establish that Boeing had a duty to preserve documents during those years, as it had no reason to anticipate litigation from the bankrupt company. In addition, Boeing said, AAI had no proof that a single document was missing that is crucial to the case.
U.S. District Judge R. David Proctor found in March 2017 that Boeing employees did destroy documents and said he would allow a jury to assume the information deleted could have hurt Boeing's case.
Boeing and counsel for AAI declined to comment, and counsel for Boeing did not respond to requests to comment on Friday.
AAI is represented by J. Michael Rediker, Joshua D. Lerner, R. Scott Williams, Peter J. Tepley, Meredith Jowers Lees and Rebecca A. Beers of Rumberger Kirk & Caldwell PC.
Boeing is represented by R. Thomas Warburton and J. Thomas Richie of Bradley Arant Boult Cummings LLP; and Craig S. Primis, Erin C. Johnston, Tia Trout-Perez and Alexia Brancato of Kirkland & Ellis LLP.
The case is Alabama Aircraft Industries Inc. et al. v. Boeing Co. et al., case number 2:11-cv-03577, in the U.S. District Court for the Northern District of Alabama.
--Additional reporting by Daniel Wilson, Natalie Olivo, Bonnie Eslinger, Christopher Crosby and Ryan Boysen. Editing by Peter Rozovsky.
Date Filed # Docket Text
01/21/2020 535 DAMAGE list of Alabama Aircraft Industries Inc, Alabama Aircraft Industries Inc Birmingham, Pemco Aircraft Engineering Services Inc filed.. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Tepley, Peter) (Entered: 01/21/2020)
01/21/2020 534 ORDER On January 21, 2020, the court conducted a hearing on the parties various Motions in Limine; 502 Motion in Limine re: USAF Documents and Bid Protest Litigation is GRANTED IN PART; 503 Plaintiff's consolidated Motion in Limine is GRANTED IN PART; 504 Boeings Omnibus Motion in Limine is GRANTED IN PART; The court has reserved ruling on, and has ordered specific, limited, supplemental briefing on 505 Boeing's Motion in limine to exclude argument that Boeing improperly underbid AAi by switching to a continuous learning curve 506 Boeing's Motion in Limine to Preclude AAI From Seeking DoubleRecovery is GRANTED IN PART. Signed by Judge R David Proctor on 1/21/2020. (KAM) (Entered: 01/21/2020)
01/15/2020 533 NOTICE by Alabama Aircraft Industries Inc, Alabama Aircraft Industries Inc Birmingham Plaintiffs' Certification in Accordance with Court's Order (Attachments: # 1 Exhibit A)(Rediker, J) (Entered: 01/15/2020)
01/13/2020 532 Exhibit List AAI's Supplemental Amended Exhibit List by Alabama Aircraft Industries Inc, Alabama Aircraft Industries Inc Birmingham, Pemco Aircraft Engineering Services Inc.. (Attachments: # 1 Appendix B-1)(Rediker, J) (Entered: 01/13/2020)
01/13/2020 531 ORDER granting in part and denying in part 507 Motion in Limine as more specifically set forth in this order. Signed by Judge R David Proctor on 1/13/2020. (KAM) (Entered: 01/13/2020)
was asked same yesterday ...
my answer : hope that is not an option. BA has -0- goodwill and they hardly need further news blips about the less than honorable way they operate. The current "New + Better" Tanker is now 2 years behind schedule and carrying many "better get it fixed issues" not to mention already extremely over-budget at this late date and 2 +yrs to go ...
I'd recommend they settle for $40-50 Mil or avg. price of Pemco (AAIIQ) prior to the issue to be at trial. They could ask for a no admission clause settlement agreement or settlement without admitting guilt.
if legal goes 50% then around 20 left for previous bag holders.
At 4 mil stock somewhere near $4-$5.
let us pray!
Any chance you will be going to the trial, or able to track it day to day ?
feb 10, 2020
latest are jan 10, 2020 limmie rebuts..up to 530.
legal will be 50%
price at begin was avg= $10 ( 5 for legal) or 4mx5=20m / 4 = 5
Is there a trial date set ?
01/03/2020 517 ORDER ADJUSTING CERTAIN PRETRIAL DEADLINES; Parties file amended exhibit list: 1/10/2020; Parties file amended witness list listing the order of witnesses: 1/10/2020; Parties file objections to exhibits: January 29, 2020; Parties serve requests for copies of documents for the purpose of determining authenticity objections:1/15/2020; Parties serve authenticity objections in writing on opposing party: 1/20/2020; Parties serve deposition designations: 1/17/2020; Parties serve counter designations: 1/24 2020; Parties file objections to deposition testimony: 1/31/2020; Parties file joint jury charge: 1/24/2020; Hearing on all pending motions in limine are set for 1/21/2020 11:00 AM before Judge R David Proctor.. Signed by Judge R David Proctor on 1/3/2020. (KAM) (Entered: 01/03/2020)
too cryptic. sorry.
mark-ets
action looks encouraging for aai.
getting a favorable outlook.
com on pagi
aaii is asking to be made 'whole' as before the sham and illegal use of the previous priority info supplied to them by aaii. The wipe of aaii info from their record whilst knowing a challenge was forth coming.
mark-
............for pemco to be @ aaiiq
ets
...........what a mixed up
outlook
.
com ........... ic
give me your email address and I'll send you a copy mine in a readable
form
my copy is different ??? will post page 15- 21 from my copy
II. COUNT THREE – AAI CLAIMS REGARDING ITS PROPRIETARY INFORMATION (BREACH OF AGREEMENTS)
A. AAI relies upon the following legal theories in support of its claims against Boeing regarding its proprietary information.
As a result of teaming agreements and other contracts and agreements between Boeing and
AAI, Boeing possessed AAI PI accumulated since 2000 and frequently updated, which was
competition-sensitive, not in the public domain, and valuable. AAI claims that Boeing breached
its several agreements with AAI that required Boeing to protect and not improperly use AAI’s PI,
and to comply with laws and regulations protecting against misuse of PI, because Boeing
knowingly and intentionally:
(1) failed to take appropriate steps to safeguard AAI’s PI after Boeing began
evaluating and pursuing plans in the spring of 2006 to (i) stop teaming with AAI under the
Recompete MOA to obtain a USAF contract to perform PDM services on the KC-135
Aircraft (the “Program”) and (ii) compete against AAI for the Recompete contract;
(2) failed to timely and effectively implement firewall and PI sequestration
measures to protect AAI’s PI after it decided it was in Boeing’s interest to take all PDM
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 15 of 35
16
work in San Antonio, making AAI its competitor for such work;
(3) failed to ensure that the Boeing’s personnel working on Boeing’s Recompete
team and bid submissions in prospective and in actual competition with AAI, were at all
relevant times permitted to participate under contractually-applicable laws and regulations,
as well as Boeing’s own policies, manuals and procedures (necessary for regulatory
compliance) and industry standards relating to procurement activity;
(4) failed to prevent Boeing employees who had knowledge of AAI’s PI stemming
from Boeing activities under agreements with AAI from working on Boeing’s Solo
Recompete activities and bid submissions in potential or actual competition with AAI, after
Boeing personnel were on reasonable notice of the likelihood of a conflict of interest
between Boeing and AAI arising from Boeing’s potential (and then actual) termination of
the Recompete MOA;
(5) used AAI-PI-knowledge-contaminated Boeing personnel, including those
handling Joint Recompete bid estimating and pricing who were familiar with AAI’s PI
(including estimates, costs, hours, rates, prices and the methods AAI used for estimating
and pricing tasks, staffing, labor, overhead, profit, materials, and other cost and pricing
factors) to develop Boeing’s estimates and prices relevant to its Solo Recompete bid in
competition with AAI after Boeing personnel were on reasonable notice of the likelihood
of a conflict of interest between Boeing and AAI arising from Boeing’s potential (and then
actual) termination of the Recompete MOA and after key Boeing personnel stated that
Boeing personnel with knowledge of AAI’s PI should not work on Boeing’s Solo
Recompete bid;
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 16 of 35
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(6) deleted, destroyed, and concealed evidence in order to cover up Boeing’s
misconduct with AAI’s PI and to impede AAI’s ability to prove that misconduct; and
(7) misappropriated and misused AAI’s PI, and used AAI-PI-knowledge
contaminated Boeing personnel to facilitate the misappropriation and misuse of AAI’s PI,
to frame Boeing’s Solo Recompete bid submissions to underbid AAI and to win the
Recompete contract award; all of which damaged AAI.
AAI’s breach of agreements claim is based on the following agreements that were in force
in 2005-2007 between AAI and Boeing: (1) the PI-protection provisions of “The Boeing Company
General Provisions (Fixed Price Services Contract) GP2,” generally referred to as GP2, for both
the 0054 and Bridge contract work; (2) the NDA; (3) the PI-protection provisions of Recompete
MOA §§ 5, 6 and 7; (3) the government laws and regulations and Boeing-government agreements
regarding procurement integrity and protections against misuse of PI with which, by contract
(Recompete MOA § 9.0 and NDA §9.0), Boeing agreed to implement and comply; and (4) the
agreements reached between Mark Rabe (counsel for Boeing) and Doris Sewell (counsel for AAI).
Therefore, AAI will prove at trial that: (1) Boeing and AAI entered into contracts governing
the parties’ PI; (2) AAI performed, or substantially performed its obligations pursuant the
contracts’ terms; (3) Boeing failed to perform things the contracts required it to do; and (4) AAI
was harmed by that failure. (Paraphrasing SAK Constr. of CA, L.P., supra.).
B. AAI expects to prove the following categories of factual allegations in support of its claims against Boeing concerning AAI’s PI6
1. The facts and circumstances relating to AAI’s development, accumulation and
6 As a number of fact elements cited under Count One, supra, are also relevant to AAI’s PI-misuse claims under Count Three here, they are not repeated here but are incorporated here from Count One, supra, by reference.
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 17 of 35
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possession of extensive and invaluable trade secrets and proprietary information connected with
KC-135 work (“PI”) which was not in the public domain and which would be valuable to anyone
seeking to compete with AAI or others for KC-135 repair and depot work.
2. The facts and circumstances relating to the 1998 RFP “bundling” which directly
led to the situation of AAI having to share its PI with Boeing.
3. The facts and circumstances, including the nature, terms, conditions and
requirements of the parties’ several contracts for KC-135 work, relating to AAI having to provide
Boeing with AAI’s PI and to update such PI, including AAI’s compliance with such terms and
requirements.
4. The facts and circumstances relating to Boeing’s obligations to protect AAI’s PI at
all relevant times.
5. The facts and circumstances relating to Boeing’s access to and possession and use
of AAI’s PI from 2000 through 2007 and relating to Boeing’s continuous access to AAI’s
Birmingham facility under the parties’ several contracts.
6. The facts and circumstances relating to the unequal (non-reciprocal) levels of
access to and possession of the other party’s PI, between Boeing as prime contractor and AAI as
subcontractor.
7. The facts and circumstances relating to Boeing’s knowledge from at least 2004
onward that it would eventually compete with AAI for all KC-135 PDM work (including AAI’s
share under the parties’ contracts), and how this related to the need for Boeing to avoid conflicts
of interest and to protect against misuse of AAI’s PI.
8. The facts and circumstances relating to Boeing’s knowledge that AAI’s economic
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 18 of 35
19
survival was dependent upon AAI’s retention of KC-135 PDM work, and implications of that
knowledge on the protection of AAI PI.
9. The facts and circumstances relating to Boeing’s use and handling of firewalls to
protect AAI PI prior to termination of the MOA.
10. The facts and circumstances relating to Boeing’s internal evaluations, analyses and
strategies for taking all KC-135 PDMs to its San Antonio facility and for terminating AAI as a
teaming partner, and implications of such facts and circumstances on Boeing’s need to protect
AAI’s PI.
11. The facts and circumstances relating to AAI’s delivery to prime contractor Boeing
of AAI PI under stipulations of confidentiality, including the nature and extent of such PI.
12. The facts and circumstances relating to Boeing personnel performing internal
studies, comparisons, and evaluations of AAI’s PI, including the familiarity of such personnel with
such AAI PI, and how such AAI PI was maintained, stored and disseminated within Boeing.
13. The facts and circumstances relating to Boeing’s Blue Team modeling of L-3 and
of Lockheed.
14. The facts and circumstances relating to Boeing’s formulation and implementation
of a Win Price.
15. The facts and circumstances relating to Boeing not having its Blue Team perform
a public-domain-information-based analysis of AAI, as Boeing had done for L-3 and Lockheed.
16. The facts, circumstances and time frames relating to which AAI PI was sequestered
and protected by Boeing and which AAI PI was not sequestered or otherwise protected against
misuse.
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 19 of 35
20
17. The facts, circumstances and timing of Boeing’s knowledge that it had entered into
a conflict of interest position with AAI (by reason of becoming a competitor with AAI, to take all
PDM work into San Antonio) and the effects of such conflict and knowledge on Boeing’s
obligations to protect AAI PI, including sequestration of PI and change of Boeing Recompete
personnel who were knowledge-contaminated.
18. The facts and circumstances relating to Boeing’s secret internal price modeling that
used AAI’s PI without AAI’s knowledge or permission, and relating to whether such use went
beyond what was reasonably necessary if Boeing and AAI were to remain a bidding team.
19. The facts, circumstances and timing relating to Boeing’s institution of a firewall in
2006, its ineffectiveness, and Boeing’s failure to enforce adequate compliance.
20. The facts and circumstances relating to Boeing’s knowledge of the need to replace
its PI-knowledge-contaminated Recompete personnel and Boeing’s failure to do so, including its
concealment of material facts relating to the foregoing.
21. The facts and circumstances of Boeing’s secretly-conducted internal competition
against AAI (including writing AAI out of the upcoming bid submission and using AAI’s PI) while
still teamed with AAI under the MOA before June 6, 2006, using AAI PI, with no PI protections
being implemented.
22. The facts and circumstances relating to the applicable standards (including methods
and procedures) to which Boeing was obligated to adhere in order to effectively and completely
protect AAI’s PI against misuse, and relating to Boeing’s failure to adhere to such applicable
standards, methods and procedures.
23. The facts and circumstances relating to the 2006 agreements between Boeing and
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 20 of 35
21
AAI concerning protection of the parties’ respective PI, and the parties’ compliance (or not) with
such agreements.
24. The facts and circumstances relating to Boeing’s spoliation of evidence relevant to
AAI’s PI and Boeing’s handling or use thereof.
25. The facts and circumstances relating to Boeing’s evaluations and analyses of AAI
and Lockheed as competitive threats during the parties’ independent bid preparation activities
between 2006 and final Recompete submissions in 2007.
26. The facts and circumstances relating to the means and methods by which Boeing
took improper advantage of its possession and knowledge of AAI PI to underbid AAI and
otherwise frame its bid submissions to defeat AAI’s competing bid, in order to win the Recompete
award.
27. The facts and circumstances relating to the result that but for the knowledge,
ongoing unauthorized possession and misuse and misappropriation of AAI’s PI by Boeing, Boeing
would not have been able to underbid or otherwise prevail over AAI in the Recompete bidding.
28. The facts and circumstances relating to AAI’s compliance with its own contractual
obligations respecting Boeing PI, including AAI’s comparative lack of knowledge of material,
relevant and useful Boeing PI and AAI not misusing Boeing PI.
29. The facts and circumstances relating to the impacts on AAI of Boeing’s breaches
of its several agreements to safeguard, protect and not use or misuse AAI’s PI, including forcing
AAI to incur substantial expense in a Recompete effort for its economic survival, while Boeing’s
contract breach ensured such AAI effort would be frustrated, and the harm and damage to AAI.
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 21 of 35
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III. DAMAGES
Recognizing the Court’s prior rulings, over AAI’s objections, on available damages, AAI
will claim the following damages:
1. Count I – as a direct result of Boeing’s breach of the Recompete MOA, AAI was
damaged in the following amounts: (i) actual reliance damages in the amount of the expenses it
had incurred in teaming with Boeing to submit a joint bid and (ii) actual damages in the amount
of the expenses it had incurred in submitting a solo bid. These actual incurred costs total
$2,132,062.53.
“A plaintiff claiming a breach of contract has available and need not choose between three
types of damages—actual, consequential, and benefit-of-the-bargain—as such damages are not
necessarily inconsistent with one another; a plaintiff may not, however, be made whole more than
once.” Catroppa v. Metal Building Supply, Inc., 267 S.W.3d 812, 817 (Mo. Ct. App. 2008).
“‘Actual damages are compensatory and are measured by the loss or injury sustained’ as a direct
result of the wrongful act.” Id. at 818 (quoting Stiffelman v. Abrams, 655 S.W.2d 522, 531 (Mo.
1983)). Reliance damages are a form of actual or direct damages. See, e.g., Nashville Lodging Co.
v. Resolution Trust Corp., 59 F.3d 236, 246 (D.C. Cir. 1995) (“The fact that reliance damages are
backward-looking does not destroy their pedigree as a species of compensatory relief. . . .
[R]emedies calibrated to putting the claimant back in the position he occupied before making the
repudiated agreement are ‘actual direct compensatory damages’ no less than those aimed to put
him where he would have been if the contract had been fulfilled.’”) “Reliance damages are
designed to compensate the plaintiff for any reasonably foreseeable costs incurred or expenditures
made in reliance on the promise that has now been broken.” Richard A. Lord, 24 Williston on
Case
I'm not sure what you had was the final document,
the document I saw said:
EXHIBIT D -- MODIFIED PRETRIAL PROCEDURES
1. Damages. No later than twenty (20) calendar days prior to the date set for trial, the parties shall file and serve a list itemizing all damages and equitable relief being claimed or sought; such list shall show the amount requested and, where applicable, the method and basis of computation.
so maybe there is more
Hi
I agree that the claim on monies spent during the rebid process is peanuts and the elephant appetite of the lawyers will need more than that to satisfy their costs of effort.
The big ?? will be damages and punitive charge for the
"misuse and disregard for Priority Information and the fact that B destroyed critical info after knowing Pemco was going to challenge the bid results. Do you recall Judge Proctor beginning his allowance for a 'go forward ' by quoting the
J. Mitchell hit..."Don't it always seem to go. That you don't know what you've got. Till it's gone...." He was referring to the destruction of aaii/boeing transcripts (emails tele calls etc.)
He said that knowing AAII would soon be a combatant in the
'rebid' ..that it was a major wrong on Boeing part in "losing this information.
So I think what Tennenbaum and cohorts believe is that the jury will award punitive damages. I thought that was the reason for the original suit asking $$$$$ based on the loss of the KC 135 and resulting company failure to survive.
what do I think ? I'm confused!
what i'm reading it seems the lawyers would be charging more than what I see them claiming in damages, and it will all be over in 10 days. So why bother ??????????
what am I missing in this decade old fight?
Hi Paulee,
Tell me what you think. No more delays for trial but appeals etc. ( a norm for B )??? best regards.
ALABAMA AIRCRAFT INDUSTRIES, INC., ) ALABAMA AIRCRAFT INDUSTRIES, INC. – ) BIRMINGHAM, and PEMCO AIRCRAFT ) ENGINEERING SERVICES, INC., ) ) Plaintiffs, ) Case No. 2:11-cv-03577-RDP ) ) vs. ) ) THE BOEING COMPANY, BOEING ) AEROSPACE OPERATIONS, INC. and ) BOEING AEROSPACE SUPPORT CENTER, ) ) Defendants. )
PRETRIAL ORDER
A final pretrial conference was held in the above case on October 10, 2019, wherein, or as
a result of which, the following proceedings were held and actions were taken:
1. Appearances. Appearing at the conference were:
For AAI: J. Michael Rediker, Joshua D. Lerner, Peter J. Tepley, and Rebecca A. Beers of Rumberger Kirk & Caldwell, P.C.
For Boeing: R. Thomas Warburton and J. Thomas Richie, Bradley Arant Boult Cummings LLP; Erin Johnston, Alexia R. Brancato, Kirkland & Ellis LLP.
2. Nature of the Action, Jurisdiction and Venue.
(a) The nature of this action as a result of the Court’s rulings to date is as follows: AAI brings two breach of contract claims against Boeing, one relating to Boeing’s termination of an agreement to submit a joint bid to the United States Air Force for a contract to perform program depot maintenance work on KC-135 aerial refueling aircraft, and the second relating to Boeing’s alleged misuse of AAI’s proprietary information in violation of certain contracts. Boeing denies each of AAI’s claims.
FILED
2019 Oct-10 PM 02:52 U.S. DISTRICT COURT N.D. OF ALABAMA
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 1 of 35
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(b) The court has subject matter jurisdiction of this action under the following statutes, rules, or cases: The Court has diversity jurisdiction under 28 U.S.C. § 1332 because there is complete diversity between the Trustee and Defendants. The Court has “related to” jurisdiction under 28 U.S.C. § 1334(b).
(c) All jurisdictional and procedural requirements prerequisite to maintaining this action have been met.
(d) Personal jurisdiction and venue are not contested.
3. Parties and Trial Counsel. Any remaining fictitious parties are hereby STRICKEN.
The parties and designated trial counsel are correctly named as set out below:
Parties:
Trial Counsel:
Plaintiff:
Alabama Aircraft Industries, Inc.
Alabama Aircraft Industries, Inc. - Birmingham
Pemco Aircraft Engineering Services, Inc.
J. Michael Rediker, Esq. Meredith J. Lees Peter J. Tepley R. Scott Williams Rebecca A. Beers RUMBERGER, KIRK & CALDWELL, P.C. Renasant Place, Suite 130 2001 Park Place North Birmingham, AL 35203
Joshua D. Lerner RUMBERGER, KIRK & CALDWELL, P.C. Brickell Bayview Centre, Suite 3000 80 Southwest 8th Street Miami, Florida 33130-3037
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 2 of 35
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Defendants:
The Boeing Company
Boeing Aerospace Operations, Inc.
Boeing Aerospace Support Center
R. Thomas Warburton J. Thomas Richie BRADLEY ARANT BOULT CUMMINGS LLP 1819 Fifth Ave. N. Birmingham, AL 35203
Craig S. Primis, P.C. Erin Johnston, P.C. Alexia R. Brancato KIRKLAND & ELLIS LLP 1301 Pennsylvania Ave. NW. Washington, D.C. 20004
4. Pleadings. The following pleadings have been allowed:
Pleading Docket Number Date
Original Complaint 1-1 September 9, 2011
First Amended Complaint 1-1 September 22, 2011
Second Amended Complaint 34 June 22, 2012
Answer to Second Amended Complaint 60 May 6, 2013
Third Amended Complaint 97 September 10, 2014
Answer to Third Amended Complaint 99 September 24, 2014
5. Statement of the Case.
(a) Narrative Statement of the Case.
The Plaintiffs in this case are Alabama Aircraft Industries, Inc. Alabama Aircraft
Industries, Inc.; Alabama Aircraft Industries, Inc. – Birmingham; and Pemco Aircraft Engineering
Services, Inc., also known as Pemco (referred to hereafter as “AAI”). The Defendants are The
Boeing Company, Boeing Aerospace Operations, Inc., and Boeing Aerospace Support Center
(“Boeing”). In June 2005, AAI and Boeing entered into a Memorandum of Agreement or “MOA.”
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 3 of 35
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Under that MOA, the parties agreed to work together to submit a joint bid to the United States Air
Force for a government contract, called the “Recompete Contract,” to perform maintenance and
repair work on a military airplane used for air refueling called the KC-135. The parties submitted
their joint bid for the Recompete Contract to the Air Force in October 2005. In May 2006, before
the Recompete Contract had been awarded, the Air Force reduced the best estimated quantity of
aircraft that would be serviced under the Recompete Contract from 44 aircraft per year to 24
aircraft per year. Boeing then terminated the MOA. Both parties submitted separate, independent
bids to compete for the Recompete Contract. Boeing won the Recompete Contract in September
2007.
AAI brings this lawsuit against Boeing. AAI alleges that Boeing breached the MOA when
Boeing terminated the MOA. AAI also alleges that Boeing breached the agreements it had made
to protect AAI’s proprietary information by misusing AAI’s proprietary information in order to
win the Recompete Contract.
Boeing denies these claims. Boeing contends that it was allowed to terminate the MOA
after the Air Force reduced the number of aircraft to be serviced, and that it did not misuse any of
AAI’s information.
(b) Undisputed Facts.
1. Boeing is an aerospace and defense company with locations across the country,
including in Huntsville, Alabama.
2. AAI, headquartered in Birmingham, Alabama since the 1950s, provided aircraft
maintenance, repair, and modification services for government and military customers, including
maintenance and repair of the KC-135 aircraft from 1968-2011.
Case 2:11-cv-03577-RDP Document 492 Filed 10/10/19 Page 4 of 35
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3. In 1998, the United States Air Force (“USAF”) awarded Boeing a prime contract
to perform programmed depot maintenance (“PDM”) services on KC-135 aerial refueling aircraft.
4. On October 27, 2000, Boeing and AAI entered into a Memorandum of Agreement
(“MOA”) by which AAI would be a subcontractor to Boeing for the 1998 KC-135 PDM contract
for FY2002 through FY2007.
5. The 2000 MOA and long term requirements contract entered into between Boeing
and AAI pursuant to the 2000 MOA contained provisions regarding protecting the parties’
proprietary information.
6. In 2004, the USAF decided to “recompete” the KC-135 PDM contract (the
“Recompete Contract”) and opened bidding on a new contract to all bidders.
7. Also in 2004, the USAF decided to negotiate a Bridge contract with Boeing for
performance of the KC-135 PDM for periods between the end of the 1998 KC-135 PDM contract
and the time when the Recompete contract would be awarded and implemented.
8. After the USAF decided to recompete the KC-135 PDM, Boeing and AAI expected
a Request for Proposal (“Recompete RFP”) for the Recompete Contract.
9. In January 2005, both Boeing and AAI evaluated whether to team with each other
to compete for the Recompete Contract.
10. From April 2005 to June 2005, Boeing and AAI negotiated a new Memorandum of
Agreement under which Boeing, as the prime contractor, and AAI, as the subcontractor, would
work together to prepare and submit a proposal for the Recompete Contract (“Recompete MOA”).
11. In May 2005, the USAF released a draft Request for Proposal, or “RFP,” for the
Recompete Contract, which was set to begin in Fiscal Year 2008.
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12. The draft RFP provided for a Best Estimated Quantity (“BEQ”) of 44 KC-135
aircraft to be inducted with the winning bidder for PDM work each year.
13. On June 3, 2005, Boeing and AAI signed the Recompete MOA. The Recompete
MOA included two attachments: Exhibit A, titled “Work Share Agreement” and Exhibit B, titled
“Non-Disclosure Agreement” (“NDA”).
14. On September 5, 2005, the Recompete MOA was amended to add L-3 as a
subcontractor to perform unplanned maintenance work (“UDLM”) on KC-135s and to designate
AAI as the “Principal Subcontractor.” No other substantive changes were made to the Recompete
MOA. The NDA and the Work Share Agreement did not change, although the NDA became
Exhibit C.
15. The NDA required that:
In the event the contractual relationship between the parties (for the KC-135 PDM program that is embodied in the associated Memorandum of Agreement or in a subsequent long-term subcontracting relationship) terminates pursuant to the terms of such MOA or subcontract, either party may pursue and independent contract to perform work for the United States Government on the PDM program, either alone or in conjunction with other parties. Nonetheless, in compliance with this Agreement, each party shall safeguard the Proprietary Information exchanged up to the date the relationship ends, and ensure that such data is not sued against the disclosing party’s interests. This restriction will not preclude a party’s employees who have had access to the other’s Proprietary Information from participating in the subsequent independent contract, so long as appropriate safeguards are in place to prevent inappropriate use of the other party’s Proprietary Information.
16. In October 2005, Boeing as prime contractor and the USAF as buyer entered into
the Bridge Contract, and Boeing entered into a Long Term Requirements Contract with AAI as
subcontractor to perform half of the PDM work on KC-135 aircraft provided by the USAF under
the Bridge Contract.
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17. The Long Term Requirements Contract incorporated the “General Provisions 2,”
or “GP2,” which required:
Buyer and Seller shall each keep confidential and protect from unauthorized use and disclosure all (a) confidential, proprietary and/or trade secret information; (b) tangible items containing, conveying or embodying such information; and (c) tooling identified as being subject to this clause and obtained, directly or indirectly, from the other in connection with this contract or other agreement referencing this contract (collectively referred to as “Proprietary Information and Materials”). Buyer and Seller shall each use Proprietary Information and Materials of the other only in the performance of and for the purpose of this contract and/or any other agreement referencing this contract.
18. The USAF issued the Recompete RFP on August 19, 2005. The Recompete RFP
provided for a BEQ of 44 KC-135 aircraft to be inducted with the winning bidder for PDM work
each year.
19. On October 28, 2005, Boeing submitted its joint bid with Pemco as subcontractor
to the USAF.
20. After submitting the October 2005 joint bid, the parties began to work toward the
expected Final Proposal Revision, or “FPR,” which at that time was expected to be submitted on
June 30, 2006.
21. On April 18, 2006, the USAF released a Letter of Intent (“LOI”) regarding a
potential BEQ change from 44 aircraft per year to 24 aircraft per year.
22. On May 31, 2006, the USAF formally issued an amendment to the Recompete RFP
that lowered the BEQ to 24 aircraft per year.
23. On June 6, 2006, Boeing terminated the Recompete MOA with AAI, citing Section
5.0(c) which allowed for termination, “[a]fter the release of any RFP or amendments thereto, if the
contents thereof are so unfavorable to the Prime or a Principal Subcontractor that participation in
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the Program is no longer practical or financially viable” and stating, as the termination grounds,
“[t]he reduction in requested quantities is so unfavorable to Boeing that further participation in the
Program pursuant to the MOA is no longer practical or financially viable.”
24. On June 12, 2006, AAI submitted a protest to the USAF, requesting that AAI be
allowed to submit an independent bid for the Recompete Contract.
25. On June 27, 2006, the USAF re-opened the Recompete Contract competition to
allow AAI to submit an independent bid.
26. AAI officially withdrew its protest on June 30, 2006.
27. The parties first submitted their independent Recompete Contract proposals in
September 2006.
28. During the independent bid phase, the parties submitted First Final Proposal
Revisions (“FPR1”) on February 23, 2007.
29. Before submission of the FPR1, the USAF released Amendments 9 and 10 to the
Recompete RFP.
30. The parties submitted Second Final Proposal Revisions (“FPR2”) on June 18, 2007.
31. Before submission of the FPR2, the USAF released Amendment 11 to the
Recompete RFP, which further reduced aircraft quantities.
32. Both AAI and Boeing’s FPR2 submissions were lower in price than the FPR1, due
to the reduced aircraft quantities in Amendment 11.
33. No major changes were made from AAI and Boeing’s FPR1 submissions to their
FPR2 submissions, beyond the adjustment for Amendment 11.
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34. On September 7, 2007, the USAF awarded the Recompete Contract to Boeing by
means of a 23-page Source Selection Decision Document containing extended discussion of
decision factors concerning competing bidders Boeing, AAI and Lockheed.
(c) Plaintiff’s Claims.1
I. COUNT ONE – BOEING’S BREACH OF THE RECOMPETE MOA
A. AAI relies upon the following legal theories in support of its claims that Boeing breached the Recompete MOA.
Count One alleges that Defendants The Boeing Company, Inc., Boeing Aerospace
Operations, Inc. and Boeing Aerospace Support Center (collectively, “Boeing”) breached its
contract obligations when it improperly terminated the September 6, 2005 Memorandum Of
Agreement (“Recompete MOA”) executed by the Boeing and Alabama Aircraft Industries, Inc.
(“AAI”), when AAI was known as Pemco Aeroplex Inc., on September 6, 2005 (the “Recompete
MOA”) and failed to award AAI at least 50% of the Program Depot Maintenance (“PDMs”) for
the KC-135 tanker aircraft. Such breach occurred when Boeing terminated the Recompete MOA
on June 6, 2006 and then within a week reteamed with L-3 Communications Integrated Systems
L.P (“L-3”) and continued to compete for the PDM for the KC-135 Aircraft (the “Program”)
instead of withdrawing from the Program. AAI will prove at trial that: “(1) [Boeing] and [AAI]
entered into a contract; (2) [AAI] performed, or substantially performed its obligations pursuant
1 While Boeing claims that the Court’s summary judgment decision “significantly narrowed the factual issues for trial,” it has made no attempt to identify or clarify what facts it believes are no longer relevant to AAI’s claims. Regardless, while the Court’s summary judgment opinion and later opinions may have limited the damages AAI can seek to recover at this juncture, the factual elements of AAI’s breach of contract and misuse of PI claims remain the same.
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to the contract’s terms; (3) [Boeing] failed to perform something the contract required it to do; and
(4) [AAI] was harmed by that failure.” SAK Constr. of CA, L.P. v. PSC Indus. Outsourcing, L.P.,
No. 11-1479, 2012 WL 3765096, at *6 (E.D. Mo. Aug. 30, 2012 (citation omitted).2
Boeing has previously admitted, and this Court has held, that the Recompete MOA was a
binding contract. Moreover, as this Court has previously held, Boeing has not even argued that
AAI failed to perform under the Recompete MOA. Thus, the first two elements of a breach of
contract action are undisputedly satisfied. AAI will demonstrate at trial that Boeing breached the
Recompete MOA by terminating it in violation of § 5.0(c). In addition, AAI will demonstrate the
damages it suffered as a result of Boeing’s breach as summarized in this order.
The unambiguous terms of the Recompete MOA did not allow Boeing to terminate based
upon either (a) a reduction in the best estimated quantity of KC-135 aircraft for the Program
(“BEQ”) or (b) the potential impact of any BEQ reduction on other work at Boeing’s San Antonio
facility. The unambiguous terms of the Recompete MOA did not allow Boeing to terminate the
teaming agreement under § 5.0(c) and then compete for the Recompete without AAI. AAI will
prove the meaning of § 5.0(c) through testimony, evidence of the parties’ contract negotiations,
and statements made by the parties in contemporaneous documents. Missouri case law is clear that
such evidence is admissible. See Simul Vision Cable Sys. P’ship v. Cont’l Cablevision of St. Louis
Cnty., Inc., 983 S.W.2d 600, 603 (Mo. Ct. App. 1999 (affirming trial court’s interpretation of
contract based in part upon prior draft of agreement submitted as evidence to show that final draft
omitted provision that had been involved in prior negotiations); Cameron v. Morrison, 901 S.W.2d
171, 177 (Mo. Ct. App. 1995 (“Even a complete and integrated contract must be interpreted.
2 The Recompete MOA contains a Missouri choice of law provision. Doc. 263-27 at 10, § 15.
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Admission of oral testimony of agreements or negotiations contemporaneous with the execution
of the written agreement are admissible to establish the meaning of the contract.”) (quotation
omitted).3
AAI will prove that Boeing, knowing BEQs were very likely to be reduced for industry
depots, repeatedly attempted to include language in the Recompete MOA that would have
permitted termination for a reduction in the BEQ and qualified Boeing’s obligation to award a
subcontract to AAI if the USAF awarded PDMs “at the anticipated quantity.” AAI will also prove
that it completely rejected Boeing’s attempts to include this language and that the Recompete
MOA did not contain termination language based on a reduction of the BEQ and the parties
removed “at the anticipated quantity” as a qualifier to Boeing awarding a subcontract to AAI.
As executed, § 5.0(c) provides that the Recompete MOA shall terminate:
After the release of any RFP or amendments thereto, if the contents thereof are so unfavorable to the Prime or a Principal Subcontractor that participation in the Program is no longer practical or financially viable, in such case the party seeking termination for this reason will provide written notice to the other party within 15 days of the receipt of the RFP (or amendment) giving notice of such.
Section 4.1 of the Recompete MOA provides, “[s]ubject to the conditions in this MOA, if BASC
is awarded a contract in connection with the Program as a ‘Recompete Effort,’ BASC will award
3 This evidence clearly demonstrates the Recompete MOA’s meaning and AAI does not offer it to alter or change the terms of the Recompete MOA; therefore, the parol evidence rule does not bar such evidence. See Topper v. Midwest Div., Inc., 306 S.W.3d 117, 131 (Mo. Ct. App. 2010) (finding parol evidence rule did not apply where testimony did not contradict the contract terms). Missouri courts routinely admit extrinsic evidence such as prior contract drafts and evidence of contract negotiations to “explain [ ] the circumstances that existed at the time” of contract execution. Wheelhouse Marina Real Estate, L.L.C. v. Bommarito, 284 S.W.3d 761, 770 (Mo. Ct. App. 2009 (admitting testimony explaining why lease contract contained a certain start date). Alternatively, to the extent that latent ambiguities exist in the MOA (including any of its exhibits), it is “[a]ppropriate for consideration [] the relationship of the parties, the circumstances surrounding execution of the contracts, the subject matter of the contracts, the acts of the parties in relation to the contract and any other external circumstances which would cast light on the intent of the parties.” Doc. 445 at 30, quoting Boswell v. Steel Haulers, Inc., 670 S.W.2d 906, 913 (Mo. Ct. App. 1984).
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subcontracts to Pemco and [L-3] for the work share to the extent that the government awards
PDMs.” The term “Program” was clearly defined by the Recompete MOA as “Program Depot
Maintenance for the KC-135 Aircraft (the ‘Program’)”. The phrase in § 4.1, “to the extent that the
government awards PDMs,” is not tied to any minimum quantity, and thus means “to the extent
that the government awards any PDMs.”
The ordinary and plain meaning of § 5.0(c) is that a party could terminate the Recompete
MOA if it determined that it was no longer financially viable for that party to perform the KC-135
PDM work at all. In other words, to terminate pursuant to § 5.0(c), the terminating company would
have to withdraw from the competition for the Recompete entirely, instead of excising its long
time partner on the eve of the deadline for submitting final prices to the United States Air Force
(“USAF”), in an attempt to exclude that long-time partner from submitting a bid at all. See
Freeman v. Barrs, 237 S.W.3d 285, 288 (Mo. App. 2007) (“Courts do not rewrite unambiguous
contracts but construe them as written”) (citations omitted).
AAI will establish that it was part of the parties’ intentions underlying the MOA provisions
including § 5.0(c), and relevant to Boeing’s breach of contract, that the Recompete MOA was
based upon an enforceable exclusive teaming arrangement (and a requirements contract for a
minimum of 50% of PDM work to be supplied by AAI4) between Boeing, AAI, and L-3 for both
the preparation and submission of a bid for the Recompete and the performance of the Program,
which Boeing breached when it terminated AAI and re-teamed with L-3 to continue in the Program
4 “A ‘requirements contract’ is one in which one party promises to supply all the specific goods or services which the other party may need during a certain period at an agreed price, and the other party promises that he will obtain his required goods or services from the first party exclusively.” Kirkwood-Easton Tire Co. v. St. Louis County, 568 S.W.2d 267, 268 (Mo. 1978).
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and to submit a bid excluding AAI. See, generally, Recompete MOA at the seventh recital and §§
1.1, 1.3. 1.5, 3.5, and 4.1, and Univ. Power Sys., Inc. v. Godfather’s Pizza, Inc., 818 F.2d 667, 672
(8th Cir. 1987) (applying Missouri law, upholding enforcement of oral requirements contract,
finding defendant breached its exclusive dealing requirement to buy pizza pans from plaintiff
supplier); Kirkwood-Easton Tire, 568 S.W.2d at 268 (Missouri has for some time recognized and
enforced ‘requirements contracts.’“); Cantrell v. Knight, 72 S.W.2d 196, 200 (Mo. App. 1934)
(upholding requirements contract for supplying gasoline to defendant).
B. AAI expects to prove the following categories of factual allegations at trial in support of its breach of contract claims against Boeing for breach of the Recompete MOA.5
1. AAI’s history and experience in performing KC-135 PDM services.
2. The circumstances relating to the 1998 government contract solicitation (the “1998
RFP”) and government Contract No. F42620-98-D-0054 (the “0054 Contract”).
3. The circumstances relating to Boeing and AAI entering into an October 27, 2000
Memorandum of Agreement (the “0054 MOA”), followed by a Long Term Requirements Contract
(“LTRC”) entitled “Repair Agreement 01-003,” including terms of such arrangements.
4. The circumstances relating to, and terms of, a 2004 LTRC, Repair Agreement 06
003 (the “Bridge LTRC”), covering KC-135 PDM Program work for FY 06-07.
5. The factual background, circumstances, analyses and decision factors involved in
Boeing’s and AAI’s respective decisions to enter into a Boeing/AAI teaming agreement for a joint
submission of a bid for and joint performance of the KC-135 PDM work under a 10-year USAF
5 Various of such facts are also relevant to AAI’s PI-misuse claims described in Count Three, infra. AAI lists such facts here, for Count One, and also for Count Three, infra, in the form of categories of factual elements.
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contract known to the parties as the Recompete, including facts relating to best estimated quantity
(BEQ) of KC-135s that might be allocated to industry depots for PDM work.
6. The parties’ negotiations and drafting of the 2005 MOA, including related
documents (a non-disclosure agreement (“NDA”) and a workshare agreement).
7. The terms and conditions of the MOA, the NDA and the workshare agreement.
8. Boeing’s internal analyses and evaluations of eliminating AAI from the joint work
under the 0054 contracts, the Bridge contract and/or the Recompete under the MOA, during 2004
2006.
9. The circumstances relating to, and perceived advantages resulting from, adding L
3 to the Recompete team and the resulting 3-party MOA, including the terms and conditions of
that MOA.
10. AAI’s full performance of its contractual obligations under the MOA.
11. The circumstances relating to Boeing’s 2005 submission of a Joint Bid on behalf
of the Boeing/AAI/L-3 team.
12. The circumstances relating to the USAF reduction of BEQs in spring 2006 from 44
aircraft per year to 24 aircraft per year, and how such reduction related to the parties’ prior
evaluations.
13. The facts and circumstances relating to Boeing’s internal planning and actions in
the first half of 2006 to abandon AAI as a teaming partner for the Recompete as well as, potentially,
as a Bridge subcontractor.
14. The facts and circumstances relating to Boeing’s termination of the MOA with
AAI, including its entry into a replacement MOA with L-3.
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15. The facts and circumstances showing that the Boeing/AAI/L-3 team would have
won the Recompete even though the BEQ had been reduced as was anticipated.
16. The impact of Boeing’s above-referenced activities on AAI including AAI’s
expenditure of considerable resources in participating in the Joint Bid efforts and in mounting its
own solo bidding, now as a prime contractor, for the Recompete.
17. The harm and damages caused AAI by Boeing, which are itemized in the section
on Damages.
II. COUNT THREE – AAI CLAIMS REGARDING ITS PROPRIETARY INFORMATION (BREACH OF AGREEMENTS)
A. AAI relies upon the following legal theories in support of its claims against Boeing regarding its proprietary information.
As a result of teaming agreements and other contracts and agreements between Boeing and
AAI, Boeing possessed AAI PI accumulated since 2000 and frequently updated, which was
competition-sensitive, not in the public domain, and valuable. AAI claims that Boeing breached
its several agreements with AAI that required Boeing to protect and not improperly use AAI’s PI,
and to comply with laws and regulations protecting against misuse of PI, because Boeing
knowingly and intentionally:
(1) failed to take appropriate steps to safeguard AAI’s PI after Boeing began
evaluating and pursuing plans in the spring of 2006 to (i) stop teaming with AAI under the
Recompete MOA to obtain a USAF contract to perform PDM services on the KC-135
Aircraft (the “Program”) and (ii) compete against AAI for the Recompete contract;
(2) failed to timely and effectively implement firewall and PI sequestration
measures to protect AAI’s PI after it decided it was in Boeing’s interest to take all PDM
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work in San Antonio, making AAI its competitor for such work;
(3) failed to ensure that the Boeing’s personnel working on Boeing’s Recompete
team and bid submissions in prospective and in actual competition with AAI, were at all
relevant times permitted to participate under contractually-applicable laws and regulations,
as well as Boeing’s own policies, manuals and procedures (necessary for regulatory
compliance) and industry standards relating to procurement activity;
(4) failed to prevent Boeing employees who had knowledge of AAI’s PI stemming
from Boeing activities under agreements with AAI from working on Boeing’s Solo
Recompete activities and bid submissions in potential or actual competition with AAI, after
Boeing personnel were on reasonable notice of the likelihood of a conflict of interest
between Boeing and AAI arising from Boeing’s potential (and then actual) termination of
the Recompete MOA;
(5) used AAI-PI-knowledge-contaminated Boeing personnel, including those
handling Joint Recompete bid estimating and pricing who were familiar with AAI’s PI
(including estimates, costs, hours, rates, prices and the methods AAI used for estimating
and pricing tasks, staffing, labor, overhead, profit, materials, and other cost and pricing
factors) to develop Boeing’s estimates and prices relevant to its Solo Recompete bid in
competition with AAI after Boeing personnel were on reasonable notice of the likelihood
of a conflict of interest between Boeing and AAI arising from Boeing’s potential (and then
actual) termination of the Recompete MOA and after key Boeing personnel stated that
Boeing personnel with knowledge of AAI’s PI should not work on Boeing’s Solo
Recompete bid;
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(6) deleted, destroyed, and concealed evidence in order to cover up Boeing’s
misconduct with AAI’s PI and to impede AAI’s ability to prove that misconduct; and
(7) misappropriated and misused AAI’s PI, and used AAI-PI-knowledge
contaminated Boeing personnel to facilitate the misappropriation and misuse of AAI’s PI,
to frame Boeing’s Solo Recompete bid submissions to underbid AAI and to win the
Recompete contract award; all of which damaged AAI.
AAI’s breach of agreements claim is based on the following agreements that were in force
in 2005-2007 between AAI and Boeing: (1) the PI-protection provisions of “The Boeing Company
General Provisions (Fixed Price Services Contract) GP2,” generally referred to as GP2, for both
the 0054 and Bridge contract work; (2) the NDA; (3) the PI-protection provisions of Recompete
MOA §§ 5, 6 and 7; (3) the government laws and regulations and Boeing-government agreements
regarding procurement integrity and protections against misuse of PI with which, by contract
(Recompete MOA § 9.0 and NDA §9.0), Boeing agreed to implement and comply; and (4) the
agreements reached between Mark Rabe (counsel for Boeing) and Doris Sewell (counsel for AAI).
Therefore, AAI will prove at trial that: (1) Boeing and AAI entered into contracts governing
the parties’ PI; (2) AAI performed, or substantially performed its obligations pursuant the
contracts’ terms; (3) Boeing failed to perform things the contracts required it to do; and (4) AAI
was harmed by that failure. (Paraphrasing SAK Constr. of CA, L.P., supra.).
B. AAI expects to prove the following categories of factual allegations in support of its claims against Boeing concerning AAI’s PI6
1. The facts and circumstances relating to AAI’s development, accumulation and
6 As a number of fact elements cited under Count One, supra, are also relevant to AAI’s PI-misuse claims under Count Three here, they are not repeated here but are incorporated here from Count One, supra, by reference.
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possession of extensive and invaluable trade secrets and proprietary information connected with
KC-135 work (“PI”) which was not in the public domain and which would be valuable to anyone
seeking to compete with AAI or others for KC-135 repair and depot work.
2. The facts and circumstances relating to the 1998 RFP “bundling” which directly
led to the situation of AAI having to share its PI with Boeing.
3. The facts and circumstances, including the nature, terms, conditions and
requirements of the parties’ several contracts for KC-135 work, relating to AAI having to provide
Boeing with AAI’s PI and to update such PI, including AAI’s compliance with such terms and
requirements.
4. The facts and circumstances relating to Boeing’s obligations to protect AAI’s PI at
all relevant times.
5. The facts and circumstances relating to Boeing’s access to and possession and use
of AAI’s PI from 2000 through 2007 and relating to Boeing’s continuous access to AAI’s
Birmingham facility under the parties’ several contracts.
6. The facts and circumstances relating to the unequal (non-reciprocal) levels of
access to and possession of the other party’s PI, between Boeing as prime contractor and AAI as
subcontractor.
7. The facts and circumstances relating to Boeing’s knowledge from at least 2004
onward that it would eventually compete with AAI for all KC-135 PDM work (including AAI’s
share under the parties’ contracts), and how this related to the need for Boeing to avoid conflicts
of interest and to protect against misuse of AAI’s PI.
8. The facts and circumstances relating to Boeing’s knowledge that AAI’s economic
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survival was dependent upon AAI’s retention of KC-135 PDM work, and implications of that
knowledge on the protection of AAI PI.
9. The facts and circumstances relating to Boeing’s use and handling of firewalls to
protect AAI PI prior to termination of the MOA.
10. The facts and circumstances relating to Boeing’s internal evaluations, analyses and
strategies for taking all KC-135 PDMs to its San Antonio facility and for terminating AAI as a
teaming partner, and implications of such facts and circumstances on Boeing’s need to protect
AAI’s PI.
11. The facts and circumstances relating to AAI’s delivery to prime contractor Boeing
of AAI PI under stipulations of confidentiality, including the nature and extent of such PI.
12. The facts and circumstances relating to Boeing personnel performing internal
studies, comparisons, and evaluations of AAI’s PI, including the familiarity of such personnel with
such AAI PI, and how such AAI PI was maintained, stored and disseminated within Boeing.
13. The facts and circumstances relating to Boeing’s Blue Team modeling of L-3 and
of Lockheed.
14. The facts and circumstances relating to Boeing’s formulation and implementation
of a Win Price.
15. The facts and circumstances relating to Boeing not having its Blue Team perform
a public-domain-information-based analysis of AAI, as Boeing had done for L-3 and Lockheed.
16. The facts, circumstances and time frames relating to which AAI PI was sequestered
and protected by Boeing and which AAI PI was not sequestered or otherwise protected against
misuse.
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17. The facts, circumstances and timing of Boeing’s knowledge that it had entered into
a conflict of interest position with AAI (by reason of becoming a competitor with AAI, to take all
PDM work into San Antonio) and the effects of such conflict and knowledge on Boeing’s
obligations to protect AAI PI, including sequestration of PI and change of Boeing Recompete
personnel who were knowledge-contaminated.
18. The facts and circumstances relating to Boeing’s secret internal price modeling that
used AAI’s PI without AAI’s knowledge or permission, and relating to whether such use went
beyond what was reasonably necessary if Boeing and AAI were to remain a bidding team.
19. The facts, circumstances and timing relating to Boeing’s institution of a firewall in
2006, its ineffectiveness, and Boeing’s failure to enforce adequate compliance.
20. The facts and circumstances relating to Boeing’s knowledge of the need to replace
its PI-knowledge-contaminated Recompete personnel and Boeing’s failure to do so, including its
concealment of material facts relating to the foregoing.
21. The facts and circumstances of Boeing’s secretly-conducted internal competition
against AAI (including writing AAI out of the upcoming bid submission and using AAI’s PI) while
still teamed with AAI under the MOA before June 6, 2006, using AAI PI, with no PI protections
being implemented.
22. The facts and circumstances relating to the applicable standards (including methods
and procedures) to which Boeing was obligated to adhere in order to effectively and completely
protect AAI’s PI against misuse, and relating to Boeing’s failure to adhere to such applicable
standards, methods and procedures.
23. The facts and circumstances relating to the 2006 agreements between Boeing and
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AAI concerning protection of the parties’ respective PI, and the parties’ compliance (or not) with
such agreements.
24. The facts and circumstances relating to Boeing’s spoliation of evidence relevant to
AAI’s PI and Boeing’s handling or use thereof.
25. The facts and circumstances relating to Boeing’s evaluations and analyses of AAI
and Lockheed as competitive threats during the parties’ independent bid preparation activities
between 2006 and final Recompete submissions in 2007.
26. The facts and circumstances relating to the means and methods by which Boeing
took improper advantage of its possession and knowledge of AAI PI to underbid AAI and
otherwise frame its bid submissions to defeat AAI’s competing bid, in order to win the Recompete
award.
27. The facts and circumstances relating to the result that but for the knowledge,
ongoing unauthorized possession and misuse and misappropriation of AAI’s PI by Boeing, Boeing
would not have been able to underbid or otherwise prevail over AAI in the Recompete bidding.
28. The facts and circumstances relating to AAI’s compliance with its own contractual
obligations respecting Boeing PI, including AAI’s comparative lack of knowledge of material,
relevant and useful Boeing PI and AAI not misusing Boeing PI.
29. The facts and circumstances relating to the impacts on AAI of Boeing’s breaches
of its several agreements to safeguard, protect and not use or misuse AAI’s PI, including forcing
AAI to incur substantial expense in a Recompete effort for its economic survival, while Boeing’s
contract breach ensured such AAI effort would be frustrated, and the harm and damage to AAI.
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III. DAMAGES
Recognizing the Court’s prior rulings, over AAI’s objections, on available damages, AAI
will claim the following damages:
1. Count I – as a direct result of Boeing’s breach of the Recompete MOA, AAI was
damaged in the following amounts: (i) actual reliance damages in the amount of the expenses it
had incurred in teaming with Boeing to submit a joint bid and (ii) actual damages in the amount
of the expenses it had incurred in submitting a solo bid. These actual incurred costs total
$2,132,062.53.
“A plaintiff claiming a breach of contract has available and need not choose between three
types of damages—actual, consequential, and benefit-of-the-bargain—as such damages are not
necessarily inconsistent with one another; a plaintiff may not, however, be made whole more than
once.” Catroppa v. Metal Building Supply, Inc., 267 S.W.3d 812, 817 (Mo. Ct. App. 2008).
“‘Actual damages are compensatory and are measured by the loss or injury sustained’ as a direct
result of the wrongful act.” Id. at 818 (quoting Stiffelman v. Abrams, 655 S.W.2d 522, 531 (Mo.
1983)). Reliance damages are a form of actual or direct damages. See, e.g., Nashville Lodging Co.
v. Resolution Trust Corp., 59 F.3d 236, 246 (D.C. Cir. 1995) (“The fact that reliance damages are
backward-looking does not destroy their pedigree as a species of compensatory relief. . . .
[R]emedies calibrated to putting the claimant back in the position he occupied before making the
repudiated agreement are ‘actual direct compensatory damages’ no less than those aimed to put
him where he would have been if the contract had been fulfilled.’”) “Reliance damages are
designed to compensate the plaintiff for any reasonably foreseeable costs incurred or expenditures
made in reliance on the promise that has now been broken.” Richard A. Lord, 24 Williston on
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Contracts § 64:4 (4th ed. 1990) “An award of reliance damages returns the plaintiff to its
precontractual position by putting a dollar value on the detriment the plaintiff incurred in reliance
on the now-broken promise and reimbursing expenditures the plaintiff made in performing or
preparing to perform its part of the contract.” Id. AAI seeks to recover the actual costs it incurred
to its detriment by working on the joint bid in reliance upon Boeing’s promises in the MOA. In
addition, as a direct result of Boeing’s breach of the MOA by terminating it and competing against
AAI for the Recompete Program work, AAI had to put together its own solo bid in a very
compressed time frame. AAI also seeks to recover the actual costs it incurred in developing its
solo bid.
The total amount of the costs AAI incurred in connection with its work on the joint bid
prior to Boeing’s breach of the MOA was $788,480.31 and consisted of out of pocket expenses
and burdened labor expenses in connection with AAI’s work on the joint bid, as follows:
a) out of pocket expenses: $75,067.90 and b) burdened labor expenses: $713,412.41.
The total amount of the costs incurred in connection with the AAI’s work on its solo bid
was $1,343,582.22 and consisted of out of pocket expenses, burdened labor expenses, and
consulting expenses in connection with the AAI’s work on its solo bid, as follows:
a) out of pocket expenses: $13,133.52 b) burdened labor expenses: $630,127.30 c) consultant expenses: $700,267.40.7 7 These costs, which will be presented by testimony at trial, are further itemized and supported by the following deposition exhibits that Defendants used in the course of discovery in this case: (1) DX 637, the Declaration of Randy Shealy and the exhibits thereto that were submitted to the Court of Federal Claims; (2) DX 133, the Declaration of Timothy Walker and the exhibits thereto that were submitted to the Court of Federal Claims; and (3) DX 638, the January 28, 2009 Opinion and Order of the Court of Federal Claims. They are also supported by AAI_1064785’s allocation of AAI’s 2006 burdened labor hours and costs, which were listed in exhibit B to the Declaration of Randy Shealy (DX 637) as modified by the Declaration of Timothy Walker (DX 133) at ¶ 8, to the joint and solo bids.
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2. Count III – as a direct result of Boeing’s breach of the agreements protecting AAI’s
proprietary information by Boeing’s failure to safeguard AAI’s proprietary information, and by
Boeing’s use of AAI’s proprietary information to outbid AAI for the Recompete Program work,
AAI sustained actual damages in the form of the expenses it had incurred in submitting a solo bid.
Under Missouri law, actual damages for breach of contract ‘“are compensatory and are measured
by the loss or injury sustained’ as a direct result of the wrongful act.” Catroppa, 267 S.W.3d at
818 (quoting Stiffelman v. Abrams, 655 S.W.2d 522, 531 (Mo. 1983)).
The total amount of the costs incurred in connection with AAI’s work on its solo bid was
$1,343,582.22 and consisted of out of pocket expenses, burdened labor expenses, and consulting
expenses in connection with AAI’s work on its solo bid, as follows:
a) out of pocket expenses: $13,133.52 b) burdened labor expenses: $630,127.30 c) consultant expenses: $700,267.40.8
(d) Defendant’s Defenses.
Count I9
1. Boeing denies that it breached the MOA by terminating the MOA. Termination
was allowed by MOA § 5.0(c), which allowed for termination “[a]fter the release of any RFP or
amendments thereto, if the contents thereof are so unfavorable to the Prime or a Principal
Subcontractor that participation in the Program is no longer practical or financially viable[.]”
8 See footnote 7 above.
9 Boeing’s position is that Sections I.A and II.A of AAI’s claims are sufficient and Sections I.B and II.B do not comply with the Court’s pre-trial order instructions. For this reason, Boeing responds specifically only to Sections I.A and II.A of AAI’s claims.
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Boeing terminated the MOA after the Air Force reduced the quantity of aircraft from 44 per year
to 24 per year, and after Boeing undertook an in-depth analysis to determine whether teaming with
AAI for the reduced number of aircraft would be “practical or financially viable.”
2. The termination provision that Boeing relied upon was drafted by AAI after months
of negotiations. Boeing’s initial draft of MOA § 5.0(c) provided narrow language stating that the
contract could “terminate” for “Failure of the Customer to award a KC-135 PDM contract to
[Boeing] at a quantity anticipated above to support two (2) contractor SORs.” AAI took issue with
allowing termination upon “award” of the contract. To address this concern, AAI proposed
language that changed the trigger for allowable termination under § 5.0(c) from the “award” of the
contract to “the release of any RFP or amendments thereto[.]” AAI’s language broadened § 5.0(c)
to allow for termination for any change in the RFP or amendments thereto, including a change that
reduced the BEQ, if that change was sufficiently “unfavorable” to render “participation…no longer
practical or financially viable.” AAI similarly edited § 4.1 to align with the language used in §
5.0(c).
3. Moreover, the parties agreed that either party could submit an independent bid after
termination of the MOA, and that any such independent bid could include other parties. Section
12 of the NDA stated:
In the event the contractual relationship between the parties … terminates pursuant to the terms of such MOA or subcontract, either party may pursue an independent contract to perform work for the United States Government on the PDM program, either alone or in conjunction with other parties.
Count III
4. Boeing followed the terms of all contracts between the parties. No external
communications altered the terms of the contracts between the parties.
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5. Boeing denies that it misused any of AAI’s proprietary information. Boeing’s
independent bid proposal was based solely on Boeing information. AAI cannot point to a single
piece of AAI proprietary information in Boeing’s independent bid proposal. AAI cannot point to
any use of any AAI proprietary data by anyone at Boeing. Instead, AAI relies only on speculation
and mischaracterizations of Boeing presentations that were developed to determine how to price
the expected joint bid FPR.
6. Boeing and AAI were subject to the same requirement under the NDA to employ
“appropriate safeguards … to prevent inappropriate use of the other party’s Proprietary
Information” after the MOA terminated. Boeing timely implemented appropriate safeguards,
including sending out its initial firewall email one day after the USAF re-opened the competition
to allow AAI to submit an independent bid. AAI’s firewall failed in multiple respects, and left key
Boeing proprietary data unfirewalled and available to AAI employees working on the independent
bid team.
7. The MOA expressly allowed individuals who worked on the joint bid to continue
on the independent bid teams: “This restriction will not preclude a party’s employees who have
had access to the other’s Proprietary Information from participating in the subsequent independent
contract…” Both Boeing and AAI had multiple team members who worked on both the joint bid
team and the independent bid team.
8. Boeing could not have used AAI’s proprietary information to underbid AAI. First,
the information Boeing had from the joint bid proposal was irrelevant because the information
Boeing had related to AAI’s costs as a subcontractor to Boeing, not as a prime contractor. That
information gave Boeing no insight into the sizable additional costs AAI would need to price into
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its independent prime bid. Second, AAI’s subcontractor information was outdated by the time the
independent bids were submitted, including because the USAF made substantial changes to the
Recompete Contract RFP after the joint bid period. Finally, AAI’s proprietary information used
for its independent proposal for the Recompete Contract was unknown to Boeing.
9. Under Missouri law, the “essential elements” of a breach of contract claim include
“that plaintiff performed or tendered performance pursuant to the contract[.]” Smith Flooring, Inc.
v. Pa. Lumbermens Mut. Ins. Co., 713 F.3d 933, 941 (8th Cir. 2013). AAI’s claim for breach of
the NDA cannot establish that AAI performed, and therefore AAI is barred from recovering against
Boeing for any breach of the NDA. See Rainey-Hicks v. Mo. Accreditation of Programs for
Children & Youth, 466 S.W.3d 699, 704 (Mo. App. 2015) (under Missouri law, “an essential
element [of a] breach of contract claim” is “that plaintiff performed or tendered performance
pursuant to the contract”); Hodge, 2016 WL 7494275, at *8-10 (finding for defendant because
plaintiff had not performed its own duties pursuant to the contract). Boeing asserts that AAI
breached the MOA by knowingly and repeatedly misusing Boeing’s proprietary information to
gain a competitive advantage in connection with AAI’s independent Recompete Contract proposal.
AAI’s actions breached the NDA because the NDA allows for use of proprietary information
“solely for the purpose” of “negotiating a Memorandum of Agreement leading to a long-term
subcontracting relationship relating to the [KC-135 PDM],” and provides that proprietary
information “shall not otherwise be used for the benefit of the recipient.”
Causation
10. Both of AAI’s claims fail because Boeing’s alleged breaches did not cause AAI
harm. The Boeing/AAI joint bid would not have won the Recompete Contract once the quantity
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of aircraft was reduced. Even if Boeing’s independent bid price was higher than AAI’s, AAI
would not have won the Recompete Contract because the Air Force considered pricing the least
important factor. See Hodge v. Springleaf Fin. Servs., Inc., No. 13-05131-CV-SW-REL, 2016 WL
7494275, at *9 (W.D. Mo. Sept. 30, 2016) (“Missouri law imposes a causation requirement on the
recovery of damages.”); see also Al-Khaldiya Elecs. & Elec. Equip. Co. v. Boeing Co., 571 F.3d
754, 759 (8th Cir. 2009) (“[A] contract breach that causes no loss to the plaintiff will not support
a judgment.”); Belisle v. Miceli, 758 S.W.2d 465, 468 (Mo. App. 1988) (“fail[ing] to prove any
damages suffered in consequence of the breach of contract” and relying on “pure speculation” is
“insufficient to support…a monetary recovery”).
6. Discovery and Other Pretrial Procedures.
(a) Pretrial Discovery: Pursuant to previously entered orders of the court,
discovery is closed.
(b) Pending Motions: No motions remain pending at this time.
(c) Motions In Limine. Motions in limine must be filed at least sixty (60) days
in advance of the scheduled trial date and shall be accompanied by supporting memoranda.
Response briefs are due fifteen (15) days after the initial motions, and replies are due ten (10) days
after the response briefs are due. As to each matter counsel seeks to exclude, counsel shall indicate
whether the exclusion is “opposed” or “unopposed” by counsel for the other side. Parties are
encouraged to resolve evidentiary issues by stipulation whenever possible. Motions in Limine will
be argued on January 21, 2020.
7. Trial Date.
(a) This case is set for jury trial on February 10, 2020.
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(b) The trial will last no longer than 10 trial days.
8. Exhibit D. The parties are to comply fully with each provision contained in Exhibit
D -- Standard Pretrial Procedures, as amended, which is incorporated into this Order by reference
as if fully set forth verbatim herein.
It is ORDERED that the above provisions be binding on all parties unless modified by
further order for good cause shown.
DONE and ORDERED this October 10, 2019.
_________________________________ R. DAVID PROCTOR UNITED STATES DISTRICT JUDGE
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EXHIBIT D -- MODIFIED PRETRIAL PROCEDURES
1. Damages. No later than twenty (20) calendar days prior to the date set for trial, the parties shall file and serve a list itemizing all damages and equitable relief being claimed or sought; such list shall show the amount requested and, where applicable, the method and basis of computation.
2. Witnesses - Exchange of Lists.
During the month of October 2019, pursuant to the discussion during the pretrial conference, the parties SHALL meet and confer regarding the attendance of witnesses not subject to the court’s subpoena power. On or before December 11, 2019, the parties SHALL each submit to chambers, in camera, an outline of the witnesses they will call and may call, and the topics the party plans to cover with each listed witness.
(a) Expert Witnesses. No later than seventy (70) calendar days prior to the date set for trial, the parties shall file and serve a list stating the names and addresses of all expert witnesses who have previously been identified in accordance with Fed. R. Civ. P. 26(a)(2) and whose testimony may be offered at trial.
(b) Other Witnesses. No later than seventy (70) calendar days prior to the date set for trial, the parties shall file and serve a list stating the names and addresses of all witnesses (other than expert witnesses) whose testimony they may offer at trial.
(c) Contents of Lists. The parties shall appropriately indicate on their witness lists: (1) the “primary” witnesses - those witnesses whose testimony the party expects to offer including designation of those expected to testify in person and those expected to testify by deposition; (2) the “optional” witnesses - those witnesses whose testimony the party expects will not be needed, but the party has listed to preserve its right to offer such testimony should the need arise in light of developments at trial, and (3) those witnesses the party expects to present by means of depositions.
Unless specifically agreed by the parties in writing or allowed by the court for good cause shown, the parties shall be precluded from offering substantive evidence through any witness not included on the party’s witness list. A party will make the witnesses designated by that party as “expected to testify in person” available to testify at the trial, subject to changes in a witness’s availability (which shall be communicated to the opposing party as soon as practicable). The parties will provide reasonable prior notice of a designated witness’s availability to testify and the parties will coordinate when the witness will testify, including making reasonable accommodations regarding the order of proof.
As to any witnesses shown on such witness lists to be presented by deposition, within ten (10) business days after the filing of the witness lists, the parties shall provide opposing counsel with a listing of the specific pages from the depositions to be used (provided, however, that this requirement shall not apply to portions which may be used for impeachment or cross examination of a witness first called by the opposing party). Within fifteen (15) business days thereafter, the
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opposing party may serve a list of additional pages of the deposition to be used, and may serve and file a list disclosing any objections to the use of such deposition testimony under Rule 32 or Rule 26(a)(3)(B). Any objections to deposition testimony must be filed twenty-eight (28) days before trial and should be accompanied by excerpts from the depositions including the testimony to which the objection relates. Objections not made within such time, other than objections under Fed. R. Evid. 402 and 403, shall be deemed waived, unless such failure to timely object is excused by the court for good cause shown.
3. Exhibits.
(a) Exchange of lists. No later than sixty (60) calendar days prior to the date set for trial, the parties shall file and serve a list providing an appropriate identification of each document or other exhibit, including summaries of other evidence, separately identifying those exhibits that the party expects to offer and those exhibits that the party may offer if the need arises. Unless specifically agreed by the parties in writing or allowed by the court for good cause shown, the parties shall be precluded from offering as substantive evidence any exhibit not so identified.
Courtesy copies of Exhibit Lists should be submitted to the Clerk’s office (for delivery to the judge’s chambers), as well as emailed to the chamber’s email address at proctor_chambers@alnd.uscourts.gov, in either Word or WordPerfect format. (b) Objections and Stipulations. Upon receipt of Exhibit Lists, the parties shall immediately meet and confer regarding any objections to the listed exhibits. Most objections should be cured by discussion, and the parties should stipulate as to the admissibility of as many exhibits as possible.
As to any document or other exhibit on which agreement cannot be reached, including summaries of other evidence shown on such list, no later than thirty (30) days before trial, an opposing party shall serve and file a list disclosing any objection, together with the grounds therefor, that may be made as to the admissibility of exhibits identified on such list. Objections not so disclosed, other than objections under Fed. R. Evid. 402 and 403 are waived, unless such failure to timely object is excused by the court for good cause shown. The court generally rules on objections to exhibits outside the presence of the jury and will do so prior to opening statements, to the extent possible.
(c) Counsel requiring authentication of an opponent’s exhibit must notify offering counsel in writing within ten (10) business days after the exhibit is identified and made available for examination. Failure to do so is an admission of authenticity.
(d) Marking. Each party that anticipates offering more than five (5) exhibits as substantive evidence shall premark such exhibits in advance of trial, using exhibit labels and lists available from the Clerk of Court. The court will provide up to 100 labels; if any party needs more labels, that party must use labels of the same type
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as those supplied by the court. Counsel must contact the courtroom deputy for the appropriate exhibit list form for use at trial. The court urges counsel to be judicious in determining which documents actually are relevant to necessary elements of the case.
(e) Examination by Opposing Party. Except where beyond the party’s control or otherwise impractical (e.g., records from an independent third-party being obtained by subpoena), each party shall make such exhibits available for inspection and copying. The presentation of evidence at trial shall not ordinarily be interrupted for opposing counsel to examine a document that has been identified and was made available for inspection.
(f) Court’s Copies. In addition to the premarked trial exhibits mentioned above, the court requests for the bench an exhibit notebook of anticipated trial exhibits (to the extent possible and practical, with any native format exhibits provided in suitable electronic media). The notebook should include a copy of the Exhibit List referenced in “(d)” above.
(g) Special and Visual Exhibits. Native format Excel spreadsheets which were displayed by computer or enlargement to any witness during the taking of a deposition in this action may be displayed by projection, enlargement or other special means, whether or not a witness at trial is testifying in person or by deposition. Should either side desire to present exhibits through a witness called by the party to testify in person or by deposition (in addition to native format Excel spreadsheets used in depositions taken in this action) via projection onto a screen or monitor or by enlargement, or other special means to present the exhibit to the jury, such additional exhibits will be limited to the fifty (50) most critical documents to that side’s case and (in the case of witnesses testifying by videotaped deposition) any exhibits which were displayed to such witnesses by projection or special means during a witness’s videotaped deposition. Such limitation shall not apply to exhibits used by a party for cross-examination of a witness first called by the opposing party or impeachment. Counsel shall advise opposing counsel at the same time as submission of the Exhibit List which documents (other than those which had been displayed by computer or special means during one or more depostions) it will or may so present through a witness called by the party. Hard copies or agreed ESI versions of such exhibits must first be identified before projection. Counsel is responsible for providing whatever technology may be necessary for such projection.
THE PARTIES ARE REMINDED THAT THEY WILL NOT BE ALLOWED TO USE AT TRIAL ANY WITNESS OR EXHIBIT NOT DISCLOSED IN ACCORDANCE WITH FED. R. CIV. P. 26(a) OR 26(e), UNLESS EXTREMELY GOOD CAUSE IS SHOWN AND THE OFFERING PARTY CAN SHOW THAT ITS FAILURE TO DISCLOSE WAS HARMLESS. See Fed. R. Civ. P. 37(c)(1).
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4. Use of Depositions at Trial.
(a) The court will accept the parties’ written agreement to use a deposition at trial even though the witness is available. In the absence of such an agreement, parties must comply with Fed R. Civ. P. 32.
(b) Before trial, counsel must provide the courtroom deputy with a copy of all depositions to be used as exhibits at trial.
(c) To the extent possible, with respect to witnesses called by a party, counsel will designate the portion of any deposition that counsel anticipates reading by citing pages and lines within ten (10) days of exchanging final witness list. Such designation requirement does not apply to portions used for impeachment or cross examination of a witness called by the opposing party. Within fifteen (15) business days thereafter, the opposing party may serve a list of additional pages of the deposition to be used, and may serve and file a list disclosing any objections to the use of such deposition testimony under Rule 32 or Rule 26(a)(3)(B). Objections, if any, to those portions (citing pages and lines) with supporting authority must be filed at least twenty-eight (28) days before trial.
(d) Use of videotape depositions is permitted and the parties must make good faith efforts to agree on admissibility or edit the videotape to resolve objections.
(e) In a non-jury trial, for any deposition offered as a trial exhibit, counsel shall attach to the front of the exhibit a summary of what each party intends to prove by the deposition testimony, with line and page citations, and include an appropriate concordance of the deposition pages offered.
5. Trial Submissions to Court.
No later than ten (10) business days prior to the scheduled trial date, each party will submit the following to the Clerk’s office (for delivery to the judge’s chambers):
(a) A listing of what each party understands to be the essential elements of each of Plaintiff’s claim(s) (separate listing for each claim).
(b) A listing of what each party understands to be the essential elements of each Defendant’s defense(s) (separate listing for each defense).
(c) A listing of what each party understands to be the essential elements of each Defendant’s counterclaim(s), if any (separate listing for each counterclaim).
(d) A listing of what each party understands to be the essential elements of each defense to any Defendant’s counterclaim, if any (separate listing for each defense).
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(e) A listing of any special evidentiary or other anticipated legal problems with citation to legal authority that supports the party’s position.
(f) Any special questions or topics for voir dire examination of the jury venire.
Parties may, if they desire, file trial briefs. Any such briefs must be filed at least twenty (20) days prior to trial. Opposing parties may respond to such trial briefs at least ten (10) days prior to trial. The briefs, if any, should not exceed fifteen (15) typed pages and must otherwise comply with this court’s Exhibit A to the Scheduling Order. Additionally, three-hole punched courtesy copies of all briefs must be submitted to the Clerk’s office (for delivery to the judge’s chambers), as well as emailed to the chamber’s email address at proctor_chambers@alnd.uscourts.gov, in either Word or WordPerfect format.
6. Jury Charges.
No later than one month prior to the scheduled trial date, the parties shall file a single, joint proposed jury charge, including all necessary instructions, or definitions applicable to the specific issues of the case. The parties need not submit standard generic instructions regarding routine matters, e.g., burden of proof, credibility of witnesses, duty of jurors, etc.
(a) Each requested instruction must be numbered and presented on a separate sheet of paper with authority cited.
(b) In their joint, proposed jury materials, counsel are to include all necessary instructions or definitions, specifically including: (1) the prima facie elements of each cause of action and defense asserted; (2) legal definitions required by the jury; (3) items of damages; and (4) methods of calculation of damages. Counsel are to use the Eleventh Circuit Pattern Jury Instructions, or appropriate state pattern jury instructions, as modified by case law or statutory amendments, wherever possible. Any deviations must be identified, and accompanied with legal authorities for the proposed deviation.
(c) Even if the parties, in good faith, cannot agree on all instructions, definitions or questions, the parties should nonetheless submit a single, unified charge. Each disputed instruction, definition, or question should be set out in bold type, underlined or italics and identified as disputed. Each disputed item should be labeled to show which party is requesting the disputed language. Accompanying each instruction shall be all authority or related materials upon which each party relies. The parties shall also email the unified charge, in either Word or WordPerfect format, to the chamber’s email address at proctor_chambers@alnd.uscourts.gov.
7. Court’s Expectations.
(a) The court will expect all parties to be ready for trial as of the trial date set in the Pretrial Order unless a continuance is requested within ten (10) business days after
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12630271.v1
the date on which the court enters the Pretrial Order. Continuances based on inadequate preparation will not be considered favorably.
(b) The court calls to the attention of all parties the various time requirements in the Pretrial Order and Exhibits. The court strictly adheres to these time requirements to avoid last minute requests for rulings.
(c) Any case announced settled after the Pretrial Conference but before the scheduled trial date will be dismissed with prejudice and with costs taxed as paid on the scheduled trial date unless a different stipulated judgment form is submitted on or before the scheduled trial date.
Case
Thanks,
any chance you can email the entire file ?
Paulie, this is for you ,,, thanks for your help...
date set for Feb 2020.
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA
ALABAMA AIRCRAFT INDUSTRIES, INC., ) ALABAMA AIRCRAFT INDUSTRIES, INC. – ) BIRMINGHAM, and PEMCO AIRCRAFT ) ENGINEERING SERVICES, INC., ) ) Plaintiffs, ) Case No. 2:11-cv-03577-RDP ) ) vs. ) ) THE BOEING COMPANY, BOEING ) AEROSPACE OPERATIONS, INC. and ) BOEING AEROSPACE SUPPORT CENTER, ) ) Defendants. )
PRETRIAL ORDER
A final pretrial conference was held in the above case on October 10, 2019, wherein, or as
a result of which, the following proceedings were held and actions were taken:
1. Appearances. Appearing at the conference were:
For AAI: J. Michael Rediker, Joshua D. Lerner, Peter J. Tepley, and Rebecca A. Beers of Rumberger Kirk & Caldwell, P.C.
For Boeing: R. Thomas Warburton and J. Thomas Richie, Bradley Arant Boult Cummings LLP; Erin Johnston, Alexia R. Brancato, Kirkland & Ellis LLP.
2. Nature of the Action, Jurisdiction and Venue.
(a) The nature of this action as a result of the Court’s rulings to date is as follows: AAI brings two breach of contract claims against Boeing, one relating to Boeing’s termination of an agreement to submit a joint bid to the United States Air Force for a contract to perform program depot maintenance work on KC-135 aerial refueling aircraft, and the second relating to Boeing’s alleged misuse of AAI’s proprietary information in violation of certain contracts. Boeing denies each of AAI’s claims.
FILED
2019 Oct-10 PM 02:52 U.S. DISTRICT COURT N.D. OF ALABAMA
I have full copy 34/35 pages. bottom line the case is going to trial ...
from PACER & court listener
Any input for this blip I found today.
Sudden increase in action today with AAIIQ rising 2 Cent with a 4.5 close.
______________________________________________________________
October 2, 2018
Boeing Tries To Cut Lost Profits Claims In $1.3B Deal Row
The Boeing Co. has urged an Alabama federal court to find that Alabama Aircraft Industries can’t pursue lost-profits damages in its suit alleging Boeing cut it out of a $1.3 billion U.S. Air Force deal, while the now-bankrupt AAI argued the parties’ agreement doesn’t bar such recovery.
_______________________________________________________________
thanks for any help here.
thanks .... frustrating with the drag out maneuvers of
litigants .... especially the one(s) who are ( imo ) guilty.
i know nothing new
Two days of actual interest. Any news about AAII vs Boeing ???
Imagine this could be dragged out for years . Any opinions?
Still wishing the under dog wins this one.
Thank you, Paullee!
Really appreciate the more complete story on the August 2018 court update.
I was following this for years ... and was always hoping that in some way AAI could find Justice from the giant's
theft of their USAF business.
I am still 'in the dark' as to the status of the shares???
Bankruptcy to Kaiser (Doris Sewell, CEO) to Stewart Industries International.
If the outcome proves just (AAI pervails) ... any guess as to the final benefit per share.
Am using your latest case/court info to continue searching.
again, thank you.
Boeing Must Face Bankrupt Aircraft Co.'s $100M Suit
Share us on: By Christopher Crosby
Law360 (August 16, 2018, 9:01 PM EDT) -- An Alabama federal judge has denied Alabama Aircraft Industries a quick win in its $100 million suit alleging Boeing put it out of business by pushing it out of a $1.2 billion U.S. Air Force contract, but also refused to clear the aerospace giant of the accusation, saying a jury will have to weigh the facts.
In a 47-page decision U.S. District Judge R. David Proctor on Wednesday denied AAI's motion for summary judgment and granted parts of Boeing Co.'s dueling bid, clearing it of certain claims that it breached parts of contracts for a joint bid for maintenance of the Air Force’s KC-135 tanker fleet. AAI has accused Boeing of gaining access to its trade secrets, wrongfully terminating the parties' agreement, and then using AAI’s confidential information to win the contract for itself.
But the judge ruled that it's up for a jury to decide if Boeing's actions caused AAI's business to hit rock bottom, saying that after careful consideration "Boeing’s argument that is it entitled to summary judgment due to AAI’s failure to prove damages caused by its breach is without merit."
The court likewise refused to settle whether Boeing's decision to terminate the work agreement was done in bad faith, saying it couldn't read into the company's actions because both parties "had competing interests and competing intents."
Judge Proctor found that Boeing did not breach a work share and teaming agreement with AAI, and said that even if it did run afoul of the parties' founding agreement to work together on the project, a clause in the contract limits the damages that AAI can seek for those breaches.
The court also did not come to a conclusion whether Boeing used AAI's proprietary information, as each side had presented plausible evidence. Judge Proctor said that even if a jury were to find against Boeing, AAI's argument that a clause limit liability did not apply in cases of bad faith "is without merit."
AAI initially sued Boeing in October 2007 after Boeing allegedly went back on its agreement to jointly bid on the Air Force contract after the military branch reduced the anticipated scope of the project. Both companies bid separately and Boeing was awarded the contract in May 2008, despite a submission from AAI that was about $15 million lower.
AAI eventually filed for Chapter 11 bankruptcy and received a final order from the federal bankruptcy court in Delaware on Sept. 6, 2011. AAI says Boeing was directly responsible for the bankruptcy, alleging its much-larger rival stole proprietary information and pulled strings with corrupt U.S. Air Force officials to cut AAI out of the $1.2 billion plane-servicing contract that its survival depended on.
The court has already found that Boeing destroyed certain evidence and Judge Proctor said Wednesday he would allow a jury to assume the information deleted could have hurt Boeing's case. However, the judge rejected AAI's contention that Boeing should have turned over certain pricing information.
"AAI knew that rather than suppressing the relevant information, Boeing flatly refused to provide the information requested," Judge Proctor wrote. "And, when AAI decided to act, it knew fully that it did not have the information it requested. On these facts, AAI has not presented evidence sufficient to create a genuine issue of material fact as to its suppression claim."
Counsel for Boeing did not immediately return a request for comment Thursday.
"AAI greatly appreciates the court's guidance and looks forward to establishing its rights of recovery at trial," AAI attorney Mike Redicker.
Boeing is represented by Craig S. Primis, Erin C. Johnston, Tia Trout-Perez and Alexia R. Brancato of Kirkland & Ellis LLP and R. Thomas Warburton and J. Thomas Richie of Bradley Arant Boult Cummings LLP.
AAI is represented by J. Michael Rediker, Joshua Lerner, R. Scott Williams, Peter J. Tepley, Meredith J. Lees and Rebecca A. Beers of Rumberger Kirk & Caldwell PC.
The case is Alabama Aircraft Industries Inc. et al. v. The Boeing Co. et al., case number 2:11-cv-03577, in the U.S. District Court for the Northern District of Alabama.
--Additional reporting by John Kennedy. Editing by Bruce Goldman.
Update and correction: A previous version of this article misstated the types of damages AAI could seek at trial. This story has also been updated with comment from AAI's counsel.
Am searching .... will be back if I get more and more timely info.
Anyone a member of Law360 ? Can't get past the short summary ... 47 pages!
Boeing Must Face Bankrupt Aircraft Co.'s $100M Suit
By Christopher Crosby
Law360 (August 16, 2018, 9:01 PM EDT) -- An Alabama federal judge has denied Alabama Aircraft Industries a quick win in its $100 million suit alleging Boeing put it out of business by pushing it out of a $1.2 billion U.S. Air Force contract, but also refused to clear the aerospace giant of the accusation, saying a jury will have to weigh the facts.
In a 47-page decision U.S. District Judge R. David Proctor on Wednesday denied AAI's motion for summary judgment and granted parts of Boeing Co.'s dueling bid, clearing it of certain claims that it...
Case Title: Alabama Aircraft Industries Inc et al v. Boeing Company, The et al
Case Number: 2:11-cv-03577 Court Alabama Northern
Nature of Suit: 190(Contract: Other)
Judge: Judge R David Proctor
Hello AAIIQ followers,
Just got thru 16 pages of U.S. District Judge R. David Proctor.
Haven't been here on iHub in years .... and saw on a search result that a post was entered here by Paullee Thursday, 11/16/17! Thank You Any newer info?
Seems Boeing is trying the drag it out ...cheaper than getting a court date with a non Boeing jury.
Missouri’s high court explained in Purcell Tire??? wow
Still have the AAIIQ stock and looking (searching) for some "latest" news. Got any Case titles or #s or current filing court locals I can use to search for info .
Will post any newer info I come across.
Again, Thank you, 6bsa8
AAI, Boeing Each Ask For Wins In $1.2B Contract Suit
Share us on: By John Kennedy
Law360, New York (November 14, 2017, 6:31 PM EST) -- Boeing Co. and bankrupt Alabama Aircraft Industries Inc., which are on opposite sides of a dispute over a $1.2 billion U.S. Air Force contract, each urged an Alabama federal judge Monday to rule in their favor on several claims in the long-running lawsuit and to deny their opponent the same.
AAI claims in its most recent amended complaint that Boeing crippled AAI’s business by agreeing to work on a joint bid for maintenance of the Air Force’s KC-135 tanker fleet, gained access to AAI’s trade secrets, wrongfully terminated the agreement and then used AAI’s confidential information to win the contract for itself. Both sides have moved for summary judgment on four of the five claims remaining in AAI’s third amended complaint.
In a 57-page filing, AAI said Monday that Boeing’s arguments fail legally, factually or both and that it has already shown in its summary judgment motion that it’s entitled to a favorable ruling on the four counts at issue. Even if it’s not, there’s at least a factual dispute regarding each of its claims, so Boeing’s bid should be denied, AAI argued.
In its own 68-page opposition, Boeing said the court must deny AAI’s motion because it fundamentally mischaracterizes controlling law and ignores the Supreme Court of Missouri’s 2001 ruling in Purcell Tire & Rubber v. Executive Beechcraft Inc., the most relevant case on limitation of liability clauses in contracts.
“Instead, AAI relies on selective bits of evidence from a massive discovery record, distorted by heavily disputed inferences and speculation,” Boeing said. “Once AAI’s rhetoric and unfair characterizations of the evidence are pushed aside, it becomes clear that Missouri law requires that summary judgment be entered for Boeing.”
AAI initially sued Boeing in October 2007 after Boeing allegedly went back on its agreement to jointly bid on the Air Force contract after the military branch reduced the anticipated scope of the project. Both companies bid separately and Boeing was awarded the contract in May 2008, despite a submission from AAI that was about $15 million lower.
AAI eventually filed for Chapter 11 bankruptcy and received a final order from the federal bankruptcy court in Delaware on Sept. 6, 2011.
AAI said Monday that Boeing’s bid for summary judgment on Count 1 — breach of contract — ignores its breach of the parties’ agreement, referred to as the MOA, and focuses only on the unenforceability of a related agreement to share work, which AAI says is enforceable.
The Alabama company said that the work share agreement, or WSA, isn’t the core contract between Boeing and AAI, nor is it an unenforceable agreement to agree. AAI argued that the WSA can’t be read in isolation and must be read in conjunction with the MOA.
Boeing has also argued that it couldn’t have breached the WSA because it ended the MOA prior to being awarded the Air Force contract and any obligations under the WSA couldn’t be triggered until after the contract was awarded.
AAI said Monday that Boeing shouldn’t be allowed to capitalize on its wrongful termination of the MOA to avoid liability when its own actions meant that the WSA wasn’t satisfied.
As for Boeing’s arguments regarding Count 3 — breach of contract regarding nondisclosure of AAI’s confidential information — AAI argued that summary judgment isn’t appropriate when an adverse inference can be drawn in its favor about a genuine issue of material fact.
U.S. District Judge R. David Proctor said in March that neither he nor AAI can know why Boeing employees destroyed information related to the agreement, but that a jury will be allowed to presume that the information would have hurt Boeing’s case.
Boeing, meanwhile, argued Monday that Missouri’s high court explained in Purcell Tire that the state’s law, which governs the dispute, enforces liability limitations like the one at issue in the instant suit because “sophisticated parties have freedom of contract,” including the freedom to “contractually limit future remedies.”
Both parties clearly disclaimed any incidental, punitive, exemplary and consequential damages, Boeing said, arguing that AAI has no answer for this argument and failed to cite Purcell Tire at all. AAI further failed to identify any decisions following Purcell Tire that invalidated its findings.
Boeing is represented by Craig S. Primis, Erin C. Johnston, Tia Trout-Perez and Alexia R. Brancato of Kirkland & Ellis LLP and by R. Thomas Warburton and J. Thomas Richie of Bradley Arant Boult Cummings LLP.
AAI is represented by J. Michael Rediker, Joshua Lerner, R. Scott Williams, Peter J. Tepley, Meredith J. Lees and Rebecca A. Beers of Rumberger Kirk & Caldwell PC.
Boeing Sanctioned In $1.2B Air Force Contract Dispute
By Chuck Stanley
Law360, New York (March 10, 2017, 6:22 PM EST) -- An Alabama federal judge on Thursday granted a sanctions bid against Boeing, invoking the Joni Mitchell song "Big Yellow Taxi" in an order finding the company intentionally destroyed documents related to its long-running dispute with defunct Alabama Aircraft Industries over a $1.2 billion U.S. Air Force contract.
U.S. District Judge R. David Proctor said neither the court nor Alabama Aircraft Industries Inc. can know why Boeing Co. employees destroyed information related to the two companies' collapsed agreement to bid on an Air Force tanker fleet maintenance contract, but that it can be reasonably presumed the information would have hurt Boeing’s case, in an order stating jurors in a potential trial will be allowed to assume the lost information is unfavorable to Boeing.
"'Big Yellow Taxi' reminds us of this: 'Don't it always seem to go / That you don't know what you've got 'til it's gone.' But in this case, Alabama Aircraft Industries Inc. ('AAI') contends that employees of The Boeing Co. have destroyed documents, and that presents a somewhat different problem: AAI doesn’t know what Boeing had because it's gone," the order states. "Because the information is irretrievably lost, AAI (not to mention this court) is left to speculate as to why the data was destroyed."
Boeing had argued that AAI never showed the deleted documents were crucial to the case or that the documents were deleted to purposely undermine AAI's suit.
But Proctor ruled Boeing employees' "unexplained, blatantly irresponsible behavior" leading to the loss or destruction of the documents was sufficient to draw the conclusion that the documents had been intentionally destroyed.
Boeing knew or should have known that it's withdrawal from a memorandum of understanding with AAI was likely to result in litigation, since a loss of the contract would almost certainly bankrupt AAI.
Boeing set up a "firewall plan" to preserve and separate from its solo bid for the contract, proprietary information belonging to AAI's predecessor company, Pemco, which it had obtained as part of the failed partnership.
Boeing employees tasked with crafting Boeing's solo proposal for the Air Force contract in 2006 deleted files from their chief financial officer's computer rather than preserving and delivering them to the company legal department, in compliance with the firewall plan. Rather than copying the files to a disk as they were required to do, according to the decision, the employees executed a "two-step process" to permanently delete the files, moving them to the computer's recycle bin and then emptying the recycle bin.
In a separate 2007 incident, Mark Rabe, an in-house attorney for Boeing in charge of preserving the Pemco information removed two CDs with Pemco information from an analyst tasked with rewriting and removing Pemco from joint bid volumes originally produced for the abandoned joint agreement. Rabe claimed to have lost the CDs and told the court he could not remember why he removed them in the first place, according to court documents.
Boeing's inability to explain the series of actions that ran directly contrary to its procedure for handling Pemco electronic information, which resulted in the data being lost or destroyed was enough for Proctor to rule that the loss of the data was intentional and the information was unfavorable to its position in a potential lawsuit over the contract award.
In the event the case goes to trial, according to the order, jurors will be instructed that they "may presume that the lost information contained in Blake's Pemco-related [computer] was unfavorable to Boeing."
Boeing was also ordered to pay AAI's legal costs related to its sanctions motion.
A representative from AAI said the company is pleased by the decision, but declined to comment further.
Representatives for Boeing did not immediately respond to requests for comment.
AAI is represented by J. Michael Rediker, R. Scott Williams, Peter J. Tepley, Meredith J. Lees, Rebecca A. Beers and Joshua D. Lerner of Rumberger Kirk & Caldwell.
Boeing is represented by Kevin C. Newsom, John Thomas Richie and R. Thomas Warburton of Bradley Arant Boult Cummings LLP and Craig S. Primis, Matthew E. Papez and Erin C. Johnston of Kirkland & Ellis LLP.
The case is Alabama Aircraft Industries Inc. v. Boeing Co. et al., case number 2:11-cv-03577, in the U.S. District Court for the Northern District of Alabama.
--Editing by Katherine Rautenberg.
I bought some over the last few days. The settlement of a billion dollar lawsuit would certainly be a plus.
That's why I wanted to take a chance on it yesterday, then found out I couldn't through Fidelity. Not sure what the catalyst is, only thing I could come up with is maybe that suit is coming to a close, I haven't found anything to confirm it one way or the other though. There's only a little over 4 million shares, I'd assume the shareholders might get a pretty good cut if they are successful, but wouldn't be the first time I was wrong... GL if you decide to participate.
A 46000 bid just appeared at .30 for AAIIQ. This thing was at .03 a few days back and you still have people willing to place large buy orders at these levels.
Last info I could find was that it was ongoing as of 11/16. I couldn't find anything more recent than that, so am assuming there hasn't been a decision as of yet.
https://www.law360.com/companies/alabama-aircraft-industries-inc/articles
This rally in AAIIQ seems to have legs. It has been up several days in a row and someone is sitting on the bid trying to buy 109,000 shares at current levels.
What info do you have on the Boeing lawsuit?
Could just be somebody's play or may have something to do with a longstanding lawsuit against Boeing. I'm not recommending nor do I have any skin in the game, just ran across this yesterday when researching something else.
Now I think I know...
Can't figure out why this went from .03 to .25....Anyone have a clue?
The CH-47F Chinook is the world's fastest military helicopter with maximum speed of 315km/h. Here are the top 10 fastest military helicopter.
Long time ago.... I am pretty sure I never bought in. It was one I was looking at but something kept me away at the time. The filings are available here.
http://www.otcmarkets.com/pink/quote/quote.jsp?symbol=aaii#getFilings
With the particular filing I posted here.
http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=22825
there's a real dearth of info on this company. do you work there or for them or are you an investor?
how many employees do they have?
you posted earnings back to 07, but the charts don't go back that far. where did you get that?
Alabama Aircraft Industries, Inc. Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2009
* Press Release
* Source: Alabama Aircraft Industries, Inc.
* On Tuesday August 4, 2009, 9:20 am EDT
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Companies:
o Alabama Aircraft Industries, Inc
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Alabama Aircraft Industries, Inc. (Pink Sheets: AAII - News), a leading provider of aircraft maintenance and modification services to military customers, today announced its operating results for the second quarter and six months ended June 30, 2009. Net income for the second quarter of 2009 was $0.8 million, or $0.19 per share, compared to a net loss for the second quarter of 2008 of $2.4 million, or $0.59 per share. Revenue from continuing operations for the second quarter of 2009 was $17.3 million versus revenue of $12.5 million in the first quarter of 2008, an increase of 38.0%. Income from continuing operations for the second quarter of 2009 was $0.8 million compared to a loss from continuing operations of $1.1 million for the second quarter of 2008.
Net income for the first six months of 2009 was $1.4 million, or $0.35 per share, compared to a net loss for the first six months of 2008 of $1.6 million, or $0.39 per share. Revenue from continuing operations for the six months ended June 30, 2009 was $32.9 million, compared to revenue from continuing operations of $32.1 million for the six months ended June 30, 2008, an increase of 2.5%. Income from continuing operations for the first six months of 2009 was $1.6 million compared with income from continuing operations of $0.3 million for the first six months of 2008.
Ronald Aramini, Alabama Aircraft’s President and Chief Executive Officer, stated, “We are very pleased to report net income for the second quarter and first six months of 2009. We continue to see advancement in our efforts to improve productivity and control costs. Revenue for the second quarter of 2009 versus the second quarter of 2008 increased significantly due to the higher volume of aircraft inducted into our Birmingham facility during the last twelve months. Our emphasis for future growth continues to be on P-3 and C-130 aircraft. Several new C-130 programs are currently being competed and we expect additional C-130 programs to be competed in the near future. Our P-3 business has grown significantly and is profitable for us.”
Mr. Aramini further stated, “We just completed negotiations with Boeing on an extension of the Bridge contract to cover KC-135 inductions through September 30, 2010. We look forward to continuing to provide the United States Air Force (“USAF”) with high quality and competitive prices on its fleet of KC-135 tankers. There have been no recent developments in the KC-135 re-competition. We anticipate that the appeal by the USAF and Boeing of the Court of Federal Claims ruling will be resolved in late 2009 or early 2010. We firmly believe the Court’s ruling, which set aside the award of the KC-135 contract to Boeing, was correct and that the ruling will not be overturned. As previously reported, we are extremely pleased with the jury’s verdict in our case against General Electric Capital Aviation Services which awarded AAII compensatory damages and punitive damages in an aggregate amount of approximately $8.5 million before interest. As a result of the jury verdict, we reversed an allowance for doubtful accounts of $1.4 million in the first quarter of 2009.”
Second Quarter 2009 vs. 2008 Results
Summary of comparative results for the second quarter ended June 30, 2009 and 2008:
(Dollars in Millions)
2009 2008 Change
Revenue from continuing operations $
17.26
$
12.51
38.0
%
Gross profit
3.04
1.22
149.2
%
Operating income (loss) from continuing operations
1.04
(0.94
)
210.6
%
Income (loss) from continuing operations before taxes
0.81
(1.13
)
171.7
%
Income (loss) from continuing operations
0.81
(1.06
)
176.4
%
Net income (loss)
0.80
(2.44
)
132.8
%
EBITDA* from continuing operations
1.44
(0.52
)
376.9
%
* A description of the Company’s use of non-GAAP information is provided below under “Use of Non-GAAP Financial Measures.” A reconciliation of the income (loss) from continuing operations to EBITDA from continuing operations is provided at the end of this press release. The Company defines “operating income (loss) from continuing operations”, as shown in the above table, as revenue from continuing operations less cost of revenue, less selling, general and administrative (“SG&A”) expenses.
Second quarter 2009 revenue from continuing operations increased $4.8 million from the second quarter of 2008. Revenue from the KC-135 Program Depot Maintenance (“PDM”) program increased by $4.2 million during the second quarter of 2009 versus the second quarter of 2008. The KC-135 program, which accounted for 86% of revenue in the second quarter of 2009 and 84% of revenue in the second quarter of 2008, allows for the Company to provide services on PDM aircraft, drop-in aircraft, and other aircraft related areas. During the second quarter of 2009, the Company delivered four PDM aircraft compared to three PDM aircraft during second quarter of 2008. Revenue increased on the KC-135 program in the second quarter of 2009 versus the second quarter of 2008 due to an increase in the number of KC-135 aircraft in work and one more delivery during the second quarter of 2009. The Company delivered one P-3 aircraft in the second quarter of 2009 versus no P-3 aircraft deliveries in the second quarter of 2008, resulting in an increase in P-3 revenue of $1.3 million. The Company has been successful in pursuing additional contracts to perform maintenance services on P-3 aircraft and has seen a growth in P-3 inductions with three P-3s in work at the end of the second quarter of 2009 and an additional induction in July 2009. Revenue decreased $1.5 million in the second quarter of 2009 versus the second quarter of 2008 under contracts to perform non-routine maintenance work on other aircraft, primarily USAF C-130 aircraft, due to a reduction of aircraft inducted. During the first quarter 2009, the Company was awarded a contract for de-paint services on USAF C-130 aircraft which resulted in an increase in revenue of $0.8 million in the second quarter of 2009 as compared to the second quarter of 2008.
Gross profit increased from $1.2 million to $3.0 million during the second quarter of 2009 compared to the second quarter of 2008. Gross profit on KC-135 revenue increased $0.7 million due to more aircraft in work during the second quarter of 2009 and due to one more delivery during the second quarter of 2009. Gross profit on the P-3 program increased $0.4 million in the second quarter of 2009 as compared to the second quarter of 2008 due to efficiency gains in the production line and due to no deliveries of P-3 aircraft in the second quarter of 2008. Gross profit increased $0.4 million during the second quarter of 2009 versus the second quarter of 2008 on non-routine maintenance work performed on C-130 due to an increase in the contract price. Work performed on the newly acquired contract for de-paint services on C-130 aircraft resulted in additional gross profit of $0.2 million.
Selling, general and administrative (“SG&A”) expenses decreased $0.2 million during the second quarter of 2009 compared to the second quarter of 2008 due to a reduction in legal fees related to the KC-135 legal actions. SG&A expenses were 11.6% of revenue in the second quarter of 2009 as compared to 17.2% in the second quarter of 2008.
Total interest expense increased $31,000 in the second quarter of 2009 as compared to the second quarter of 2008. The increase in interest expense was due to the amortization of a $400,000 debt extension fee paid by AAII in the first quarter of 2009 which was partially refunded to AAII in the second quarter of 2009.
Six Months 2009 vs. 2008 Results
Summary of comparative results for the six months ended June 30, 2009 and 2008:
(Dollars in Millions)
2009 2008 Change
Revenue from continuing operations $ 32.93 $ 32.12 2.5 %
Gross profit 4.78 5.80 (17.6 %)
Operating income from continuing operations 2.08 0.76 173.7 %
Income from continuing operations before taxes 1.60 0.36 344.4 %
Income from continuing operations 1.57 0.26 503.8 %
Net income (loss) 1.44 (1.61 ) 189.4 %
EBITDA* from continuing operations 2.86 1.26 127.0 %
* A description of the Company’s use of non-GAAP information is provided below under “Use of Non-GAAP Financial Measures.” A reconciliation of the income (loss) from continuing operations to EBITDA from continuing operations is provided at the end of this press release. The Company defines “operating income (loss) from continuing operations”, as shown in the above table, as revenue from continuing operations less cost of revenue, less selling, general and administrative (“SG&A”) expenses.
The Company’s revenue from continuing operations for the first six months of 2009 increased $0.8 million from revenue for the first six months of 2008. Revenue from the KC-135 PDM program increased $2.2 million during the first six months of 2009 versus the first six months of 2008. The KC-135 program accounted for 88% of revenue in the first six months of 2009 and 84% of revenue in the first six months of 2008. During the first six months of 2009, the Company delivered seven PDM aircraft which was consistent with the seven PDM aircraft delivered during first six months of 2008. Revenue increased on the KC-135 program in the first six months of 2009 versus the first six months of 2008 due to more KC-135 aircraft in work throughout the period. The Company delivered one P-3 aircraft in each of the first six months of 2009 and 2008. P-3 revenue increased $0.2 million due to an increase in the contractual price and an increase in P-3 aircraft in work during the first six months of 2009. Revenue decreased $2.9 million under contracts to perform non-routine maintenance work on other aircraft, primarily USAF C-130 aircraft, due to fewer aircraft in work during the first six months of 2009. The Company’s award of a contract for de-paint services on USAF C-130 aircraft resulted in an increase in revenue of $1.3 million in the first six months of 2009 as compared to the first six months of 2008.
Gross profit decreased from $5.8 million to $4.8 million during the first six months of 2009 compared to the first six months of 2008. Gross profit on KC-135 revenue decreased $1.6 million due to a decrease in price per KC-135 aircraft. Gross profit on the P-3 program increased $0.2 million in the first six months of 2009 as compared to the first six months of 2008 due to efficiency gains in the production line. Gross profit increased $0.4 million during the first six months of 2009 versus the first six months of 2008 on non-routine maintenance work performed on C-130 due to an increase in the contract price. Work performed on the newly acquired contract for de-paint services on C-130 aircraft resulted in additional gross profit of $0.2 million.
Selling, general and administrative (“SG&A”) expenses decreased $1.0 million during the first six months of 2009 compared to the first six months of 2008 due to a reduction in legal fees related to the KC-135 legal actions. SG&A expenses were 12.4% of revenue in the first six months of 2009 as compared to 15.7% in the first six months of 2008. During the first six months of 2008, the Company forgave a related party receivable (including accrued interest) of $0.5 million. During the first six months of 2009, the Company reversed an allowance for doubtful accounts of $1.4 million due to positive developments in the GECAS case to collect the outstanding receivables.
Total interest expense increased $88,000 in the first six months of 2009 as compared to the first six months of 2008. The increase in interest expense is due to the amortization of a $400,000 debt extension fee paid by AAII in the first six months of 2009 which was partially refunded to AAII in the first six months of 2009.
*Use of Non-GAAP Financial Measures
EBITDA from continuing operations is defined as earnings from continuing operations before interest, taxes, depreciation and amortization. The Company presents EBITDA because its management uses the measure to evaluate the Company's performance and to allocate resources. In addition, EBITDA has been used as one of the components to calculate the Company’s debt covenants. The Company believes EBITDA is also a measure of performance used by some commercial banks, investment banks, investors, analysts and others to make informed investment decisions. EBITDA is an indicator of cash generated to service debt and fund capital expenditures. EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered as a substitute for or superior to other measures of financial performance reported in accordance with GAAP. EBITDA as presented herein may not be comparable to similarly titled measures reported by other companies. See the reconciliation of income (loss) from continuing operations to EBITDA from continuing operations at the end of this release.
About Alabama Aircraft Industries
Alabama Aircraft Industries, Inc., located in Birmingham, Alabama, performs maintenance and modification of aircraft for the U.S. Government and military customers. The Company also provides aircraft parts and support and engineering services.
Caution Concerning Forward-Looking Statements
This document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition generally, as well as specific matters such as the award or loss of contracts, the outcome of pending or future litigation and estimates of backlog. Forward-looking statements are often identified by words such as “expect,” “anticipate,” “intend,” “plan,” believe,” “seek,” “see,” “may,” “should,” “could” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include, among other things: the severity and duration of the current economic recession and current financial conditions; the impact of U.S. and foreign government programs to restore liquidity and stimulate national and global economies; the impact of conditions in the financial and credit markets on the availability and cost of capital to us; operational challenges in achieving our strategic objectives and executing our plans, competition in the aircraft maintenance and modification industry; the award or loss of contracts; changes in estimates of backlog; our ability to obtain additional contracts and perform under existing contracts; the final outcome of our legal action with regard to the KC-135 contract; the outcome of pending and future litigation and the costs of defending such litigation; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including regulatory changes that could adversely affect our business; potential environmental and other liabilities; our inability to obtain additional financing; the loss of key personnel; and other factors and risks detailed from time to time in our publicly available statements and reports, which are available at www.pinksheets.com. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. We do not undertake any obligation to update or revise any forward-looking statements and are not responsible for changes made to this release by wire services or Internet services.
ALABAMA AIRCRAFT INDUSTRIES, INC.
(In thousands except per share information)
Second Quarter Ended
June 30
2009 2008
Revenue $ 17,261 $ 12,508
Cost of revenue 14,226 11,295
Gross profit 3,035 1,213
Selling, general and administrative expenses 1,997 2,153
Operating income (loss) 1,038 (940 )
Interest expense 225 194
Income (loss) from continuing operations before taxes 813 (1,134 )
Income tax expense - (70 )
Income (loss) from continuing operations 813 (1,064 )
Income from discontinued operations, net of tax - (1,378 )
Loss on sale of discontinued operations, net of tax (10 ) -
Net income (loss) $ 803 $ (2,442 )
Weighted Average Common Shares Outstanding:
Basic 4,129 4,129
Diluted 4,129 4,129
Net Income (Loss) Per Common Share:
Basic income (loss) from continuing operations $ 0.20 $ (0.26 )
Basic loss from discontinued operations $ (0.00 ) $ (0.33 )
Basic net income (loss) per share $ 0.19 $ (0.59 )
Diluted income (loss) from continuing operations $ 0.20 $ (0.26 )
Diluted loss from discontinued operations $ (0.00 ) $ (0.33 )
Diluted net income (loss) per share $ 0.19 $ (0.59 )
EBITDA Reconciliation*
Income (loss) from continuing operations $ 813 $ (1,064 )
Interest expense 225 194
Income tax expense - (70 )
Depreciation and amortization 399 420
EBITDA from continuing operations $ 1,437 $ (520 )
*See note above on Use of Non-GAAP Financial Measures.
ALABAMA AIRCRAFT INDUSTRIES, INC.
(In thousands except per share information)
Six Months Ended
June 30
2009 2008
Revenue $ 32,928 $ 32,119
Cost of revenue 28,151 26,322
Gross profit 4,777 5,797
Selling, general and administrative expenses 4,070 5,039
Provision for (reversal of) doubtful accounts (1,372 ) -
Operating income 2,079 758
Interest expense 483 395
Income from continuing operations before taxes 1,596 363
Income tax expense 27 104
Income from continuing operations 1,569 259
Income (loss) from discontinued operations, net of tax 78 (1,867 )
Loss on sale of discontinued operations, net of tax (212 ) -
Net income (loss) $ 1,435 $ (1,608 )
Weighted Average Common Shares Outstanding:
Basic 4,129 4,129
Diluted 4,129 4,129
Net Income (Loss) Per Common Share:
Basic income from continuing operations $ 0.38 $ 0.06
Basic loss from discontinued operations $ (0.03 ) $ (0.45 )
Basic net income (loss) per share $ 0.35 $ (0.39 )
Diluted income from continuing operations $ 0.38 $ 0.06
Diluted loss from discontinued operations $ (0.03 ) $ (0.45 )
Diluted net income (loss) per share $ 0.35 $ (0.39 )
EBITDA Reconciliation*
Income from continuing operations $ 1,569 $ 259
Interest expense 483 395
Income tax expense 27 104
Depreciation and amortization 778 941
EBITDA from continuing operations $ 2,857 $ 1,699
*See note above on Use of Non-GAAP Financial Measures.
Contact:
Alabama Aircraft Industries, Inc.
Randall C. Shealy, 205-510-4944
Senior Vice President
Chief Financial Officer
Alabama Aircraft Industries Files Lawsuit Challenging Air Force's KC-135 Contract Award to Boeing
Date : 06/26/2008 @ 10:08AM
Source : Business Wire
Stock : Alabama Aircraft Industries, Inc. (AAII)
Quote : 1.73 0.0 (0.00%) @ 9:57AM
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Alabama Aircraft Industries Files Lawsuit Challenging Air Force's KC-135 Contract Award to Boeing
Alabama Aircraft Industries, Inc. (AAII) announced today that it will be filing a lawsuit in the United States Court of Federal Claims challenging the United States Air Force’s selection of Boeing for a $1.1 billion contract to maintain the fleet of KC-135 refueling tankers. On December 27, 2007, the Government Accountability Office (GAO) sustained in part a protest filed by AAII. The GAO found that last minute and unexplained changes in Boeing’s proposed prices raised issues of price realism and proposal risk. On February 1, the GAO again ruled in AAII’s favor on these issues, denying the Air Force Request for Reconsideration.
Despite the GAO’s December 27 and February 1 decisions, on June 13 the GAO denied AAII’s request for further relief and the Air Force has decided to press forward with an award to Boeing. AAII’s firm belief is that, if proposals were evaluated fully and reasonably, it would be selected due to its past contract performance, lower price and consistently higher quality in maintaining the KC-135 fleet. AAII has decided to pursue this matter in Court because the Air Force failed to take appropriate corrective action in response to the GAO’s December 27 and February 1 decisions. AAII is asking the Court of Federal Claims to order the Air Force to conduct a full and proper evaluation and to ensure compliance with applicable law.
AAII notes that the Air Force’s KC-135 PDM procurement has a long and questionable history and continues to be the subject of allegations of bias, conflicts of interest, and procurement integrity violations. Judicial review should provide a greater opportunity for thorough review of these issues than the limited administrative process at the GAO. AAII believes review by the Court of these, as well as other multiple issues contained within the Complaint, will provide compelling evidence that the current widespread concerns about the acquisition process and the award are valid.
AAII President Ron Aramini issued a statement on the filing of the lawsuit: "We believe that the Air Force’s award of the KC-135 maintenance contract to Boeing is significantly flawed. AAII intends to pursue its right to seek review by the Court with the hope and expectation that, following a full review, the Air Force’s award will be overturned and a new competition ordered.” Alabama Aircraft Industries, Inc. (AAII), with executive offices in Birmingham, Alabama, and facilities in Alabama, and California, performs maintenance and modification of aircraft for the U.S. Government. The company also provides aircraft parts and support and engineering services and full service overhaul and repair for a wide range of aircraft. AAII also develops and manufactures rocket vehicles and control systems, and precision components for the aviation industry.
This press release contains forward-looking statements made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may be identified by their use of words, such as “believe,” “expect,” “intend,” “anticipate,” “estimate” and other words and terms of similar meaning, in connection with any discussion of the Company's prospects, financial statements, business, financial condition, revenues, results of operations or liquidity. Factors that could affect the Company's forward-looking statements include, among other things: changes in global or domestic economic conditions; the loss of one or more of the Company's major customers; the Company's ability to obtain additional contracts and perform under existing contracts; the outcome of pending and future litigation and the costs of defending such litigation; financial difficulties experienced by the Company's customers; potential environmental and other liabilities; the inability of the Company to obtain additional financing; material weaknesses in the Company’s internal control over financial reporting; regulatory changes that adversely affect the Company's business; loss of key personnel; and other risks detailed from time to time in the Company's SEC reports, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. The Company does not undertake any obligation to update or revise any forward-looking statements and is not responsible for changes made to this release by wire services or Internet services.
Alabama Aircraft Industries Announces Protest Decision
Date : 06/13/2008 @ 5:49PM
Source : Business Wire
Stock : Alabama Aircraft Industries, Inc. (AAII) (AAII)
Quote : 1.8 0.05 (2.86%) @ 11:16AM
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Alabama Aircraft Industries Announces Protest Decision
Alabama Aircraft Industries, Inc. (AAII) (NASDAQ: AAII) learned today that the U.S. Government Accountability Office (GAO) denied a protest filed by the company on March 11, 2008. In its protest, AAII was challenging the selection of Boeing over AAII for a billion dollar contract to maintain the Air Force's fleet of KC-135 tankers. As recently as December 27, 2007, and February 1, 2008, the GAO had issued decisions finding that the Air Force's selection of Boeing was flawed.
AAII President Ron Aramini issued a statement explaining, "While we are disappointed with the GAO's latest decision, we fully intend to continue to press our case until the Air Force has conducted a full and fair evaluation of proposals. We believe that a proper evaluation would result in the selection of AAII as the highest quality and lowest cost source for the maintenance of the Air Force's KC-135 fleet." Alabama Aircraft Industries, Inc. (AAII), with executive offices in Birmingham, Alabama, and facilities in Alabama and California, performs maintenance and modification of aircraft for the U.S. Government and foreign and domestic commercial customers. The company also provides aircraft parts and support and engineering services and full service overhaul and repair for a wide range of aircraft. AAII also develops and manufactures rocket vehicles and control systems, and precision components for the aviation industry.
(NASDAQ: AAII - News), a leading provider of aircraft maintenance and modification services to military customers, Today announced the operating results of its first quarter ended March 31, 2008. Net income for the first quarter of 2008 was $0.8 million ($0.20 per share) compared to net income for the first quarter of 2007 of $0.9 million ($0.22 per share). Revenue from continuing operations for the first quarter of 2008 was $21.1 million versus revenue of $22.4 million in the first quarter of 2007, a decrease of 5.8%. Income from continuing operations for the first quarter of 2008 was $0.8 million compared to a loss from continuing operations of $0.3 million for the first quarter of 2007.
Its attempting to recover from todays sell off on really light volume
ALABAMA AIRCRAFT IND(NasdaqGM: AAII)
Last Trade: 2.3999
Trade Time: 2:37PM ET
Change: 0.3501 (12.73%)
Prev Close: 2.75
Open: 2.43
Bid: 1.85 x 200
Ask: 2.40 x 1200
1y Target Est: N/A
Day's Range: 1.55 - 2.45
52wk Range: 1.75 - 12.00
Volume: 12,700
Avg Vol (3m): 4,556.25
Market Cap: 9.91M
P/E (ttm): 10.48
EPS (ttm): 0.229
Div & Yield: N/A (N/A)
Income Statement Get Income Statement for:
View: Annual Data | Quarterly Data All numbers in thousands
PERIOD ENDING 31-Mar-08 31-Dec-07 30-Jun-07 31-Mar-07
Total Revenue 21,130 17,452 54,770 50,810
Cost of Revenue 17,044 16,363 47,066 42,972
Gross Profit 4,086 1,089 7,704 7,838
Operating Expenses
Research Development - - - -
Selling General and Administrative 2,874 2,938 5,692 5,116
Non Recurring - - - -
Others - - - -
Total Operating Expenses - - - -
Operating Income or Loss 1,212 (1,849) 2,012 2,722
Income from Continuing Operations
Total Other Income/Expenses Net - - - -
Earnings Before Interest And Taxes 1,212 (1,849) 2,012 2,722
Interest Expense 204 51 1,171 888
Income Before Tax 1,008 (1,900) 841 1,834
Income Tax Expense 174 (702) 342 811
Minority Interest - - - -
Net Income From Continuing Ops 834 (1,198) 499 1,023
Non-recurring Events
Discontinued Operations - 85 127 (127)
Extraordinary Items - - - -
Effect Of Accounting Changes - - - -
Other Items - - - -
Net Income 834 (1,113) 626 896
Preferred Stock And Other Adjustments - - - -
Net Income Applicable To Common Shares $834 ($1,113) $626 $896
Form 10-Q for ALABAMA AIRCRAFT INDUSTRIES, INC
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12-May-2008
Quarterly Report
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
The following discussion should be read in conjunction with the Company's consolidated financial statements and notes thereto included herein.
OVERVIEW
The Company operates primarily in the aerospace and defense industry and its principal business is providing aircraft maintenance and modification services to the U.S. Government and military customers. The Company's services are provided under traditional contracting agreements that include fixed-price, time and material, cost plus and variations of such arrangements. The Company's revenue and cash flows are derived primarily from services provided under these contracts, and cash flows include the receipt of milestone or progress payments under certain contracts.
The financial condition of the Company, which operated as a subcontractor to the Boeing Company ("Boeing"), has been impacted by several extraordinary events in connection with the U.S. Air Force ("USAF") KC-135 Program Depot Maintenance ("PDM") program and the related recompetition for the new KC-135 contract award. In summary, from May 2005 through June 2006, the Company worked in cooperation with Boeing to submit a proposal on the new KC-135 contract under a Memorandum of Agreement with Boeing ("MOA"). After filing an initial proposal with the USAF, which included critical financial and operational information on the Company's KC-135 program, the Company believes Boeing breached the MOA due to the USAF's reducing the number of aircraft in the request for proposal. As part of the Company's teaming arrangement with Boeing on the existing KC-135 contract, the Company had already spent several million dollars to meet Boeing's new requirement that the Company adopt its KC-135 methodology. From July 2006 to September 2007, the Company spent another million dollars preparing their own proposal for the new KC-135 contract. The Company's proposal for the KC-135 PDM program was unsuccessful as the contract was awarded to Boeing in September 2007. The Company filed a protest with the Government Accountability Office ("GAO") and the contract was stayed for 100 days pending the results of the protest. On December 27, 2007 the GAO upheld in part the Company's protest on the basis that the USAF failed to conduct a proper analysis of Boeing's cost/price proposal for realism or potential risk. The USAF filed a Request for Reconsideration on January 7, 2008, which was denied by the GAO on February 1, 2008. On March 3, 2008, the USAF advised the Company that in response to the recommendation by the GAO it had completed additional review, documentation and a new award decision and that the Company's proposal was not selected for award. Company officials attended a debriefing from the USAF on the new award decision on March 7, 2008. The Company filed a protest on the new award decision on March 11, 2008 as to the USAF's lack of proper evaluation to meet GAO recommendations and sudden post-award change of work scope under the contract recompete. On May 2, 2008, the GAO dismissed the change of work scope portion of the protest on the basis that the USAF has not made a determination regarding potential changes to the contract requirements. The GAO decision provides the Company the right to re-submit its protest for consideration in the event the USAF subsequently pursues a course of action consistent with the Company's factual allegations. The Company has expended substantial financial resources in connection with these events. If the Company is successful with the protest, it may be able to recover a portion of the cost of the protest.
In order to adjust for and mitigate the effects of the events discussed above, the Company has taken several significant steps. On November 6, 2007 the Company officially qualified with the Small Business Administration as a small business for military contracts. The Company believes that this will provide vital opportunities for defense contracts which were previously unavailable. Management has taken significant steps to reduce costs including headcount reductions, administrative cost reductions, freezing its defined benefit pension plan (the "Pension Plan") for salaried employees as of December 31, 2007, eliminating salary increases for 2008 and restructuring the medical and dental benefit plans. In addition, the Board of Directors, in a unified move to support the Company, has agreed to a 50% reduction in all Board fees in 2008. If the new protest does not result in a positive outcome for the Company, it would have a material adverse effect on the Company's financial condition and prospects, materially harm the Company's business and impair the value of its Common Stock. The Company and Boeing continue to be teamed on the KC-135 Bridge Contract for which the USAF exercised a second six-month option to extend through September 30, 2008. There are no assurances that the Company will receive more than the four aircraft already inducted during these six month extensions of the KC-135 Bridge Contract.
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RESULTS OF OPERATIONS
Three months ended March 31, 2008 versus three months ended March 31, 2007
The table below presents major highlights from the three months ended March 31, 2008 and 2007 excluding the results of discontinued operations, except for net income.
(In Millions)
2008 2007 % Change
Revenue $ 21.13 $ 22.39 (5.6 )%
Gross profit 4.09 3.11 31.6 %
Operating income (loss) from continuing operations 1.21 (0.35 ) 445.7 %
Income (loss) from continuing operations before taxes 1.01 (0.54 ) 287.0 %
Income (loss) from continuing operations 0.83 (0.30 ) 376.7 %
Net income 0.83 0.90 (7.8 )%
EBITDA from continuing operations 1.65 0.12 1275.0 %
The Company defines operating income (loss) from continuing operations, as shown in the above table, as revenues less cost of revenues, less selling, general, and administrative expenses.
EBITDA from continuing operations for the quarters ended March 31, 2008 and 2007 was calculated using the following approach:
(In Millions)
2008 2007
Income (loss) from continuing operations $ 0.83 $ (0.30 )
Interest expense 0.20 0.19
Income tax expense (benefit) 0.17 (0.24 )
Depreciation and amortization 0.45 0.47
EBITDA from continuing operations $ 1.65 $ 0.12
The Company presents Earnings Before Interest, Taxes, Depreciation and Amortization, more commonly referred to as EBITDA from continuing operations, because its management uses the measure to evaluate the Company's performance and to allocate resources. In addition, the Company believes EBITDA is an important gauge used by commercial banks, investment banks, other financial institutions, and current and potential investors, to approximate its cash generation capability. Accordingly, the Company has included EBITDA as part of this report. The Depreciation and Amortization amounts used in the EBITDA calculation are those that were recorded in the consolidated statements of operations in this report. Due to the long-term nature of much of the Company's business, the Depreciation and Amortization amounts recorded in the consolidated statements of operations will not directly match the change in Accumulated Depreciation and Amortization reflected on the Company's consolidated balance sheets. This is a result of the capitalization of depreciation expense on long-term contracts into Work-in-Process. EBITDA is not a measure of financial performance under generally accepted accounting principles in the United States ("GAAP") and should not be considered as a substitute for or superior to other measures of financial performance reported in accordance with GAAP. EBITDA as presented herein may not be comparable to similarly titled measures reported by other companies.
The table below presents the highlights in revenue from continuing operations by operating segment for the three months ended March 31, 2008 and 2007.
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(In Millions)
2008 2007 Change % Change
GSS $ 19.61 $ 19.63 $ (0.02 ) (0.1 )%
MCS 1.52 2.76 (1.24 ) (44.9 )%
Total $ 21.13 $ 22.39 $ (1.26 ) (5.6 )%
GSS
GSS 2008 revenue was consistent with 2007 revenue. Revenue from the KC-135 PDM program increased $1.4 million during the first quarter of 2008 versus the first quarter of 2007. The KC-135 program, which accounted for 77% of revenue in the first quarter of 2008 and 67% of revenue in the first quarter of 2007, allows for the Company to provide services on PDM aircraft, drop-in aircraft, and other aircraft related areas. During each of the first quarter of 2008 and first quarter of 2007, the Company delivered four PDM aircraft and no drop-ins. Revenue increased on the KC-135 program in the first quarter of 2008 versus the first quarter of 2007 due to an increase in the contractual price for each aircraft delivered. The Company delivered one P-3 aircraft in the first quarter of 2008 versus two P-3 aircraft in the first quarter of 2007, resulting in a decrease in P-3 revenue of $1.2 million. The delivery of the P-3 aircraft in the first quarter of 2008 represented the final delivery of P-3 aircraft under the current contract. The Company is continuing to pursue additional contracts to perform maintenance services on P-3 aircraft. Revenue decreased $0.2 million under contracts to perform non-routine maintenance work on other aircraft, primarily USAF C-130 aircraft.
Gross profit at GSS increased from $2.6 million during the first quarter of 2007 to $4.2 million during the first quarter of 2008. Gross profit on KC-135 revenue increased $1.2 million due to increased revenue. Cost of revenue on the KC-135 program decreased as a percentage of revenue due to increased efficiencies on the KC-135 maintenance line. Gross profit increased $0.5 million as a result of losses on the P-3 program in the first quarter of 2007 for which there were no comparable losses in the first quarter of 2008. Selling, general and administrative ("SG&A") expenses of GSS increased $0.1 million during the first quarter of 2008 compared to the first quarter of 2007 because of increased allocation of corporate SG&A expenses as a result of the sale of PWAS.
MCS
MCS revenue decreased $1.2 million in the first quarter of 2008 versus the first quarter of 2007 due to decreases on a large software contract of $0.5 million, a large GPS receiver contract of $0.5 million and a launch vehicle structures contract of $0.3 million. Revenue in 2008 was adversely affected because Space Vector Corporation ("SVC") was in the completion stage of several large contracts and any follow-on contracts had not fully begun.
Gross profit at MCS decreased $0.5 million in the first quarter of 2008 versus the first quarter of 2007. SVC recorded a reserve for contract loss in cost of revenue of $0.4 million during the first quarter of 2008 due to contract overruns on a large battery contract. Gross profit also decreased $0.1 million as a result of the decrease in revenue. SG&A expenses at SVC decreased $0.2 million in the first quarter of 2008 versus the first quarter of 2007 due to headcount reductions of administrative personnel.
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Consolidated Unallocated Corporate SG&A Expenses, Interest Expense and Income Taxes
During the first quarter of 2008, the Company forgave a related party receivable and accrued interest of $0.5 million (See "RELATED PARTY TRANSACTIONS" discussed below). During the first quarter of 2007, the Company incurred $0.9 million of corporate SG&A expenses that previously had been allocated to PWAS for segment reporting purposes. Under accounting principles generally accepted in the United States, these allocated amounts are recorded in continuing operations rather than discontinued operations.
Total interest expense, including amounts in discontinued operations ($0.8 million in 2007), decreased to $0.2 million in the first quarter of 2008 from $1.0 million in the first quarter of 2007. Interest expense decreased primarily as a result of extinguishing a large portion of the Company's debt when PWAS was sold.
During the first quarter of 2008, the Company recorded income tax expense at an effective rate of 17.3% for continuing operations as a result of utilizing net operating loss carryforwards which previously were subject to a deferred tax valuation allowance. At March 31, 2008 and December 31, 2007, all deferred tax assets were subject to a deferred tax valuation allowance. During the first quarter of 2007, the Company recorded income tax benefits at an effective rate of 44.2% for continuing operations and income tax expense at an effective rate of 44.7% for discontinued operations. The effective income tax rate is impacted by the allocation of taxable gains or losses between operations in Alabama and California. Net operating loss carry forwards for discontinued operations in California were subject to a deferred tax valuation allowance in the first quarter of 2007.
LIQUIDITY AND CAPITAL RESOURCES
General
The table below presents the major indicators of financial condition and
liquidity.
(In Thousands, Except Ratios)
March 31, December 31,
2008 2007 Change
Cash $ 9,846 $ 8,750 $ 1,096
Working capital 14,286 16,193 (1,907 )
Debt and capital lease obligations 5,070 5,082 (12 )
Stockholders' equity 17,944 16,326 1,618
Debt to equity ratio 0.28 x 0.31 x (0.03 )
Working Capital
The Company has no current arrangements with respect to sources of additional financing, and its negative results of operations in prior years and the current lack of long-term contracts, exacerbated by the current state of the credit markets, will likely make it more difficult and expensive for the Company to raise additional capital that may be necessary to continue its operations.
The Company's primary sources of liquidity and capital resources include cash-on-hand, cash flows from operations (primarily from collection of accounts receivables and conversion of work-in-process inventory to cash) and potential borrowing capability through lenders. Principal factors affecting the Company's liquidity and capital resources position include, but are not limited to, the following: results of operations; the results of the Company's protest of the USAF award of the KC-135 contract to The Boeing Company; collection of accounts receivable; funding requirements associated with the Pension Plan; settlements of various claims; and potential divestitures. The Company anticipates that cash-on-hand will be sufficient to fund operations, make minimal capital expenditures and make scheduled payments on debt obligations for the next twelve months. However, the Company has proposed and is expecting to propose on several government programs in the next twelve months. If the Company is successful in winning some or all of these programs, additional financing may be needed to fund working capital requirements related to the buildup of accounts receivable and inventory on the projects. Moreover, the Company does not have sufficient cash to make the required contributions to the Pension Plan without negatively impacting the cash and liquidity of the Company by the end of 2008. Therefore, the Company applied on February 29, 2008 to the Internal Revenue Service for a waiver of contributions to the Pension Plan through December 31, 2008. Without a waiver of contributions, the Company would be required to contribute approximately $3.7 million for the 2007 plan year by September 15, 2008. While contribution calculations for the 2008 plan year have not been completed, the Company currently
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estimates that the quarterly payments for the 2008 plan year will be approximately $1.1 million to $1.2 million with the first quarterly payment due April 15, 2008. The Company did not make the first quarterly contribution due April 15, 2008. Several events could significantly impact the generation, availability and uses of cash over the next twelve months including:
• whether the Company is successful in its protest of the USAF award of the KC-135 contract to The Boeing Company;
• whether the Company is granted a waiver of contributions to the Pension Plan through December 31, 2008;
• whether the Company sells its subsidiary, SVC, although no decision has been made with regards to selling SVC;
• whether the Company is able to win additional contracts, including in part as a result of qualifying with the Small Business Administration as a small business under certain North American Industry Classification System codes;
• whether the Company is able to get additional funding from lenders to fund working capital increases needed if additional contracts are won; and
• whether the $5.0 million Senior Secured Note maturing on February 15, 2009 is extended.
There are no assurances that the Company will be successful in any of these respects and negative outcomes could adversely impact the Company's ability to meet financial obligations as they become due.
Cash Flow Overview
Operating activities provided $1.1 million during the first quarter of 2008, compared to $0.9 million during the first quarter of 2007. Cash payments to fund the Company's Pension Plan exceeded pension expense by $1.0 million in the first quarter of 2007 versus pension expense exceeding contributions to the Pension Plan by $0.6 million in the first quarter of 2008 due to the Company not making any contributions in 2008. Cash of $27,000 and $111,000 was used during the first quarters of 2008 and 2007, respectively, for minimal capital expenditures. Financing activities used $0.8 million in the first quarter of 2007, as the Company used $0.8 million to service the revolving credit facility and long-term debt during the first quarter of 2007.
Future Capital Requirements
The Company's potential capital requirements over the next twelve months include: required minimum funding of the Pension Plan (noted below), principal and interest payments of long-term debt, the cost of protesting the award of the KC-135 PDM contract to Boeing, and working capital required to fund increases in accounts receivable, inventory and equipment if GSS is awarded new contracts.
The Pension Plan covers substantially all employees at the Company's Birmingham, Alabama facility. The Pension Plan's assets consist primarily of equity mutual funds, bond mutual funds, hedge funds and cash equivalents. These assets are exposed to various risks, such as interest rate, credit, and overall market volatility. As a result of unfavorable investment returns related to the Pension Plan during 2002 and 2001, coupled with an increase in actuarial liability resulting from lower interest rates, increased mortality rates and the terms of the collective bargaining agreements entered into in 2005, the Pension Plan was under-funded by approximately $9.2 million and $18.8 million at December 31, 2007 and 2006, respectively.
The Company does not have sufficient cash to make the required contributions to the Pension Plan without negatively impacting the cash and liquidity of the Company by the end of 2008. Therefore, the Company applied on February 29, 2008 to the Internal Revenue Service for a waiver of contributions through December 31, 2008. Without a waiver of contributions, the Company would be required to contribute approximately $3.7 million for the 2007 plan year by September 15, 2008. While contribution calculations for the 2008 plan year have not been completed, the Company currently estimates that the quarterly payments for the 2008 plan year will be approximately $1.1 million to $1.2 million, with the first quarterly payment due April 15, 2008. There are no assurances that the waiver will be granted. If the waiver is not granted, the Company may not have sufficient internal resources to fund operations for the next twelve months and will have to pursue external financing which may or may not be available.
Senior Secured Debt
On February 15, 2006, the Company entered into a Note Purchase Agreement with Silver Canyon Services, Inc. ("Silver Canyon") pursuant to which the Company issued to Silver Canyon a senior secured note in the principal amount of $5.0 million (the "Note"). The Note accrues interest at an annual rate of 15%, which is payable quarterly in arrears. The Company may, at its election, redeem the Note at a price equal to 100% of the principal amount then outstanding, together with accrued and unpaid interest thereon. The Note contains customary events of default and the payment of all outstanding principal, interest and other amounts owed under the Note may be declared immediately due and payable by the lender upon the occurrence of an event of default. On July 31, 2006, Silver Canyon sold the Note and assigned the Note Purchase Agreement to the Special Value Bond Fund, LLC, which is managed by Tennenbaum Capital Partners, LLC, a related party of the Company.
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On July 31, 2007, the Company entered into an Amended and Restated Senior Secured Note with Special Value Bond Fund, LLC, in which the maturity date for the principal amount of the Note was extended until February 15, 2009.
Funding Sources
The Company plans to finance its capital expenditures, working capital and liquidity requirements through the most advantageous sources of capital available to the Company at the time, which may include using existing cash and cash equivalents, the incurrence of additional indebtedness through secured or unsecured borrowings and the reinvestment of proceeds from the potential disposition of SVC. Additional capital may not be available at all, or may not be available on terms favorable to the Company. While not planned, any additional issuance of equity or equity-linked securities through the sale of equity or debt securities through public offerings or private placements may result in substantial dilution to the Company's stockholders. The Company is continually monitoring and reevaluating its level of investment in all of its operations, as well as the financing sources available to achieve its goals in each business area.
The aircraft services industry has generally been in a consolidation phase. As a consequence, the Company sometimes receives and sometimes initiates inquiries with respect to corporate combinations. However, there can be no assurances that the Company will be party to any such transactions in the future.
RELATED PARTY TRANSACTIONS
On April 23, 2002, the Company loaned Ronald A. Aramini, its President and Chief Executive Officer, approximately $0.4 million under the terms of a promissory note. The promissory note carried a fixed interest rate of 5% per annum and was payable within 60 days of Mr. Aramini's termination of employment with the Company. On March 26, 2007, Mr. Aramini paid the accumulated interest on the promissory note. On February 1, 2008, the Company forgave in full the loan represented by the promissory note, including all accrued and unpaid interest to date, in recognition of Mr. Aramini's dual role as Chief Executive Officer of the Company and as acting President of the Company's former subsidiary, PWAS, including Mr. Aramini's critical role in the successful sale of PWAS.
On December 28, 2006, the Company and Mr. Aramini entered into a Second Amendment (the "Second Amendment"), to the Executive Deferred Compensation Agreement, dated as of May 3, 2002 (the "Agreement"), between the Company and Mr. Aramini. The Agreement, as amended, provided for annual contributions by the Company to an associated rabbi trust for the benefit of Mr. Aramini over the term of his employment agreement. The Company contributed $359,861 during January 2007 for the 2006 calendar year. Pursuant to the Second Amendment to the Agreement, the Company's obligation to make a final $380,326 lump sum trust contribution for the 2007 calendar year was eliminated. Company contributions to the trust are invested by the trustee and are to be disbursed to Mr. Aramini in accordance with the terms of the Agreement. In February 2008, the Plan disbursed approximately $2.1 million to Mr. Aramini from the deferred compensation plan assets thereby reducing the deferred compensation plan liabilities by $2.1 million.
As discussed above, on February 15, 2006, the Company entered into a Note Purchase Agreement with Silver Canyon, pursuant to which the Company issued the Note to Silver Canyon. On July 31, 2006, Silver Canyon assigned the Note Purchase Agreement and sold the Note to Special Value Bond Fund, LLC, which is managed by Tennenbaum Capital Partners, LLC. Michael E. Tennenbaum is the Senior Partner of Tennenbaum Capital Partners, LLC and is Chairman of the Board of Directors of the Company. The Note Purchase Agreement was amended on July 31, 2007 to extend the maturity date of the Note to February 15, 2009.
INTERNAL CONTROLS AND PROCEDURES
During the audit of 2006 financial statements, the Company's independent registered public accounting firm identified a material weakness in internal control over financial reporting due to the resignation of the Director of Corporate Accounting and Manager of Financial Reporting in December 2006 which created a lack of resources in the financial close and reporting process and caused the Company to rely more heavily on qualified outside contractors. In addition, it was noted that the Chief Financial Officer had the ability to make journal entries although no entries were made during the year ended December 31, 2006. As a result of the lack of financial reporting resources, the Company's independent registered public accounting firm identified miscellaneous audit adjustments. The Company added temporary resources to compensate for the departure of the accounting personnel. However, the Company experienced a significant level of turnover of financial personnel in 2007 and experienced a reduction of full-time finance employees. As a result thereof, the Company determined that the material weakness due to the lack of financial resources remained at March 31, 2008 and December 31, 2007. The Company is currently re-evaluating the staffing of its accounting function both in terms of number of . . .
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