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.