The Los Angeles jury validated Cable & Computer Technology's claims of fraud, breach of contract and intentional interference with prospective economic advantage against Nashua, N.H.-based Sanders Co., a Lockheed Martin company.
The companies' agreement never made it to paper. But jurors awarded Cable & Computer $11.2 million in compensatory damages on lost profits and $53.3 million in punitive damages. Cable & Computer Tech. Inc. v. Lockheed Sanders, CV97-5315 (C.D. Cal., verdict April 5, 2001).
"[The award] reaffirms the fact that it is possible under California law that one can enter into oral agreement that everybody understands later will be translated to writing that everyone will have to live up to," Cable & Computer's attorney Jeffrey S. Davidson of Kirkland & Ellis in Los Angeles said.
Quinn Emanuel Urquhart Oliver & Hedges' Dominic Surprenant, attorney for Sanders Co., said there was no written contract between his client and Cable & Computer but confirmed the existence of a binding oral agreement. He would not comment about the jury's finding that Sanders breached that agreement, however.
In 1996, Cable & Computer teamed with Sanders in developing a bid for an upgraded mission computer for the U.S. Air Force's B1B bomber.
The companies, which had collaborated previously on similar projects, worked for about six months to formulate an approach, provide a bid and jointly perform the work, Davidson said.
But 12 days before the bid was due, Sanders walked off the job, claiming the companies could not meet the price levels needed to win the contract, and shared information about the bid with another Lockheed business unit, Federal Systems, Davidson said.
"They gave them confidential information about how Cable & Computer was going to price the bid...the overall price they were going to put in for the bid and technological approach," he said.
Crippled by Sanders' departure, Cable & Computer was unable to submit a bid and lost the project to Federal Systems, which bid 10 percent more than Cable & Computer's anticipated bid, he said.
Cable & Computer sued in 1997. U.S. District Judge Carlos Moreno presided over the six-week trial.
"What we believe happened is that there was pressure that was put on them to not support somebody from outside the Lockheed organization," Davidson's co-counsel Eric C. Liebeler of Kirkland & Ellis said.
Randy Morger, vice president of communications for Sanders said, "We are of course disappointed by the jury's findings. We believe we presented a clear case that Sanders Co.'s actions and decisions which gave rise to the dispute were based on sound business considerations."
Sanders will file a motion for judgment for verdict as a matter of law under Federal Rule of Civil Procedure 50(b), Surprenant said.
"We look forward to pursuing all post-verdict avenues at the trial level and in the appellate court, if necessary," he said.
Reprinted with permission from the Los Angeles Daily Journal, April 6, 2001.