LightSquared Fights GPS Makers' Bid To Toss Contract Suit

Bankrupt LightSquared Inc. blasted Monday Garmin International Inc. and other GPS companies' bid to nix the wireless startup’s contract suit over spectrum usage, saying in New York court that their motion to dismiss should be rejected since it relies on factual disputes that can’t be resolved at the pleading stage.

Garmin, Deere & Co., Trimble Navigation Ltd., the U.S. GPS Industry Council and the Coalition to Save Our GPS urged a New York federal judge to toss the complaint in May, contending LightSquared’s allegations that they breached contract and withheld crucial spectrum-usage information are easily refuted by the text of the agreements.

The suit must be allowed to proceed, LightSquared countered, since the arguments for dismissal involve questions of fact that cannot be determined at this point in the case, the company said in a document filed in the U.S. District Court for the Southern District of New York.

“At every turn of their motion to dismiss, defendants ask this court to either reject the facts as pleaded or otherwise resolve disputed factual issues in their favor,” LightSquared said.

The complaint alleges that the defendants kept LightSquared from using the spectrum that the Federal Communications Commission approved it for, causing the company to suffer enormous losses on the endeavor.

In Monday’s filing, LightSquared said the motion to dismiss raises at least 11 factual disputes — including the “precise terms of defendants’ promises” — that cannot be settled at the pleading stage.

“When, as required, those facts are construed in LightSquared’s favor and as alleged in the complaint, there is simply no question … that LightSquared has more than adequately pleaded claims for contractual, quasi-contractual, and tort relief,” the company said.

LightSquared entered bankruptcy in May 2012, hours before time ran out to renegotiate terms of its $1.7 billion debt.

The Virginia-based startup launched the lawsuit in November 2013, saying it had previously worked with Garmin and the other companies in securing part of the wireless spectrum, making sure it would not interfere with their GPS devices.

LighSquared claimed they did not reveal that the use of the spectrum would cause their GPS devices to malfunction until after the company had invested billions of dollars into acquiring the spectrum, according to the complaint. This led the FCC to suspend LightSquared’s use of the spectrum and cost LightSquared owner Harbinger Capital Partners LLC billions in investments and contracts, the complaint says.

Garmin, Deere and the others argued in May's motion to dismiss that they were not contractually obligated to design their devices to be compatible with the spectrum for which the FCC approved for LightSquared. According to the motion, they never promised “in perpetuity” to design their GPS receivers to be “impervious to interference generated by future satellite or terrestrial systems,” which they say LightSquared implied heavily — without actually alleging — in its complaint.

“If the parties had intended to create perpetual commitments impacting the very lifeblood of the world’s leading GPS manufacturers, they would have done so expressly,” the motion said.

LightSquared originally brought the complaint as an adversary proceeding in its Chapter 11, but in January, U.S. District Judge Richard M. Berman granted the defendants’ request to withdraw the reference from the bankruptcy case.

Based in Reston, Virginia, LightSquared listed $4.5 billion in assets and $2.3 billion in liabilities in its petition, which it filed the face of a congressional probe and an investor suit after its plans to build a nationwide 4G network ran afoul of telecom regulators.

Last month, the company announced it had brought Dish Network Corp. Chairman Charlie Ergen on board to a new Chapter 11 exit plan that would see the creditor and longtime opponent fund the wireless venture’s way out of bankruptcy.

LightSquared is represented in the suit by Eugene F. Assaf, K. Winn Allen, Rebecca L. Taibleson and Devin A. DeBacker of Kirkland & Ellis LLP.

The defendants are represented by Philip Le B. Douglas and Paul Bartholomew Green of Jones Day, Michael D. Hays of Cooley LLP, Kenneth Ian Schacter of Bingham McCutchen LLP, Steven R. Schindler of Schindler Cohen & Hochman LLP, and William A. Isaacson of Boies Schiller & Flexner LLP.

The suit is LightSquared Inc. et al. v. Deere & Co. et al., case number 1:13-cv-08157, in the U.S. District Court for the Southern District of New York.

The bankruptcy is In re: LightSquared Inc., case number 1:12-bk-12080, in the U.S. Bankruptcy Court for the Southern District of New York.

REPRINTED WITH PERMISSION FROM THE AUGUST 4, 2014 EDITION OF LAW360 © 2014 PORTFOLIO MEDIA INC. ALL RIGHTS RESERVED. FURTHER DUPLICATION WITHOUT PERMISSION IS PROHIBITED. WWW.LAW360.COM