A Birmingham federal judge on May 11 upheld a jury verdict against Boeing Co. that awarded $2.1 million in damages to a legacy Alabama aircraft company that 14 years ago was crushed by the industry giant in a fight for a $1.3 billion contract.
Alabama Aircraft Industries sued Boeing for breach of contract and misuse of proprietary information to outbid AAI for the prize contract for maintenance of the Air Force’s fleet of refueling tankers.
U.S. District Judge David Proctor denied an appeal by Boeing Co. that asked for a reversal of the March 2 jury verdict in favor of AAI, a verdict that came after years of court battles dating to AAI’s bankruptcy in 2011.
Based at the airport in Birmingham, AAI, formerly Pemco, had a history dating to World War II. For decades it held the maintenance contract for the refueling tankers, called Stratotankers, built by Boeing.
In 2006, Boeing entered the maintenance arena and set its sights on the Stratotanker contract. At first, Boeing offered to partner with AAI on its bid for renewal, and the two companies entered into a memorandum of agreement and a nondisclosure agreement.
In the lawsuit, plaintiff AAI said Boeing terminated the partnership contract illegally, then used proprietary AAI information that helped Boeing to go it alone and win the maintenance contract for itself.
Boeing argued that evidence was insufficient to support the March 2 jury verdict, but Judge Proctor found that there was convincing evidence of Boeing’s “misuse of Pemco proprietary information to gain a competitive advantage over Pemco in framing Boeing’s solo bid pricing.” He noted an expert accounting witness who “testified that Boeing used Pemco’s proprietary pricing information to model Pemco as a prime contractor competing with Boeing.”
Stratotankers are beginning to be replaced by the new Boeing KC-46, but Boeing is two years behind on delivery of those aircraft. Nine years ago, Boeing wrestled the $44 billion new tanker contract away from EADS, the military arm of Airbus, which was prepared to make the air tankers in Mobile, Alabama.