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Lockheed Is Ordered to Pay $64.5 Million to Former Partner


Lockheed Martin Corp. was ordered Thursday to pay $64.5 million to a small, 25-employee Anaheim computer products maker after a federal jury found that a unit of the nation's largest defense contractor had improperly pulled the plug on a joint venture.

After a six-week trial in Los Angeles, a jury found Lockheed Martin and its units, Sanders and Federal Systems, had breached a contract and committed fraud against Cable & Computer Technology. The jury awarded CCT $11.3 million in compensatory damages and $53.2 million in punitive damages.

CCT had entered into an agreement in 1996 with Lockheed Martin's former Sanders unit in Nashua, N.H., to bid on a $60-million contract to upgrade cockpit computers for the Air Force's B-1B bombers.

But CCT lawyers alleged that the unit, now owned by BAE Systems North America, canceled the venture just 12 days before the bid was due, then joined with another Lockheed unit to secure the contract.

"We were able to discover the fact that Sanders being teamed with CCT was an issue within Lockheed," said Jeff Davidson, CCT's lawyer and partner with the law firm of Kirkland & Ellis. "They didn't like the fact that it was supporting a competitor."

Subsequently, CCT lawyers alleged that Sanders shared confidential bid information it had from CCT with Lockheed's Federal Systems unit of Oswego, N.Y.

A spokesman for the company said it was disappointed with the verdict and that it will probably seek to overturn the verdict on appeal.

"We believe we presented a clear case that Sanders' actions and decisions, which gave rise to this dispute, were based on sound business considerations," said Randy Morger, spokesman for BAE's Information and Electronic Systems, the Sanders unit acquired from Lockheed last fall.

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