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Ex-Air Force contractor asks 11th Circuit for second chance at trade secrets claim against Boeing

The decade-long legal battle between Boeing and a former U.S. Air Force contractor continued Friday, with both parties asking for a new trial in a case arising out of a failed joint bid for a billion dollar government contract.

ATLANTA (CN) — An attorney for Alabama Aircraft Industries asked an 11th Circuit panel Friday to overturn a district court’s ruling dismissing the company’s claim against Boeing for misappropriation of trade secrets.

An attorney for Boeing agreed that the case should go back before a federal judge, but only with regard to the sanctions it claims were unfairly levied against it.

The legal battle between the two companies spans over a decade.

Boeing and AAI, formerly Pemco Aircraft Engineering Services Inc., teamed up in June 2005 to bid $1.4 billion on a contract to perform maintenance on KC-135 aerial refueling aircraft for the U.S. Air Force. The two companies worked together, with AAI acting as Boeing’s primary subcontractor.

The deal fell apart the following year after the Air Force drastically reduced the number of aircraft it would send for annual maintenance. The companies submitted separate bids instead, with Boeing winning the final contract.

AAI sued Boeing in 2011 after filing bankruptcy, alleging that the company breached a contract and used its knowledge of AAI’s pricing and bidding methodology to undercut AAI’s bid.

But AAI’s claim against Boeing for misappropriation of proprietary information was struck down by an Alabama federal judge in 2013. U.S. District Judge R. David Proctor found that the claim fell outside the two-year statute of limitation under Alabama law.

A jury returned a verdict in favor of AAI last year and awarded the company $2.5 million.

An attorney for AAI told a three-judge panel of the 11th Circuit Friday that Missouri law, not Alabama law, applies in the case because the alleged misappropriation occurred in Boeing’s headquarters in St. Louis. The Missouri law has a five-year statute of limitation.

U.S. Circuit Judge Robert Luck, a Trump appointee, questioned whether AAI’s interpretation of the law was correct.

“The theft would’ve happened in Missouri, but wouldn’t the injury have happened at [AAI’s] headquarters in Alabama?” Luck asked. “If someone takes money from my bank account in Missouri… aren’t I injured in my home [in Alabama]?”

Arguing on behalf of AAI, attorney Laurie Webb Daniel of Holland & Knight said that the claim arises from the place where the act occurred.

In a brief filed in the case, attorneys for Boeing argued that Alabama law governs the trade secrets claim because the choice of law provision in the agreement between the parties applies only to contractual claims and does not extend to AAI’s tort claim.

“They’re trying to re-write the contract,” Boeing attorney Craig Primis of Kirkland & Ellis said.

Boeing has also claimed that the district court “irreparably tainted” the trial by issuing an instruction to the jury allowing it to infer that Boeing intended to deprive AAI of emails which belonged to a Boeing financial executive.

Although Boeing argued that the emails were deleted accidentally before there was any talk of litigation, Proctor granted AAI’s motion for sanctions.

Primis took issue with Proctor’s instruction to the jury on spoliation, telling the panel that the judge failed in his role as a “gatekeeper."

Proctor improperly told the jury it could infer that the lost data was unfavorable to Boeing if it found that it was anticipating the litigation, Primis said.

“The district court explicitly stated that he was left to speculate as to why the data was destroyed. Speculation as to why data has gone missing is by definition unavailable for an adverse inference jury instruction,” Primis said. “Before those words can come out of the district court’s mouth in an instruction, the court has to make its own findings that a party acted with bad faith and with an intent to deprive.”

Primis asked the panel to grant Boeing a new trial in the case.

Luck was joined on the panel by U.S. Circuit Judge Jill Pryor, an Obama appointee, and U.S. Circuit Judge Andrew Brasher, a Trump appointee.

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