Lockheed Martin Corp. v. Boeing Co.

• Citation: 314 F.Supp.2d 1198
• Decision Date: 23 April 2004
• Docket Number: No. 6:03-cv-796-Orl-28KRS.,6:03-cv-796-Orl-28KRS.
• Parties: LOCKHEED MARTIN CORPORATION, Plaintiff, v. The BOEING COMPANY, William Erskine, Kenneth Branch, and Larry Satchell, Defendants.
• Court: U.S. District Court — Middle District of Florida

314 F.Supp.2d 1198

LOCKHEED MARTIN CORPORATION, Plaintiff, v. The BOEING COMPANY, William Erskine, Kenneth Branch, and Larry Satchell, Defendants.

No. 6:03-cv-796-Orl-28KRS.

United States District Court, M.D. Florida, Orlando Division.

April 23, 2004.

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Terry C. Young, Michael V. Elsberry, Kevin K. Ross, Lowndes, Drosdick, Doster, Kantor & Reed, P.A., Orlando, FL, for plaintiff.

David B. King, Mayanne Downs, Thomas A. Zehnder, King, & Associates, Winter Springs, FL, Darryl M. Bloodworth, Nichole M. Mooney, Dean, Mead, Egerton, Bloodworth, Capouano & Bozarth, Blackwell & Downs, P.A., Orlando, FL, Kristin Linsley Myles, Munger, Tolles & Olson, San Francisco, CA, Brad D. Brian, Dennis C. Brown, Marc A. Becker, Munger, Tolles & Olson LLP, Los Angeles, CA, Gerry S. Gibson, Traci H. Rollins, Steel, Hector & Davis, West Palm Beach, FL, Thomas J. Pilacek, Thomas J. Pilacek & Associates, Winter Springs, FL, Robert L. Corbin, Michael W. Fitzgerald, Corbin & Fitzgerald LLP, Los Angeles, CA, for defendant.

Thomas J. Pilacek, Thomas J. Pilacek & Associates, Winter Springs, FL, for cross-claimant.

David B. King, Mayanne Downs, King, Blackwell & Downs, P.A., Orlando, FL, Kristin Linsley Myles, Munger, Tolles & Olson, San Francisco, CA, Brad D. Brian, Dennis C. Brown, Marc A. Becker, Munger, Tolles & Olson LLP, Los Angeles, CA, for cross-defendant.

MEMORANDUM AND ORDER

ANTOON, District Judge.

Lockheed Martin has filed a twenty-three count Complaint against the Boeing Company and certain individuals related to their alleged theft of trade secrets pertaining to a bid competition to provide the U.S. Government space launch capability. Defendants the Boeing Company, William Erskine, Larry Satchell, and Kenneth Branch have all filed motions to dismiss several of the counts of Lockheed Martin's Complaint for failure to state a claim. Specifically, Defendants seek dismissal of all of the claims pursuant to the Racketeer Influenced and Corrupt Organizations Act and the Florida Civil Remedies For Criminal Activities Act stated in CountsI — IV ("the racketeering claims" and the "racketeering conspiracy claims") and of all of the claims brought under the Sherman Act and the Florida Antitrust Act of 1980 stated in CountsV — VIII (the "attempted monopolization claims" and the "conspiracy to monopolize claims"). William Erskine's motion also seeks a more definite statement from Lockheed.¹ This memorandum and order supplement the Court's order of March 31, 2004. (Doc. 189, filed March 31, 2004.)

I. BACKGROUND²

Lockheed Martin ("Lockheed") is a company heavily involved in the defense and aerospace industries, including satellite launch services. The Boeing Company ("Boeing") competes with Lockheed in the satellite launch services business. This competition extended to the multi-billion dollar Evolved Expendable Launch Vehicle ("EELV") Program, an Air Force program seeking assistance from the private sector to develop a cost-efficient national space launch capability. The Air Force contemplated that interested aerospace contractors would engage in a multi-phased competition covering the design, development, and prototyping of the EELV. Initially, the Air Force planned to select the contractor that submitted the proposal representing the "best value" to the Air Force in a "winner take all" competition. The winner was to be awarded $1 billion for the development cost of the EELV as well as contracts for future space launches.

The first phase of the competition was called the "Low Cost Concept Validation" ("LCCV") and it required competitors to develop cost and risk reduction concepts. On August 24, 1995, the Air Force awarded LCCV contracts to four contractors: Lockheed, Boeing, McDonnell Douglas, and Alliant Techsystems. The Air Force agreed to pay each competitor $30 million for its participation.

The Air Force then called upon the participating companies to submit proposals for the next phase of the competition, which was called "Pre-Engineering and Manufacturing Development" ("Pre-EMD"). The proposals were required to show at least a twenty-five percent savings over current launch costs. On December 20, 1995, after receiving the proposals, the Air Force eliminated two of the competitors, Alliant Techsystems and Boeing, and awarded Pre-EMD contracts to Lockheed and McDonnell Douglas. Approximately eight months later, Boeing re-entered the competition when it acquired McDonnell Douglas.

On November 3, 1997 the Air Force changed its acquisition policy by abandoning the "winner take all" approach. The Air Force announced that, instead, it would award each of the two remaining competitors — Lockheed and Boeing — $500 million Engineering, Manufacturing and Development contracts ("the EMD contracts"). The EMD contracts awarded to Lockheed and Boeing required that they each develop the engineering and manufacturing process for the "launch vehicle system, launch pads, satellite interfaces, and support infrastructure." The contracts required each of the competitors to demonstrate that its system was capable of launching commercial satellites as well as meeting the Air Force's launch mission requirements.

Also under the new Air Force strategy, the contractors were expected to submit firm, fixed-price bids for the initial thirty launch missions. Information generated by the bidders in the earlier phases of the bid remained relevant to the final award. Believing the winning contractor would enjoy "an enhanced position in the national and international commercial space launch vehicle market from [Department of Defense's] investment in the program," the Air Force also required each contractor to make a financial investment in the new technology.

At the end of the Pre-EMD phase, the Air Force requested that Lockheed and Boeing submit separate proposals for EMD contracts and Launch Services contracts. The Air Force advised the contractors that its allocation of the initial thirty launch missions would be based on which company's proposal would provide the best value to the Air Force. On October 16, 1998, much to Lockheed's disappointment, the Air Force awarded nineteen of the first twenty-eight initial Launch Services contracts to Boeing and only nine to Lockheed. Additionally, the first seven of the Launch Services contracts went to Boeing, while Lockheed's first launch contract was not to take place until the fourth fiscal year of the EELV program. In making this uneven allocation, the Air Force took into account Boeing's lower proposed price, Boeing's lower evaluated risk in several assessment categories, and the Air Force's determination that Boeing's proposal was technically equivalent to Lockheed's proposal. These were factors contributing to the Air Force's assessment as to which company offered the "best value." The Air Force is now considering expanding the EELV program from thirty to fifty launches within the next ten to twelve years. Lockheed believes the original disproportionate allocation places it at a distinct disadvantage in competing for future Launch Services contracts.

All three of the individual Defendants are former Boeing employees. Kenneth Branch ("Branch") began work with General Dynamics, Lockheed's predecessor, at Cape Canaveral, Florida in 1989, and stayed on when Lockheed took over. He worked on the Atlas I and Atlas II launches and continued to be assigned to Lockheed facilities at Cape Canaveral or Kennedy Space Center until he terminated his employment with the company on January 29, 1997.

In May 1995, Lockheed temporarily assigned Branch to Lockheed's Denver facility to assist with the company's LCCV proposal. Because of his experience with the Atlas II, which was the starting point for the EELV design concept, Branch was again asked to assist with the EELV proposal team at the Denver facility from October 1995 to August 1996. During his second assignment to the Denver facility, Branch was a member of the Operations Group and focused on cost data and on reduction of launch vehicle processing time at the launch site. While performing this work for Lockheed, Branch had access to sensitive Lockheed proprietary documents.

In August 1996, about the time Lockheed was completing its Pre-EMD proposal, Branch returned to Florida to find that his position with Lockheed had been eliminated. He maintained a position with the company as a consultant to the EELV team in Denver, however, while he sought another position. On November 3, 1996, Branch accepted a position with Lockheed's Reusable Launch Vehicle program in Florida. On January 14, 1997, Branch gave Lockheed two weeks' notice of his intention to leave and resigned effective January 29, 1997. Surprisingly, he began employment with Boeing on January 28, 1997, the day before his employment with Lockheed ended. Branch continued to work for Boeing until August 2, 1999, when he was terminated for violating Boeing policy by possessing and distributing Lockheed EELV-related proprietary documents during the EELV competition — the conduct that ultimately gave rise to this suit.

Lockheed alleges that as early as August 1996, when it was finalizing its Pre-EMD proposal, Branch traveled to Boeing's facilities in Huntington Beach, California to be interviewed by Boeing employees Tom Alexiou ("Alexiou") and William Erskine ("Erskine") regarding possible employment with Boeing. Mr. Alexiou was Boeing's EELV Infrastructure Team Lead and Erskine was Boeing's EELV Ground Operations Lead. At this meeting, Branch allegedly showed Erskine Lockheed documents including a presentation entitled "EELV Launch Operations Cycle Time Reduction," a document that contained trade secrets and was marked as Lockheed property. This document described Lockheed's strategy for reduction of costs and reduction of the time period a launch vehicle must remain on a pad in preparation for a flight. During the meeting, Mr. Alexiou questioned Branch...