Swedish Civil Aviation v. Project Managemt. Enter., CIV.A. DKC 2001-1507.

Citation190 F.Supp.2d 785
Decision Date14 March 2002
Docket NumberNo. CIV.A. DKC 2001-1507.,CIV.A. DKC 2001-1507.
PartiesSWEDISH CIVIL AVIATION ADMIN. v. PROJECT MANAGEMENT ENTERPRISES, INC.
CourtU.S. District Court — District of Maryland

William Paul Atkins, Pillsbury Winthrop LLP, McLean, VA, Christopher R. Wall, Roxane A. Polidora, Pillsbury Winthrop LLP, Washington, DC, for Plaintiff.

Michael D. Hays, Jonathan B. Hill, Dow Lohnes and Albertson, Washington, DC, for Defendant.

MEMORANDUM OPINION

CHASANOW, District Judge.

Presently pending and ready for resolution in this breach of contract and fraud case is the motion of the Defendant, Project Management Enterprises, Inc. ("PMEI"), to dismiss all counts against it pursuant to Fed R. Civ. P 12(b)(6) for failure to state a claim, and in part for failure to plead fraud with specificity under Fed.R.Civ.P. 9(b). The issues have been fully briefed and no hearing is deemed necessary. Local Rule 105.6. For reasons that follow, PMEI's motion to dismiss will be granted in part and denied in part.

I. Background

The following facts are alleged by Swedish Civil Aviation Administration ("SCAA") in its complaint. SCAA is the state enterprise in charge of the safety and oversight of civil aviation in Sweden. Pursuant to urging by the International Civil Aviation Organization ("ICAO"), a regulatory body which develops international aviation safety standards, SCAA began to develop a concept utilizing new technology whereby aircraft transmit their positions from a receiver on board the aircraft over a radio data link with or without the support of ground stations. This new technology named VDL Mode 4 by ICAO, is radically different from the ground-based radar air traffic control systems currently in operation. If properly implemented, SCAA alleges that VDL Mode 4 technology would replace the current navigation and surveillance infrastructure, thereby improving traffic flows and safety while reducing costs.

From 1990-1994, SCAA verified, refined and tested the prototype VDL Mode 4 technology, sponsoring several demonstrations for the international aviation community. After responding positively to these demonstrations, several international aviation entities requested in 1994 that SCAA create international standards for the technology through ICAO so that the technology could be implemented throughout the world.

ICAO, formed under the auspices of the United Nations, consists of 185 member states, including the United States. One of the primary activities of ICAO is to implement international standards and recommended practices and procedures for the technical fields of aviation. ICAO develops these standards through expert panels and working groups comprised of the member states. When a working group determines that a draft standard it has developed is sufficiently comprehensive after debate and revisions, it refers the draft standard to an ICAO Validation Subgroup ("VSG") which further reviews and validates the standard, ultimately submitting it to the ICAO Secretariat. The Secretariat circulates the draft standard to the member states for comments and subsequently to the ICAO Council for a vote to approve it. Upon approval, the standard is incorporated into the appropriate Annex to the CONVENTION ON INTERNATIONAL CIVIL AVIATION. Each ICAO member state is free to implement the standard in its own territory or provide notice to ICAO of the differences between its standard and that of ICAO.

In late 1994, after deciding to attempt to standardize its version of the VDL Mode 4 technology through the ICAO process, SCAA determined that it would need to retain an English-speaking confidential consultant to help draft submissions to the ICAO working group and assist SCAA with the ICAO process. SCAA interviewed a number of technical consulting firms to determine which best possessed the requisite technical expertise in air traffic control technology and familiarity with the ICAO standardization process.

One of the firms SCAA interviewed was PMEI, a Bethesda, Maryland consulting firm whose president is Prasad Nair. SCAA had become familiar with him during ICAO meetings in the early 1990's. At that time, Nair was a member of the United States Federal Aviation Administration ("FAA") delegation to ICAO. In late 1994 and early 1995, Johnny Nilsson of SCAA interviewed Nair several times. Nair, who articulated the merits of and expressed his support for the new VDL Mode 4 system he had witnessed in Sweden, emphasized PMEI's expertise in aviation communications systems and its familiarity with the ICAO process.

Nair represented to SCAA that PMEI could provide valuable and unique confidential consulting and technical support services with respect to drafting the standard for VDL Mode 4 technology and advancing SCAA's position in the ICAO standardization process. Relying on PMEI's representations, SCAA accepted PMEI's proposal to provide confidential consulting and technical support in a January 23, 1995, letter from Kenneth Eideberg of SCAA to Nair. The parties agreed that the information provided and the work performed would be kept confidential.

On January 28, 1995, Nilsson and Dr. Hakan Lans, the inventor of the VDL Mode 4 technology, both representing SCAA, met with Nair at PMEI's offices in Bethesda to conduct a "project launch meeting." At this meeting, the parties agreed to the scope and content of materials to be drafted and submitted to ICAO, including an agreement that PMEI would prepare the initial draft standards and recommended practices and guidance materials for SCAA's review. The parties agreed that they would review and refine those materials through discussion, with PMEI acting in confidence and in a manner that would further SCAA's interests.

In a February 15, 1995, letter from Nair to Eideberg, PMEI presented SCAA with a description and schedule of its immediate tasks and requested an advance payment to cover costs for its initial work and expenses. PMEI informed SCAA it would bill on a monthly basis and that payment would be due within 30 days of receipt of PMEI's invoices. SCAA began paying PMEI on this schedule.

SCAA and PMEI met several times to review and discuss developmental aspects of the VDL Mode 4 technology. During the course of these conversations, SCAA provided confidential information and a relationship of trust and mutual respect developed between SCAA and PMEI. Using this confidential information, PMEI prepared draft standards and recommended practices and attended ICAO working groups and meetings. After a May 1995 ICAO meeting in which the ICAO panel established the process for drafting international standards for the VDL Mode 4 technology, PMEI submitted a proposed budget to SCAA laying out anticipated fees and expenses arising from its continued consulting services. PMEI performed as a confidential consultant through 1995, 1996, and 1997 in order to support SCAA's efforts to gain standardization of its technology, gaining access to these working groups by virtue of its status as an SCAA representative. During this time, SCAA routinely shared confidential information with PMEI and PMEI presented papers and working materials to SCAA for review prior to presentation before the ICAO working groups.

In April 1997, the ICAO working group determined that the draft standards for the VDL Mode 4 technology sponsored by SCAA were sufficiently mature to be verified and validated by an ICAO VSG.

The complaint then alleges that, beginning in late 1997 and 1998, PMEI failed to provide SCAA with copies of the draft standards and working materials in a timely manner prior to their submission to the ICAO VSG, thereby prohibiting SCAA's ability to review and approve documents in advance. At the same time, PMEI began to undermine SCAA's position in the ICAO process by inserting its own unapproved changes and analyses into the draft standards and working materials submitted to the VSG. Further, PMEI publicly advocated positions at ICAO sessions that it knew to be contrary to the positions advocated by SCAA and, SCAA alleges on information and belief, made disparaging comments and remarks to other ICAO members about the fundamental technology underpinning the SCAA sponsored VDL Mode 4 technology.

SCAA alleges that PMEI began using confidential information it gained from its consultant relationship with SCAA to begin preparation for manufacturing and selling equipment using VDL Mode 4 technology and, from 1997 to the present, has provided pricing information for such equipment to airlines and aviation manufacturers. Further, PMEI created an affiliated company, Aviation Data System Innovations, LLC ("ADSI"), to produce and market the VDL Mode 4 related equipment and computer software. This equipment and software was developed using the confidential information provided by SCAA to PMEI. Nair, PMEI's president, is also the president of ADSI, which operates out of PMEI's Bethesda office.

Through 1998, PMEI continued to undermine SCAA's position in the ICAO standardization process by altering the SCAA sponsored technical concept through the advocacy of what SCAA characterizes as unnecessary changes to the developing standard. For example, during a May 24-28, 1998, VSG meeting, PMEI advocated for the incorporation of a "rapid net entry" conceptual element into the draft ICAO standard for VDL Mode 4 technology despite SCAA's objection to the inclusion of the concept. Rapid net entry significantly altered and diminished SCAA's original concept for the technology.

In a December, 1998, VSG meeting, PMEI specifically and deliberately opposed an SCAA proposal concerning a particular ground synchronization method and, when pressed by SCAA to explain its position, stated that it was not at liberty to explain its position or actions. SCAA was forced to expend time and resources to respond to PMEI's allegations disparaging its version of the VDL Mode 4 technology, in addition to the $2,066,544.21...

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