When the Indianapolis federal court jury reported that they'd reached a verdict after only three hours of deliberation, Kenneth Broughton of Haynes and Boone was a bit worried. He'd represented the defunct airline ATA in a five-day breach of contract trial against Federal Express, and figured three hours was hardly enough time for the jury to look at ATA's damages calculations.
Broughton needn't have been concerned. On Tuesday afternoon, the jury found for ATA--and awarded the airline all it asked for: $65.9 million in lost profits. Jurors also rejected a small counterclaim by FedEx. "It was all good," Broughton told us.
Broughton said that after the trial, jurors told Judge Richard Young and lawyers for both sides that the most persuasive witness was the former CEO of Omni Airlines, another member of the FedEx team, who supported ATA's account of events. Another key witness, Broughton told us, was the co-founder of a private equity firm that held a major stake in ATA. He testified that once ATA lost its military transport business, he couldn't justify the investment.
Personally I am glad to see ATA win this suit, but I am sure that FedEx will appeal the verdict.
Nice Trip Report!!! Great Pics, thanks for posting!!!! B747Forever
KC135TopBoom From United States of America, joined Jan 2005, 12138 posts, RR: 51
Reply 2, posted (3 years 10 months 1 week 5 days 14 hours ago) and read 11582 times:
Quoting readytotaxi (Reply 1): What happens to the money if FedEx lose appeal, Does ATA have a long line of creditors waiting in the wings?
Yes,TZ does have a lot of creditors still wanting to be paid. So, my guess is the BK court will make those distrubutions, when and if they are ever received. Did FedEx ever try to get some of TZ's B-757-200s? What happened to them?
wjcandee From United States of America, joined Jun 2000, 5155 posts, RR: 22
Reply 4, posted (3 years 10 months 1 week 4 days 22 hours ago) and read 6526 times:
The writing was on the wall when the Court denied FedEx's motion for summary judgment in June. I was amazed at the testimony presented by ATA's counsel through affidavits and deposition transcripts. They made a compelling case at that point that they had been screwed. Unless there was a purely-legal basis under which FedEx could escape liability, which probably would have manifested itself at that point in the proceedings, it was pretty apparent to this outside observer that they stood a good chance of being thoroughly hosed by a jury. As this article reflects, and confirmed in my personal experience, juries look for an apparently-disinterested person whose testimony they can credit, and ATA apparently had that in the testimony of the Omni folks. Ain't it grand when people tell the truth?
The case was pretty straightforward: FedEx and ATA had some writings in which they agreed that ATA and Omni would get 50 percent each of the team pax biz from FY07-FY09, and ATA made investments and took actions in reliance on this. There are also some writings acknowledging this interpretation by FedEx, i.e. that they were bound to keep ATA in the team at 50 percent through at least 09. Northwest told FedEx that it wanted to fly some pax missions as well, and FedEx acceded to that with ATA's approval to cut into its 50 percent by up to 10 missions per month, incentivized by having to pay a substantially-lower commission on the remaining missions. However, in early 2008, FedEx decided to give almost all the FY09 business to Omni, a small percentage to Northwest, and eliminate ATA.
FedEx's defense was that the thick, formal contract it signed with ATA regarding all the details of the 2008 flying had an "integration clause" that said that this agreement superceded all previous agreements on the subject matter. FedEx tried to say that this contract, which didn't say anything about the split going forward, therefore replaced, obviated, eliminated the earlier writings about the split for FY09. In its opinion on summary judgment, the Court found that the "subject matter" of that agreement was a question for the jury: it could mean that the 2008 agreement superceded the agreement regarding the split, or, instead, it could simply mean the the agreement covered the 2008 flying, and the agreement as to the split on the FY2009 flying was still in force. In short, if the jury wanted to find for ATA, it could simply find that the "integration clause" didn't do away with the agreement as to the split.
In other words, it could ignore FedEx's technical legal argument, which is what it did.
Juries don't like folks who appear to screw people just because they think they can. If you can show a jury that you really have been wronged, they usually want to help make it right. That they came back in three hours and adopted ATA's overall damage number without sweating the details of the calculation suggests that they wanted to do exactly that.
I still don't know why FedEx did what they did. They had to know they were putting the nail in the coffin of a founding member of their AMC "team", and tossing a lot of folks onto the street. It appeared from the earlier papers that they did so just because they for some reason wanted to -- and thought they could do so with impunity. I guess they didn't persuade the jury any differently. Hubris?