Boeing Company v. Spirit Aerosystems, Inc.
N14C-12-055 EMD CCLD
| Del. Super. Ct. | Dec 5, 2017Background
- In 2005 Boeing sold certain manufacturing facilities and employees to Spirit under an Asset Purchase Agreement (APA) that allocated assets/liabilities and included (a) a fee‑shifting clause for enforcement of the APA (§11.15) and (b) an indemnity for Excluded Liabilities (including certain Boeing CBA liabilities) (§9.1).
- Former Boeing employees (Hired Employees) challenged Boeing’s treatment of early retirement benefits under Boeing’s collective bargaining agreements (CBAs), producing two underlying proceedings: a UAW arbitration and the Harkness class action in Kansas.
- Boeing sued Spirit in December 2014; Spirit counterclaimed seeking a declaration that Boeing must indemnify Spirit for costs associated with those proceedings. The court granted Spirit summary judgment in June 2017, holding liabilities related to Boeing’s CBAs are Excluded Liabilities and that Spirit is the prevailing party entitled to fees under §11.15 and to indemnity under §9.1.
- Spirit moved for attorneys’ fees, costs, and pre‑/post‑judgment interest, seeking roughly $11.05 million in past fees and interest; Boeing opposed, challenging support, reasonableness, and entitlement to interest.
- The court reviewed Spirit’s supporting affidavit and exhibits, applied Delaware Rule of Professional Conduct 1.5 factors, and evaluated whether interest was contractually available.
Issues
| Issue | Plaintiff's Argument (Boeing) | Defendant's Argument (Spirit) | Held |
|---|---|---|---|
| Entitlement to attorneys’ fees under APA §11.15 | §11.15 should not support Spirit’s full fee request / award | §11.15 entitles prevailing party (Spirit) to recover reasonable attorneys’ fees for enforcement actions | Held for Spirit: §11.15 authorizes recovery of reasonable fees for the present litigation |
| Entitlement to indemnity for fees related to underlying CBA disputes (§9.1 Excluded Liabilities) | Boeing did not dispute relation to APA enforcement but contested scope/amount | Fees tied to Harkness and responses to indemnity demands are indemnifiable as Excluded Liabilities | Held for Spirit: fees tied to CBA‑related proceedings fall within §9.1 indemnity |
| Adequacy of support and reasonableness of the fee amount (~$9.6M for the litigation, $1.44M for Harkness) | Billing records are summary/vague; hours excessive (e.g., Cravath billed much more than Boeing’s counsel) | Supporting Thomas affidavit and exhibits suffice; hours reasonable given complexity and Spirit’s informational disadvantage | Held for Spirit: documentation and Thomas affidavit sufficiently support the request; fees are reasonable under Rule 1.5 factors |
| Pre‑judgment and post‑judgment interest on attorneys’ fees award | Interest should not apply to fee awards absent contract/statute | Interest should be awarded as fees are measure of damages and to compensate delay | Held for Boeing on interest: interest denied because the APA does not provide for interest on fee awards and interest is not generally awarded on attorney fees absent specific authorization |
Key Cases Cited
- Danenberg v. Fitracks, Inc., 58 A.3d 991 (Del. Ch. 2012) (trial court need not perform line‑by‑line billing review to determine reasonableness of fees)
- Mahani v. Edix Media Group, LLC, 935 A.2d 242 (Del. 2007) (contractual fee shifting requires court determination of reasonable fees using Rule 1.5 factors)
- Citadel Holding Corp. v. Roven, 603 A.2d 818 (Del. 1992) (prejudgment interest awarded as a matter of right in certain advancement contexts)
- Case v. City of Wilmington, 260 A.2d 703 (Del. 1969) (general rule that attorney fees are not subject to interest absent statutory or contractual authorization)