Amicus Curiae Brief — Boeing Co. v. United States Ex Rel. Roby

MOTION FILED 7

MAY 27 2003 H)

No. 02-1411

IN THE

Supreme Court of the Gnited States

THE BOEING COMPANY,

Petitioner,

ve

UNITED STATES OF AMERICA EX REL. BRETT ROBY,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Sixth Circuit

MOTION OF THE CHAMBER OF COMMERCE OF

THE UNITED STATES OF AMERICA FOR LEAVE TO

FILE BRIEF AS AMICUS CURIAE AND BRIEF AS

AMICUS CURIAE IN SUPPORT OF PETITIONER

ROBIN S. CONRAD JAMES J. GALLAGHER*

NATIONAL CHAMBER HERBERT L. FENSTER

LITIGATION CENTER, INC. BARBARA J. BACON

1615 H Street, N.W. MCKENNA LONG &

Washington, D.C. 20062 ALDRIDGE LLP

(202) 463-5337 444 S. Flower Street, Suite 800

Los Angeles, CA 90071

(213) 688-1000

Counsel for Amicus Curiae

Chamber of Commerce of the United States of America

May 27, 2003 *Counsel of Record

MOTION FOR LEAVE TO FILE BRIEF AS

AMICUS CURIAE

Pursuant to Rule 37.2 of the Rules of this Court, the

Chamber of Commerce of the United States of America (“the

Chamber”) requests leave to file the accompanying amicus

curiae brief in support of the petition for a writ of certiorari.

Respondent United States and Petitioner, The Boeing

Company, consented to the filing of this brief. Respondent

Roby did not.

As set forth in the accompanying brief, the Chamber

represents more than 3 million businesses and business

organizations of every size, industrial sector, and geographic

region. The Chamber often participates as amicus curiae in

cases that raise issues of vital concern to the Nation’s

business community. This is such a case.

This case concerns the proper measure of damages

under the False Claims Act. Because the Sixth Circuit’s

decision would permit the Government to recover

consequential damages under the False Claims Act, the

Chamber is concerned that businesses that do business with

the Government may be exposed to damages well in excess

of what Congress intended when it enacted the 1986

Amendments to the False Claims Act. In addition, the

Chamber is concerned that, to the extent that the Sixth

Circuit’s decision allows the Government to recover

consequential damages under the guise of direct damages, it

unwittingly invalidates consequential damages exclusions in

hundreds of commercial contracts. Because of its unique

position in the business community, the Chamber is able to

show the Court that this case is critical not only to Boeing but

also to countless other contractors and businesses.

Moreover, when the Chamber declined to file a bnef

on behalf of Boeing below, Roby’s counsel argued to the

Sixth Circuit that Boeing could not get the Chamber “‘to

support [Boeing’s] stilted legal views . . .” Relator Brett

Roby’s Opposition to the Motion by Aerospace Industries

Association of America, Inc. for Leave to File Bnef as

Amicus Curiae in Support of Boeing’s Petition for Rehearing

En Banc at 10 n. 14, United States ex rel. Roby v. Boeing,

302 F.3d 637 (6 Cir. 2002). Thus, a second reason for

seeking leave to file this brief is to show that, contrary to

Roby's contentions, the Chamber fully supports Boeing’s

position.

The Chamber’s motion for leave to file the

accompanying amicus curiae brief should be granted.

Respectfully submitted,

Robin S. Conrad James J. Gallagher*

NATIONAL CHAMBER Herbert L.Fenster

LITIGATION CENTER, INC. _ Barbara J. Bacon

1615 H Street, N.W. MCKENNA LONG &

Washington, D.C. 20062 ALDRIDGE LLP

(202) 463-5337 444 S. Flower Street, Suite 800

Los Angeles, CA 90071

(213) 688-1000

*Counsel of Record for Amicus

Curiae Chamber of Commerce

of the United States of America

1

TABLE OF CONTENTS

Page

EM OS cs ccnssnvesenvysunnessecnesnssoonensver i

ANNE Oe BET TIRORRT TIS «occu nn.onencvncvsnsnoseoseccneonsnsenssovet ii

INTEREST STATEMENT OF AMICUS CURIAE.........:++++ 1

REASONS FOR GRANTING THE WRIT .......:::s:sesseesse= 2

1. THIS COURT SHOULD RESOLVE THE

IMPORTANT FEDERAL QUESTION OF

WHAT CONSTITUTES DAMAGES

ALLOWABLE UNDER THE FCA ....-.::se:seeeeeeeoe 2

I. THIS COURT SHOULD GRANT REVIEW

TO PRESERVE THE PROPER

DISTINCTION BETWEEN DIRECT AND

CONSEQUENTIAL DAMAGES ........ssssssssssssesseeeee 8

CONCLUSION ..........0ccsccccesssccsccseccserssnsesecsssccssesnscesssenneenes 14

i

TABLE OF AUTHORITIES

Page(s)

CASES

Cook County, Ill. v. United States ex rel. Chandler,

SF ie Sat a ET ctncsatncncinsacaniaisnacsiaeeiinitivasees 3, 4, 8, 11

Gulf Oil Corp. v. Copp Paving Co.,

ae. Rica satinintiansnnlnndinlcncibitecmeats 9

Hudson v. United States,

Fe a ee i tenscinecinscnieinssinadaeaniaiaant unin 8

Russello v. United States,

is a ieiceinsccnsssetindaniiniaaststienabhiiedlintnnsuanais 9

Russo v. Hilltop Lincoln-Mercury, Inc.,

479 S.W.2d 211, 10 UCC 768 (Mo. App. 1972) .......... 10

United States v. Aerodex, Inc.,

SGD F 20 1003 08 Cie. UTD issssessinerircinervnrnivns 3, 5, 6,8

United States v. Bornstein,

i iiciniacicciniccnininiiniioniin passim

United States v. Halper,

a te eg a 7,8

United States v. Hibbs,

Fe ee EE Ee BEE Fi cieseniinnicsins ni tthiastsiiniatcientienel 4

United States v. Woodbury,

Dee ek Fe EA Bi tictineticniienstetiatennindtincsinnenninn 4

United States ex rel. Compton v. Midwest Specialties,

BAZ F Fel BIG COE. Ve i cenrcsctnvncscinesnnsionninnisenneaniianasenis 4

il

Page(s)

STATUTES AND RULES

31 United States Code

§§ 3729-3733 (1986)......cecccereseseeseresseeeseseneneenenesens passim

§ 3729(a) ....ececeresesesssessesesessscseseenensnsssneecanarenenesenenenenensnsess 3

Supreme Court Rules

Brahe STG avin cccvincsecosciessecensisssessecnésioceensenneansensenpsvorernvnians 1

OTHER AUTHORITIES

1 J. White & R. Summers, Uniform Commercial

Code, § 10.4, 567 n.10 (4th ed. 1995)........eerereeees 9,10

25 C.J.S. Damages § 2 (1966) ..........:ccseseeseesseseresseeseenenenseeees 9

Black’s Law Dictionary (7" ed. 1999) .......s:ssessesesseeeeeneeees 1,9

Restatement (Second) of Torts (1976)

§ SA9(1)(D) ...eesesesesessceeseeeseneeeenssenessecnsnensssensneneneneess 11,12

S. Rep. No. 345, 99th Cong., 2d Sess. 19 (1986),

reprinted in 1986 U.S.C.C.A.N. 5284....cssseceseeteeerstees 6

INTEREST STATEMENT OF AMICUS CURIAE

The Chamber of Commerce of the United States of

America (“the Chamber”) is the world’s largest business

federation.! It represents an underlying membership of more

than 3 million businesses and business organizations of every

size, industrial sector, and geographic region. The Chamber

regularly advocates its members’ views in this Court and

other appellate forums. It initiates and enters litigation

involving issues of national concern to the American

business community.

Many of the Chamber’s members provide goods and

services to the United States under government contracts. In

performing those contracts, Chamber members often prov. de

replacement components, conduct overhaul work, or

remanufacture or upgrade existing defense systems. In

addition, virtually all of the Chamber’s members enter into

commercial contracts, some of which contain consequential

damages provisions that allocate the risks to which the

contracting parties are subject.

Black’s Law Dictionary (7" ed. 1999) defines

“consequential damages” as “[ijosses that do not flow

directly and immediately from an injurious act, but that result

indirectly from the act.” The Sixth Circuit’s willingness to

permit the recovery of the full replacement cost of an aircraft

lost as the result of a defective component allows the

Government to recover what are “consequential damages,”

despite the fact that the False Claims Act, 31 U.S.C. §§ 3729-

! Pursuant to Supreme Court Rule 37.6, the Chamber hereby affirms that

no counsel for any party authored any part of this brief, and that no person

or entity other than the Chamber and its legal affiliate, the National

Chamber Litigation Center, Inc., provided financial support for its

preparation or submission.

2

3733 (1986) (“FCA”), excludes consequential damages and

provides instead for trebling of direct damages in lieu of

consequential damages. This overreaching threatens to

expand the nsk of exposure for Chamber members under the

FCA beyond limitations prescribed by Congress. Moreover,

by obliterating the proper distinction between direct and

consequential damages, the Sixth Circuit puts consequential

damages provisions in the Chamber members’ commercial

contracts in jeopardy. Consequently, the Chamber has a

strong interest in the proper resolution of this case.

The Chamber believes this Court should grant

certiorari to resolve both questions presented in Boeing’s

petition, however, the Chamber addresses only the second

question regarding the amounts permissible as damages

under the FCA. The Chamber submits this brief to show the

importance of that issue not just to the parties involved, but

to the countless businesses that are affected by this case.

REASONS FOR GRANTING THE WRIT

I. THIS COURT SHOULD RESOLVE THE

IMPORTANT FEDERAL QUESTION OF

WHAT CONSTITUTES DAMAGES

ALLOWABLE UNDER THE FCA

Having erroneously concluded that the federally-

mandated High Value Items Clause does not preclude the

Government from recovering damages for loss of

Government property under the FCA, the Sixth Circuit then

considered the appropriate method to compute the

Government’s damages in this case. Its holding — that the

Government may recover, as damages for the submission of a

purportedly false claim in connection with remanufacturing

work on a Government-owned aircraft, the full value of the

lost aircraft, trebled — is inconsistent with: (1) the statute

3

itself; (2) Cook County, Ill. v. United States ex rel. Chandler,

123 S. Ct. 1239 (2003); (3) United States v. Bornstein, 423

U.S. 303 (1976); and (4) United States v. Aerodex, Inc., 469

F.2d 1003 (5™ Cir. 1972).

The Sixth Circuit was improperly influenced by the

assumed criticality of the defective part involved in this case.

This is not, however, a case that is, or can be, controlled by

common law notions of either contractual or tort “damages.”

Rather, this case is entirely a creature of federal statute.

The impact of the Sixth Circuit’s holding on defense,

aerospace and aviation contractors and subcontractors doing

business with the Government is enormous: contractors who

supply relatively small components or perform repairs now

face potential liability for treble the entire value of multi-

million and multi-billion dollar, complex defense systems.

This holding, the Chamber respectfully submits, is contrary

to express Congressional intent to exclude consequential

damages from the FCA, and is out of line with Supreme

Court and other precedent concerning FCA damages. In

addition, the lower court’s inclusion as direct damages of

what are properly classified as consequential damages

exposes parties to commercial contracts to unanticipated and

unintended risks of financial disaster.

The FCA was not intended by Congress to be a

mechanism for the Government to recover common-law like

property damages caused by a defective component. The

damages that are available under the FCA are those defined

by the conduct prohibited by the statute — the submission of a

false claim. 31 U.S.C. § 3729(a) (anyone who knowingly

presents a false claim to the Government is liable for civil

statutory penalties “plus 3 times the amount of damages

which the Government sustains because of the act of that

person”) (emphasis added). The critical word is “act” and the

“act” is the submission of the false claim. Consequential

damages are not available. Chandler, 123 S. Ct. at 1247 n.9

(“The treble damages provision was, in a way, adopted by

Congress as a substitute for consequential damages”). Thus,

where the statute focuses on the false claim itself, the phrase

“because of’ cannot be construed as opening the door to

consequential damages.

In an FCA action for substandard goods, “the proper

method for determining direct damages is the difference

between the market value of the [goods] received and

retained and the market value that the [goods] would have

had if they had been of the specified quality.” Bornstein, 423

U.S. at 317 n.13. It is clear from the context of Bornstein

that the “goods” are only the components which are the

express subject matter of the false claims and not an entire

system in which the “goods” may be installed. In contrast to

the Sixth Circuit’s decision below, courts applying this

“diminution in value” measurement of damages generally

look to the contract price to establish the value of the goods

as promised. See, e.g., United States ex rel. Compton v.

Midwest Specialties, 142 F.3d 296, 304-05 (6th Cir. 1998)

(affirming award of damages based on the contract price,

which equaled the value of the goods contracted for less the

value of the goods as delivered); United States v. Hibbs, 568

F.2d 347, 351 (3d Cir. 1977) (when a defective article is

purchased in a fraudulent transaction, the measure of

damages is the difference in cost as contracted for and as

received); United States v. Woodbury, 359 F.2d 370, 379 (9th

Cir. 1966) (“Ordinarily, the measure of the Government’s

damages would be the amount that it paid out by reason of

the false statements over and above what it would have paid

if the claims had been truthful”).

As shown in Aerodex, a case neither distinguished nor

discussed by the Sixth Circuit below, the FCA does not

include as damages costs incurred as the result of the delivery

of a defective product that are above and beyond the price of

the defective product itself. 469 F.2d at 1011. In Aerodex, ©

the Government filed an FCA action against Aerodex for

making false claims for payment in connection with a

$27,000 contract for manufacture of certain aircraft engine

bearings. Aerodex delivered, and the Government accepted,

bearings that did not comply with the contract specifications.

When the Government later discovered that the bearings were

noncompliant, it removed and replaced them at a cost of

$161,000. Jd. at 1006. The court held that, although

Aerodex was liable under the FCA for the $27,000 paid by

the Government for proper bearings it did not receive, the

Government could not recover the $161,000 spent in

removing and replacing the improper bearings because that

damage was consequential in nature and not recoverable

under the FCA:

[T]he language of the False Claims Act does

not include consequential damages resulting

from delivery of defective goods. The statute

assumes double damages attributable to the

“act” which in this case is the submission of

the false vouchers. The submission of these

vouchers was not the cause of the

Government’s consequential damages. The

delivery and the installation of the bearings in

the airplanes, not the filing of the false claim,

caused the consequential damages.

In a case of this kind, damages under the False

Claims Act must be measured by the amount

6

wrongfully paid to satisfy the false claim

(citations omitted).2

Id. at 1011. In other words, the Government cannot go

outside the parameters of the contract and recover more than

the contract price.

When Congress amended the FCA in 1986, it

explicitly declined to overrule the holding in Aerodex and

allow recovery of consequential damages. In fact, when

Congress rejected the recovery of consequential damages

under the FCA, it understood, citing to Aerodex, that

replacement costs of a defective item would not be

recoverable. See S. Rep. No. 345, 99th Cong., 2d Sess. 19

(1986), reprinted in 1986 U.S.C.C.A.N. 5284. The Sixth

Circuit was obliged to respect Congress’s choice in this

regard and therefore should have followed Aerodex’s

holding, limiting baseline FCA damages to the “amount

wrongfully paid on the false claim.” 469 F.2d at 1011.

Thus, in an FCA case involving a defective

component, damages should be measured by the cost of the

defective component, as opposed to the value of the item in

which it was installed, so as to limit damages to the amount

wrongly paid as a result of the false claim. Indeed, in

Bornstein, this Court measured damages based on the value

of the falsely marked tubes, not the value of the radio kits, of

which they formed a part. Bornstein, 423 U.S. at 316 n.13.

The Sixth Circuit here attempts to distinguish Bornstein on

2 The Aerodex court noted that these consequential damages were

recoverable as single damages under the claim for breach of warranty

alleged in that action. See 469 F.2d at 1011-12. Due to the partial

settlement reached by the parties in this case, no issue pertaining to

breach of warranty damages is before this Court.

7

the grounds that “the invoices for radio kits that contained

falsely marked electron tubes ‘included claims for payment

for the falsely marked tubes.”” United States ex rel. Roby v.

Boeing, 302 F.3d 637, 646-47 (6" Cir. 2002). This

distinction leads to the anomalous result that FCA damages

for a false invoice containing separate line items for each

component used in equipment would be less than the

damages for an invoice that contained only one line item for

the delivered equipment, even though actual damages are the

same. In other words, if Boeing had included in its invoice

for the remanufactured helicopter a separately stated claim

for the $4,874 that Boeing paid for the gear, the damage to

the Government would have been the same as it was in this

case where “Boeing billed the Government for

remanufactured helicopters as units, not as assemblages of

assorted parts.” Jd. at 646. Yet, the Sixth Circuit rejected the

argument that damages should be limited to the portion of the

contract price attributed to the defective gear on the ground

that Bornstein involved bills for assemblages of assorted

parts, not units, even though the cost of the defective gear in

this case was readily available. Cf United States ex rel. Roby

v. Boeing, 79 F. Supp. 2d 877, 880 n.6 (S.D. Ohio 1999)

(“Relator asserts that Boeing paid Speco $4,874 for the cost

of the defective gear . . .”), aff'd 302 F.3d 637 (6" Cir. 2002).

The FCA, however, provides damages only for that

portion of a claim that is false. In the instant case, the

amount wrongfully paid to satisfy the false claim is that

portion of the contract price attributable to the defective gear.

Cf. United States v. Halper, 490 U.S. 435 (1989) (accepting

district court’s measure of damages as difference between the

iraproper billing rate of $12 per claim and the proper billing

rate of $3 per claim).3 The rule that damages in an FCA case

involving a defective component should be measured by the

cost of the defective component, as opposed to the

replacement cost of the item in which it was installed, limits

damages to the arnount wrongly paid as a result of the false

claim. Had the Sixth Circuit followed the rationale of these

precedents, it would have held that damages are to be

measured by separating the portion of Boeing’s claim that

was false (i.e., the cost attributable to the defective gear)

from the entire claim (i.e., the invoice delivered with the

helicopter itself). Thus, not only is the Sixth Circuit’s

_ decision in direct conflict with the Fifth Circuit’s holding in

Aerodex, it is out of step with this Court’s Bornstein and

Halper decisions.

This Court should grant Boeing’s petition to resolve

this conflict, to provide the lower courts with further

guidance on how to measure damages under the FCA, and to

clarify that baseline damages are not to exceed the amount of

the alleged false claim.

II. THIS COURT SHOULD GRANT

REVIEW TO PRESERVE THE PROPER

DISTINCTION BETWEEN DIRECT AND

CONSEQUENTIAL DAMAGES

Congress contemplated. including consequential

damages language in the FCA when it amended the statute in

1986, but deliberately deleted this proposed language from

the final enactment. Consequential damages therefore are not

available under the FCA. See Chandler, 123 S. Ct. at 1247

3 Hudson v. United States, 522 U.S. 93 (1997), disavowed Halper‘s

Double-Jeopardy Clause analysis, but did not disagree with Halper‘s

calculation of damages.

n.9. See also, Gulf Oil Corp. v. Copp Paving Co., 419 U.S.

186, 200 (1974) (when a provision is deleted before

enactment, such action “strongly militates against a judgment

that Congress intended a result that it expressly declined to

enact”); Russello v. United States, 464 U.S. 16, 23-24 (1983)

(same). Thus, Congress rejected the very damages that the

Sixth Circuit would allow in this case.

If not overturned, the Sixth Circuit’s ruling could

significantly change the allocation of msks negotiated

between parties to any contract that excludes consequential

damages. As such, the Sixth Circuit’s treatment of damages

presents an inappropriate risk to the Chamber’s members,

and others, under commercial contracts as well as under the

FCA.

Generally, consequential damages are defined as

damages that “do[] not flow directly and immediately from

the act of the party, but only from the consequences or results

of such act.” 25 C.J.S. Damages §2 (1966). See also

Black’s Law Dictionary (7" ed. 1999) (‘consequential

damages” are “[l]osses that do not flow directly and

immediately from an injurious act, but that result indirectly

from the act”).

As stated in Boeing’s petition, the Sixth Circuit

defined damages to include what are commonly recognized

as consequential damages under the Uniform Commercial

Code and the common law. Pet. at 29 (citing, as an example,

1 J. White & R. Summers, Uniform Commercial Code,

§ 10.4, 567 n.10 (4th ed. 1995).

Indeed, White and Summers would classify the

replacement cost of the helicopter in this case as

consequential damages:

10

In Russo v. Hilltop Lincoln-Mercury, Inc.,

[479 S.W.2d 211, 10 UCC 768 (Mo. App.

1972)}, defective wiring caused a fire which

destroyed the buyer’s new automobile. The

court awarded the buyer the full purchase

price of the automobile without identifying

that portion of the price which represented

recovery for consequential damages. Only the

difference between the automobile’s

warranted and actual value at the time of

acceptance could be recovered as general

damages under 2-714(2). The defective

wiring system reduced the actual value of the

automobile at the time of acceptance below

the purchase price, but the defect did not

render the auto worthless as of the acceptance

date. A large part of the fire damage was

therefore consequential. Had the parties

excluded consequentials by contract, the court

would have had to identify the value

differential component of the buyer’s total

loss.

Id. at 567. White and Summers teaches that to properly

exclude consequential damages, the value of a defective item

is to be measured at the time of acceptance. Because the

defective gear did not render the helicopter worthless at the

time it was delivered, the Sixth Circuit erred in holding that

its value was zero.4

4 In this case, the Sixth Circuit effectively measured the value of the

helicopter at the time of the accident. Cf Roby, 302 F.3d at 647. The

fact that the helicopter had some, likely substantial, value at the time that

it was delivered is, however, evident in the fact that the Government did

(Footnote continued on next page)

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A ie Oa ly Sipe.

11

The fact that the Government is not entitled to recover

damages collateral to the underlying defect that causes a

claim to be false is further supported by this Court’s most

recent FCA decision. In Chandler, this Court stated that the

FCA does not expressly provide for the consequential

damages that ordinarily are awarded for fraud. 123 S. Ct. at

1247. Rather, trebling was provided as the statutory quid pro

quo as a substitute for consequential damages. Jd.

In stating that consequential damages are typically

awarded in non-FCA fraud cases, this Court cited section

549(1)(b) and Comment d of the Restatement (Second) of

Torts (1976). 123 S. Ct. at 1247. Section 549(1)(b) declares

that the measure of damages for common law fraud includes

“pecuniary loss suffered otherwise as a consequence of the

recipient’s reliance upon’ the misrepresentation.”

Restatement (Second) of Torts at § 549(1)(b). Comment d to

clause (1)(b) explains that:

[a]lthough the most usual form of financial

loss caused by participation in a financial

transaction induced by a fraudulent

misrepresentation is the lessened value of the

subject matter due to its falsity, the loss may

result from a purchaser’s use of the article for

a purpose for which it would be appropmiate if

the representation were true but for which it is

in fact harmfully inappropriate. So, too, it

may be the expense to which he has gone in

preparation for a use of the article for which it

(Footnote continued from previous page)

not seek treble the replacement cost of any of the other remanufactured

helicopters that also contained the defective Speco gears.

12

would have been appropriate if the

representation had been true.

Id. at 112. The comment then states that “[t]hese ‘indirect’ or

‘consequential’ damages resulting from the misrepresentation

are recoverable if the misrepresentation is the legal cause of

them...” Jd.

Because the Restatement (Second) of Torts makes

clear that losses caused by the use of a product fraudulently

represented to be of a certain quality are considered

consequential damages, it is clear that this Court understood

that the FCA precludes recovery for the loss of a product

suffered as a result of the Government’s use of the product

where, as alleged here, the contractor falsely certified that the

product conformed to the contract. In this case, the loss of

the helicopter resulted from the mishap caused by operating

the helicopter with the defective gear, not from the filing of

the false claim. Thus, the Sixth Circuit erred in holding that

the Government could potentially recover the replacement

cost of the helicopter. This is especially true given that the

contract at issue here called for Boeing to refurbish a

government-owned helicopter rather than to purchase and

provide a refurbished helicopter.

In sum, the Sixth Circuit’s damages methodology

would dramatically change the nature of the FCA, converting

it to a mechanism to recover consequential property damages

- trebled - rather than one to recover monies paid to a

contractor because of submission of a false claim. Indeed,

permitting the Government to recover direct and

consequential damages trebled would result in a huge over

recovery. This is not what Congress or this Court intended.

Moreover, the Sixth Circuit’s willingness to permit the

recovery of all damages necessary to make the Government

whole for the destruction of the helicopter, despite the fact

13

that consequential damages are not compensable under the

FCA, threatens to blur the line between direct and

consequential damages. This, in turn, threatens to expand the

category of damages available in numerous contracts

excluding consequential damages beyond existing, well-

established _ limitations. For parties who previously

negotiated a lower price in return for assuming the risk of

consequential damages, this could result in a windfall. For

parties who believed the risk of consequential damages

presented an unacceptable risk and, therefore, negotiated to

exclude consequential damages, this could result in financial

ruin.» Boeing’s petition should be granted to permit this

Court to correct the confusion regarding the definition of

consequential damages engendered in the Sixth Circuit’s

decision.

5 Included in the Chamber members’ contracts are contracts for

commercial aircraft and satellites. The replacement cost of a single

aircraft or satellite could be enormous. Thus, when a business installs a

relatively small and/or inexpensive component on a high value item, it

will often negotiate to limit its risk for such losses.

14

CONCLUSION

For all of the foregoing reasons and for the reasons set

forth in Boeing’s Petition for Wnt of Certiorari, the Chamber

respectfully requests this Court to grant Boeing’s petition.

Respectfully submitted,

Robin S. Conrad James J. Gallagher*

NATIONAL CHAMBER Herbert L.Fenster

LITIGATION CENTER, INC. Barbara J. Bacon

1615 H Street, N.W. MCKENNA LONG &

Washington, D.C. 20062 ALDRIDGE LLP

(202) 463-5337 444 S. Flower Street, Suite 800

Los Angeles, CA 90071

(213) 688-1000

*Counsel of Record for Amicus

Curiae Chamber of Commerce

of the United States of America