Hughes Communications Galaxy, Inc. v. United States

271 F.3d 1060 (Fed. Cir. 2001)

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Nature of the Case

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Facts

NASA (D) and P entered into a Launch Services Agreement (LSA). D was to use its 'best efforts' to launch ten of Hughes' satellites on space shuttles or until September 30, 1994, whichever was earlier. D assigned P specific slots on a manifest. In January 1986, the space shuttle Challenger exploded. D suspended operations until September 1988. A new manifest projected that D would launch eight Hughes satellites on shuttles by September 1994. President Reagan then announced that D would no longer launch commercial satellites. A new manifested not list any P satellites. D eventually informed P that no launches would take place. After 1986, P launched three on expendable launch vehicles (ELVs), one of which was the JCSAT-1. P also launched several similar satellites on ELVs, including six HS-601 satellites (not on the original manifest with D). P incurred more costs by launching satellites on ELVs rather than on shuttles. P sued D for breach of contract and for taking its property without providing just compensation. The Court of Federal Claims granted summary judgment to D based on the sovereign act defense. The appeals court reversed. On remand, the Court of Federal Claims granted summary judgment for P for breach of contract. It then ruled that D could not produce evidence to reduce its damages by the amount P had passed on to its customers in increased prices. P sought to prove damages by showing the increased costs. By the first theory, it calculated the cost to launch the original HS-393's. But it only had launched 3 by ELV it also presented those actual costs as well. It also presented D's actual costs of launching ten satellites on ELVs with the costs that P would have incurred by launching ten satellites on shuttles under the LSA. The ten satellites included the three HS-393s, the six HS-601s, and one HS-376. The Court used the ten HS-393 Satellites Method to calculate P's costs of 'cover.' The court found that even using its best efforts, D would have only launched five HS-393s under the LSA. The Court awarded damages for those only. The court also averaged the costs of launching on shuttles the three HS-393s that were actually launched on ELVs and used that average for the fourth and fifth satellites, rather than individually calculating the cost of launching each satellite on a shuttle, as D's expert had done. On the 4th and 5th launch, the court escalated the costs using the midpoint between March 1989 and September 1994, rather than the midpoint between March 1989 and December 1995, as D's expert had done. The court refused to award P prejudgment interest on its damages. It refused to award D reflight insurance costs and increased launch insurance costs for the five satellites. The damages came to $102,680,625. Everybody appealed.