The National Law Journal
Vol. 19, No. 24 (February 10, 1997)
PLAINTIFFS' ATTORNEYS: Don Howarth and Brian D. Bubb, of Los Angeles' Howarth & Smith
CASE: Forti v. General Dynamics Corp., KC 016 871 (Super Ct., Los Angeles)
DEFENSE ATTORNEYS: Linda L. Listrom and Gregory S. Gallopoulos. of Chicago's Jenner & Block; Michael W. Mugg, of San Bernardino, Calif.'s Mac Lachlan, Burford& Arias
JURY VERDICT: $107.4 million, reduced to $37.45 million
In 1990, William B. Forti was working in business development and Delores Blanton was working as an administrator at General Dynamics Corp., when their employer asked them to leave their positions to help develop a new subsidiary called E-Metrics," said plaintiffs' attorney Don Howarth. E-Metrics would attempt to develop commercial products based on General Dynamics' patents in neural network technology.
"As founders, Mr. Forti and Ms. Blanton were to receive an equity share in the subsidiary, Mr. Howarth said. Five other General Dynamics employees were offered the same deal," he added.
In 1992, General Dynamics sold E-Metrics, along with other divisions of its Air Research Defense Systems, to Hughes Aircraft Corp. for about $500 million, Mr. Howarth said. The E-Metrics employees received nothing from the sale, so Mr. Forti and Ms. Blanton sued General Dynamics, charging breach of oral contract, breach of fiduciary duty and fraud. The other employees did not sue, Mr. Howarth said.
Company executives denied at trial that any promises of ownership had been given. General Dynamics also denied that E-Metrics was worth anything. "E-Metrics was never able to find customers or outside investors for its technology," the company said in a public statement.
But on July 26, 1996, a Los Angeles jury awarded each plaintiff $3.7 million in compensatory damages and $50 million in punitive, for a total of $107.4 million.
In October, Superior Court Judge Chris R. Conway sliced the punitive from $100 million to $30 million, then added $50,000 to the judgment for costs. The case is on appeal.