Manufacturers Win Satellite Failure Case

A Superior Court judge in Santa Ana handed a major victory to McDonnell Douglas Corp. and two other companies by rejecting a novel complaint about a satellite that failed in space.

Orange County Superior Court Judge Tully H. Seymour on Monday ruled against four insurance companies that had paid about $5.5 million after the faulty launch of a satellite from the space shuttle Challenger in 1984.

The decision, however, does not affect a similar complaint by other insurers against McDonnell Douglas and the other two defendants, Hitco and Morton Thiokol Inc. All three manufactured a device designed to deploy satellites from the 10th space shuttle flight.

The cases, which were consolidated before Judge Seymour, are believed to be among the first regarding the malfunction of satellites in space.

When the satellites failed, McDonnell Douglas and Hitco had Orange County offices. Morton Thiokol was working on the project locally. McDonnell Douglas, though based in St. Louis, Mo., still has a Huntington Beach plant.

The lawsuits stem from launches of two $90-million satellites built for Western Union Telegraph Co. and Indonesia. Judge Seymour’s decision affects only the Western Union satellite, which was attached to portable rockets and carried into orbit aboard the Challenger.

According to court documents, the satellite malfunctioned because of the failure of the payload assist module, a device designed to send the satellites into a higher orbit. The device was produced by McDonnell Douglas with component parts supplied by Hitco and Morton Thiokol.

The communications satellite was eventually recovered from space. Western Union’s four insurers filed the negligence action after they paid under policies that covered losses from a failed deployment.

In their defense, the three manufactures contended that a contract provision imposed by the National Aeronautics and Space Administration barred the lawsuit.

Since the beginning of the shuttle program, NASA has required all shuttle users to agree not to sue each other. Western Union and the Indonesian government had signed the agreement.

In a short order released Monday, Seymour upheld the NASA contract clauses. He rejected the insurers’ arguments that the provisions were overly harsh and against public policy. “Neither argument was supported by the plaintiff, even though the court allowed substantial continuances” in the year-old case, the judge wrote.

Lawyers for the four insurers declined comment Monday, saying they had not yet read the decision. The insurance companies are Appalachian, Commonwealth, Mutual Marine and Northbrook.

McDonnell Douglas attorney Jeff Fister said only that the manufacturer is “pleased that the court upheld the original contract.”

Terry W. Bakus, attorney for Los-Angeles based Hitco, said: “The court rightfully found the contract was clear, unambiguous and rightfully enforceable. Once you’ve waived the right to sue, you’ve waived it.”