Flextronics International Ltd. announced that it is appalled that a jury in Orange County, California, today returned a verdict against Flextronics, in favor of Beckman Coulter, that totals $934 million, including $931 million in punitive damages, in a case that began as a $2.2 million contract dispute relating to a manufacturing relationship between the companies. “We believe that the verdict is clearly unsupported by either the law or the facts and that the award of punitive damages is excessive and unwarranted, since the jury found only $3.0 million of actual contract and tort damages to Beckman,” said Michael Marks, Chief Executive Officer of Flextronics.
Flextronics believes that this verdict should be overturned because it violates California law and Flextronics’ right to due process under state and federal constitutions. U.S. Supreme Court rulings as applied in California establish that punitive damages generally must be limited to four times the amount of actual compensatory damages caused by tortious conduct. In this case, the jury found only $800,000 of actual tort damages, meaning punitive damages, if any, should be limited to no more than $3.2 million instead of the $931 million awarded.
“We intend to mount a vigorous challenge of this run-away jury verdict, and are fully confident that this award will be almost entirely eliminated in subsequent legal proceedings,” said Marks. The judge presiding over the case has not yet entered a judgment on the jury’s verdict, and Flextronics expects to file appropriate post trial motions to correct the jury’s decision and will appeal if necessary.
This award was particularly surprising in light of the testimony by Beckman witnesses that Flextronics did nothing intentionally wrong in the business relationship, which amounted to less than $20 million of revenue over 3 years. During the trial, the court made a number of errors of law that Flextronics believes will require a reversal of this award on appeal, preventing Flextronics from presenting key evidence that would have negated Beckman’s tort claims (which gave rise to all of the punitive damages), and erroneously instructing the jury regarding the law.
“That this irrational verdict could be rendered, even if subsequently corrected, exemplifies the need for reform of a legal system in which juries are allowed to impose absurd punitive damages,” noted Marks.
Flextronics will discuss this matter further at a previously scheduled Analyst and Investor Day on September 25, 2003, in New York City. Management presentations will begin at 12:00 Noon EDT. A live Web cast of the presentations will be available at www.flextronics.com. A replay of the Web cast will remain available on the Company’s website for 90 days after the presentation day. Minimum requirements to listen to the broadcast are Microsoft Windows Media Player software ( free download at http://www.microsoft.com/windows/windowsmedia/download/default.asp ) and at least a 28.8 Kbps bandwidth connection to the Internet. In addition, Flextronics plans to make materials related to this case available on its website.
This news release contains forward-looking statements within the meaning of federal securities laws and are subject to the safe harbor under those laws. These forward-looking statements include those related to Flextronics’ appeal of the verdict and the ultimate resolution of the case. These forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from those anticipated by these forward-looking statements. These risks include the risk that the trial judge will rule unfavorably upon Flextronics’ prejudgment motions or that appeals of the ultimate judgment could be determined unfavorably to Flextronics. The forward-looking statements in this news release are based on current expectations, and Flextronics assumes no obligation to update these forward-looking statements.