Judge Dismisses Northrop MX Fraud Charges

Citing a lack of jurisdiction, a federal judge in Los Angeles has dismissed claims that Northrop Corp. had fraudulently supplied a key portion of the guidance system for the Air Force’s MX missile.

U.S. District Judge David V. Kenyon ruled that the court had no jurisdiction over the issues raised by former Northrop employees because the federal government knew of the allegations before the suit was filed and declined to take any action. Under Kenyon’s ruling, made last week but not released until Tuesday, the claims may not be refiled.

Kenyon did not rule on whether the allegations against the Century City-based aerospace contractor were true. The employees’ suit, filed in October, 1986, alleged that Northrop “knowingly manufactured defective parts” for the MX and regularly sold the government used defective parts.

Despite Kenyon’s action, Northrop still faces legal problems in connection with its handling of the billion-dollar MX missile program.

At least two other MX-related suits are under seal, and their charges are being investigated by federal grand juries. The Justice Department also has sued Northrop for $3 million on grounds that the defense contractor charged the Pentagon for tests of a MX part that were never performed.

Still, Northrop officials were pleased with Kenyon’s ruling and a petition from the Justice Department recommending dismissal of the fraud claims on the grounds that it had been aware of the allegations involving the defective guidance system parts.

Northrop officials cited a section of the government’s petition saying that “the only portion” of the suit with “any merit” was already being handled by Justice Department lawyers. That section became the basis of the government’s $3-million suit against the company.

A spokesman for Herbert Hafif, the Claremont attorney who handled the suit, said the dismissal would be “small relief to Northrop.” He cited the two pending suits against Northrop, both of which involve its manufacture of the MX’s sophisticated guidance system, as well as other government investigations of the company’s aerospace contracting activities.

“At best this was a ‘housekeeping’ ruling,” the law firm’s statement said. “This ruling does nothing to affect the allegations against Northrop in any of the cases involving the MX, cruise missile or stealth bomber.”

Brian Hyatt, the former Northrop engineer who initiated the suit, said the only reason the government was able to claim that it knew of the allegations before he filed his suit was because he had told them of his concerns before being dismissed by the company. “It’s still a cover-up for Northrop,” Hyatt charged.

Hyatt’s original suit charged that Northrop had improperly handled parts for the MX’s inertial measuring unit, a basketball-sized device that is the brain of the sophisticated missile’s guidance system.

Hyatt filed suit under the False Claims Act, a law which allows whistle-blowers to share any damages awarded by a court with the government.