Hughes Loses Bid to Recover Fees in Whistle-Blower Case

Hughes Aircraft lost a legal effort in federal court Monday to recover more than $400,000 in attorneys’ fees from an employee who unsuccessfully sued the firm for fraud on the B-2 bomber program.

U.S. District Judge Mariana R. Pfaelzer denied a motion brought by the Los Angeles-based defense contractor in which it asked that company executive William Schumer be forced to pay a portion of Hughes legal costs because his whistle-blower suit was frivolous.

Schumer, who is an assistant division manager for contracts, sued Hughes in 1989 under the federal False Claims Act, alleging that the company shifted development costs for several jet fighter radars onto the B-2 bomber radar program.

Hughes won the case in May. It then filed its motion seeking the attorneys’ fees from Schumer, arguing that he should have dropped his case last December, when evidence surfaced that undermined his allegations.

Pfaelzer did not elaborate on her reasons for denying the Hughes motion.

“She gave us a fair hearing,” said John J. Higgins, Hughes general counsel. “It was a close question. We proved our point that we are prepared to bring such motions where we think allegations are vexatious and frivolous.”

Phillip Benson, the attorney representing Schumer, termed the ruling an “important victory for whistle-blowers” and said Schumer will appeal the earlier ruling in which Hughes won the case. “This case is far from over,” he said.