Mesa says court abused discretion
Hawaiian Airlines seeks $4.9 million in legal fees
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Mesa Air Group, claiming a federal Bankruptcy Court judge abused his discretion by not allowing the company to present critical evidence in its defense against Hawaiian Airlines, filed a motion yesterday seeking a new trial.
The Phoenix-based airline, parent company of interisland carrier go!, said newly discovered evidence -- including material discovered after an eight-day evidentiary hearing and trial -- proves it did not destroy evidence and contradicts key elements of Hawaiian's claim.
Mesa is seeking to alter or amend an $80 million-plus judgment that it was ordered to pay Hawaiian.
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Mesa Air Group, claiming it was prejudicially precluded by a federal Bankruptcy Court judge from presenting critical evidence in its defense, filed a motion yesterday seeking a new trial in which it hopes to alter or amend an $80 million-plus judgment that it was ordered to pay Hawaiian Airlines.
The Phoenix-based airline, parent company of interisland carrier go!, said newly discovered evidence -- including material discovered after the Sept. 28-Oct. 4 trial -- proves it did not destroy evidence and contradicts key elements of Hawaiian's claim. A hearing on Mesa's motion for a new trial will be held no earlier than Dec. 10.
"It was an abuse of discretion, manifest error and a gross miscarriage of justice for this court to deny Mesa's counsel's request to keep the record open for a brief period to allow presentation of such critical evidence," Mesa said in its motion for a new trial.
Mesa had attempted just prior to closing arguments of a three-day evidentiary hearing on Sept. 27 to have Bankruptcy Judge Robert Faris defer his decision on whether since-fired Mesa Chief Financial Officer Peter Murnane deliberately destroyed evidence. Faris declined to allow the new discovery of two hard drives from Murnane to be placed into evidence because he said Murnane's concealment was "Mesa's problem, not the court's problem, not the plaintiff's problem."
Mesa also filed a notice of appeal yesterday to the U.S. Bankruptcy Appellate Panel for the Ninth Circuit.
Separately yesterday, Hawaiian attorney Sidney Levinson said in a declaration that Hawaiian intends to file a motion no later than Tuesday seeking $4.93 million in legal fees and costs.
In what figures to be a busy day of legal maneuvering, a hearing also is scheduled Tuesday on a motion that Mesa filed Wednesday to postpone making its damages payment to Hawaiian because of Mesa's motion for new trial. Faris ruled that Mesa can postpone the due date of its damages payment until at least the end of Tuesday's hearing.
Hawaiian said in an opposition motion yesterday that if Mesa wants "a stay of execution," Hawaiian is entitled to the protection of a supersedas bond in an amount no less than $86.25 million during the period when a motion for a new trial is being considered.
Hawaiian said the $86.25 million reflects the judgment of $80 million, an additional $5.25 million to cover reasonable attorney fees and costs that Hawaiian has incurred through Oct. 31 and will continue to incur resisting Mesa's motion for a new trial, and another $1 million to account for post-judgment interest that began to accrue on Oct. 30 at a rate of 3.97 percent and will continue to accrue while the motion for a new trial is pending.
Hawaiian said that even though Mesa claims it has enough cash and marketable securities on hand -- about $200 million -- to more than satisfy the judgment, Hawaiian said Mesa's liquidity has been decreasing over the past year and there are no assurances Mesa can or will pay the judgment because it needs its cash to operate and maintain its business.
Faris' Oct. 30 award to Hawaiian of $80 million in damages, plus interest and attorney fees, came after his findings that Mesa had used confidential information obtained as a potential investor during Hawaiian's bankruptcy to gain a competitive advantage in entering the Hawaii market. Faris also ruled that Murnane deliberately destroyed evidence that Mesa had a duty to preserve.
Mesa said that new evidence shows that "massive Murnane data files" that the court assumed were destroyed with Murnane's wiping of the drives from his laptop and his drive on Mesa's server were, prior to the wiping, transferred to backup Murnane drives that Mesa did not learn about until early September of this year.
Furthermore, Mesa said that there is now an additional drive recovered last month that also backs up material transferred from Murnane's drives that the court found were wiped.
"The evidence of the wholesale transfer and retention of these voluminous document files proves they were not destroyed, as was assumed, but simply transferred," Mesa said. "It also disproves the assumption that there was a spoliation of evidence that could have supported (Hawaiian's) claim that Mesa misused (Hawaiian) confidential information in entering the Hawaiian interisland market."