Motorola's $1 billion award in Uzan case upheld

Motorola may seek $1 billion in punitive damages from the former owners of a Turkish wireless carrier, a federal court ruled, rejecting claims they can't afford to pay the amount.

The U.S. Court of Appeals in New York on Wednesday upheld the award, imposed last year by a Manhattan federal judge. The decision stems from a 2002 fraud suit by the Schaumburg-based Motorola and Nokia Oyj against the Uzan family of Turkey.

The challenge for Motorola will be to collect the award, which now totals $3.1 billion in compensatory and punitive damages. The Uzans claimed it far exceeded their assets, but the trial judge said the Uzans had $5 billion.

The family "failed to demonstrate that the award exceeds their ability to pay," the three-judge panel said in its ruling. Uzan family lawyer Stan Mortenson declined to comment.

Motorola provided financing for Telsim Mobil Telekomunikasyon Hizmetleri AS, then owned by the Uzans, to buy equipment, phones and services to enable it to double capacity to 5 million subscribers. Telsim was later acquired by Vodafone Group Plc., the world's biggest mobile-phone service provider.

A series of contracts among Motorola, Nokia and Telsim culminated in a $1.5 billion loan from Motorola in February 2000. After Telsim failed to make a $728 million payment on the loan 15 months later, Motorola and Nokia, of Espoo, Finland, sued.

Motorola and Nokia won their suit accusing members of the Uzan family of borrowing $2.7 billion in bad faith. An appeals court upheld a ruling by U.S. District Judge Jed Rakoff requiring the Uzans to pay compensatory damages of $2.1 billion. The appeals court also told Rakoff to reconsider a $2.1 billion punitive award.

Rakoff in February 2006 cut the punitive damage award in half, ordering the Uzans to pay $1 billion in punitive damages to Motorola. Separately, Nokia settled its claims.

"We are pleased with the court's decision and remain committed to pursuing our now fully affirmed judgments," Motorola spokeswoman Jennifer Erickson said.