Motorola, Iridium case to proceed, judge says

Motorola Inc. must face a lawsuit by shareholders who claim the company made misleading statements about the viability of its Iridium LLC satellite phone venture.

U.S. District Judge Nanette Laughrey in Jefferson City, Mo., dismissed claims by bondholders against Motorola, the only remaining defendant in the nine-year-old litigation, while allowing shareholder allegations to proceed to trial.

Backed by a Motorola-led group, Iridium LLC set up a network of 66 low-orbit satellites in 1998 to provide mobile-phone services anywhere in the world. The company collapsed after it wasn't able to sign enough customers, and it filed for bankruptcy the following year.

"Much of the case centers on the strength of Iridium, and plaintiffs have properly alleged that insiders knew even before commercial launch that the company was shaky," Laughrey said in an order Thursday. "The court therefore denies Motorola's request to grant summary judgment against class members who purchased shares prior to Dec. 23, 1998."

Jennifer Erickson, a spokeswoman for Schaumburg-based Motorola, declined to make an immediate comment on the ruling.

A group of investors bought the satellite network and other assets from the bankrupt Iridium LLC in 2000 and formed Iridium Satellite LLC, a closely held company that plans to spend more than $2 billion over the next several years developing and launching a new network of satellites.

Motorola rose 16 cents to $9.77 in New York Stock Exchange composite trading. The shares have tumbled 39 percent this year.