WASHINGTON — Amazon is looking for to dismiss a shareholder lawsuit filed in August that alleged that the corporate’s board of directors acted in bad faith when it awarded Project Kuiper launch contracts to Arianespace, Blue Origin and United Launch Alliance.
In a filing with Delaware’s Court of Chancery Dec. 11, Amazon said a suit filed in August by a Cleveland-based pension fund that may be a company shareholder failed to supply the “extreme set of facts” required by law to indicate Amazon’s board improperly approved the launch contracts while overlooking SpaceX.
The lawsuit claimed that the board performed little diligence on the proposed contracts to launch the three,236-satellite constellation with the Ariane 6, Recent Glenn and Vulcan Centaur rockets. The combined contracts were, it stated, the second largest capital expenditure in Amazon’s history on the time, trailing only its $13.7 billion acquisition of grocer Whole Foods.
The lawsuit stated that the board and its audit committee spent “barely an hour” reviewing those contracts, including those that might go to Blue Origin and ULA. Blue Origin is owned by Amazon founder and former chief executive Jeff Bezos, while ULA has a contract with Blue Origin to make use of BE-4 engines on its Vulcan rocket. The suit estimated that just about 45% of the worth of the contracts goes to Blue Origin either directly or through the BE-4 engine contract with ULA.
“Here, the pleaded facts show the alternative — that the administrators undertook a diligent and informed review of the agreements,” Amazon stated. That included meeting for hours to debate Project Kuiper typically and the proposed launch contracts specifically and “having a full board discussion” before approving those contracts.
“The grievance likewise fails to plead particularized facts showing that Bezos was improperly involved within the negotiation of the contracts or sidelined SpaceX, let alone that the administrators deliberately ignored signs of a conflicted procurement process,” the filing added.
One example the filing provided was a claim within the lawsuit that the board spent 40 minutes reviewing the contracts at a special meeting. “It suggests no reason why that period of time could be insufficient, given the data the board was provided and the dimensions of the contracts in relation to Amazon’s overall business, which generates lots of of billions of dollars in annual revenue,” it stated.
Amazon’s filing says that the lawsuit shows that, at worst, the board could have done more: “asked more questions, reviewed more information, attended longer meetings.” Nevertheless, the corporate said that falls in need of the claims made within the suit that they acted in bad faith. “A nasty-faith claim is reserved for disciplining directors who deliberately do essentially nothing.”
The general public version of the filing offers few recent details on the method Amazon followed to award the launch contracts to Arianespace, Blue Origin and ULA, including whether SpaceX was specifically excluded from consideration on the lawsuit alleges. The document is heavily redacted, with any details on cost and other points of the contracts removed. Even a passage describing “Project Kuiper’s vision” is redacted.
The Amazon filing doesn’t discuss changes in Amazon’s plans for the reason that lawsuit was filed in August. Amazon announced Dec. 1 it had signed a contract with SpaceX for 3 Falcon 9 launches of Project Kuiper satellites starting in mid-2025. The corporate didn’t discuss in that announcement why it was now working with SpaceX, whose Starlink constellation is a competitor to Kuiper, apart from stating that the contracts allow Amazon “to cut back schedule risk and move faster” in deploying the constellation.
Dave Limp, the Amazon executive whose responsibilities included Project Kuiper on the time Amazon arranged the launch contracts, has also left the corporate. He began work this month as the brand new chief executive of Blue Origin.