WASHINGTON — Amazon is seeking to dismiss a shareholder lawsuit filed in August that alleged that the company’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 is a company shareholder failed to provide the “extreme set of facts” required by law to show 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 3,236-satellite constellation with the Ariane 6, New Glenn and Vulcan Centaur rockets. The combined contracts were, it stated, the second largest capital expenditure in Amazon’s history at 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 would 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 use BE-4 engines on its Vulcan rocket. The suit estimated that nearly 45% of the value of the contracts goes to Blue Origin either directly or through the BE-4 engine contract with ULA.
“Here, the pleaded facts show the opposite — that the directors undertook a diligent and informed review of the agreements,” Amazon stated. That included meeting for hours to discuss Project Kuiper in general and the proposed launch contracts specifically and “having a full board discussion” before approving those contracts.
“The complaint likewise fails to plead particularized facts showing that Bezos was improperly involved in the negotiation of the contracts or sidelined SpaceX, let alone that the directors deliberately ignored signs of a conflicted procurement process,” the filing added.
One example the filing provided was a claim in the lawsuit that the board spent 40 minutes reviewing the contracts at a special meeting. “It suggests no reason why that amount of time would be insufficient, given the information the board was provided and the size of the contracts in relation to Amazon’s overall business, which generates hundreds 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.” However, the company said that falls short of the claims made in the suit that they acted in bad faith. “A bad-faith claim is reserved for disciplining directors who deliberately do essentially nothing.”
The public version of the filing offers few new details on the process Amazon followed to award the launch contracts to Arianespace, Blue Origin and ULA, including whether SpaceX was specifically excluded from consideration at the lawsuit alleges. The document is heavily redacted, with any details on cost and other aspects of the contracts removed. Even a passage describing “Project Kuiper’s vision” is redacted.
The Amazon filing does not discuss changes in Amazon’s plans since the lawsuit was filed in August. Amazon announced Dec. 1 it had signed a contract with SpaceX for three Falcon 9 launches of Project Kuiper satellites starting in mid-2025. The company did not discuss in that announcement why it was now working with SpaceX, whose Starlink constellation is a competitor to Kuiper, other than stating that the contracts allow Amazon “to reduce schedule risk and move faster” in deploying the constellation.
Dave Limp, the Amazon executive whose responsibilities included Project Kuiper at the time Amazon arranged the launch contracts, has also left the company. He started work this month as the new chief executive of Blue Origin.
