Bezos and other corporate leaders moved Monday to end shareholder litigation over “Project Kuiper,” allegedly the second-costliest venture in Amazon’s 29-year history. The lawsuit, filed by a pension fund in August, challenges their choice to rely on Blue Origin, the rocket company founded by Bezos, rather than Musk’s SpaceX.
The suit’s allegations of board-level bad faith “show the opposite—that the directors undertook a diligent and informed review,” according to the filing in Delaware’s Chancery Court. “A bad-faith claim is reserved for disciplining directors who deliberately do essentially nothing. That is not remotely this case.”
Bile Between Billionaires
The pension fund’s complaint described Amazon’s board as “ostrich-like,” saying it “excluded the most obvious and affordable launch provider” over the animus between Musk, the world’s wealthiest person, and Bezos, the third-richest. SpaceX regularly beats out Amazon for government contracts, prompting protests from Bezos.
Project Kuiper, announced in 2019, is a planned competitor to SpaceX’s Starlink network—a multibillion-dollar enterprise involving a mega-constellation of satellites facilitating global internet access. Under its Federal Communications Commission license, Amazon allegedly has until July 2026 to send up the first of roughly 1,600 satellites and three more years to launch the next batch.
The program is “critically dependent” on Blue Origin’s New Glenn rocket, which has been in development since 2015, according to the lawsuit made public Aug. 28. But the New Glenn is still “firmly rooted to the ground” after missing deadlines in 2020, 2021, and 2022, the complaint said.
The suit assails Amazon’s corporate directors for their alleged hands-off approach to procurement. The project’s risks, importance, and “blatant conflicts of interest” should have led to “heightened diligence over these massive contracts,” the complaint said. “But the board knowingly adopted a posture of indifference.”
No ‘Extreme’ Facts
Amazon’s leaders blasted those claims Monday, saying the circumstances don’t come close to “the extreme set of facts” required to establish bad faith by directors with no personal stake in the transaction—nearly the whole 11-seat board except Bezos. A meeting the suit downplays as lasting “barely an hour” in fact involved a thorough review, according to the court filing.
“Construed most generously, the complaint alleges flaws in the process,” the motion said. “The complaint does not allege that Amazon directors failed to attempt to undertake any process at all—and that is what is necessary.”
The lawsuit involves shareholder derivative claims, which are technically brought on a company’s behalf against its leaders. Any damages awarded by a judge or in a settlement would typically be paid into Amazon’s corporate coffers by Bezos and the others, or their insurers.
The case is the second recent derivative suit against Bezos and the Amazon board. The earlier lawsuit, filed Aug. 10, says they exposed the e-commerce giant to a “massive financial hit” through antitrust violations and breakneck expansion of its fulfillment services that had to be scaled back.
Amazon, Bezos, and the board are represented by Ross Aronstam & Moritz LLP and Wachtell, Lipton, Rosen & Katz. The fund leading the litigation, the Cleveland Bakers and Teamsters Pension Fund, is represented by Grant & Eisenhofer PA.
The case is Cleveland Bakers & Teamsters Pension Fund v. Bezos, Del. Ch., No. 2023-0868, motion to dismiss filed 12/11/23.
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