Amazon seeks dismissal of lawsuit over Kuiper satellite launch contracts

(Reuters) -Amazon.com asked a Delaware court to dismiss a lawsuit brought by shareholders over the company’s Kuiper satellite launch contracts, arguing in a filing that the plaintiffs failed to prove that directors acted in bad faith in approving one of the e-commerce giant’s biggest capital expenditures.

The Cleveland Bakers and Teamsters Pension Fund, a multi-employer fund, in August sued Amazon in the Delaware Court of Chancery alleging Amazon’s board awarded contracts to Jeff Bezos’ space company Blue Origin without proper diligence and without considering rocket rival Elon Musk-owned SpaceX’s rockets.

In a redacted motion to dismiss filed with the court on Monday, Amazon argued that plaintiffs did not adequately show its directors acted in bad faith.

“The complaint does not come close to alleging the facts necessary to support that extraordinary theory,” Amazon said, countering that its directors “undertook a diligent and informed review of the agreements.”

Amazon aims to launch over 3,000 satellites into low-Earth orbit to provide global broadband internet coverage and compete directly with Elon Musk’s SpaceX, whose Starlink network is farther ahead in the market for providing internet from space.

Bezos is Amazon’s founder and was CEO until 2021, but remains as the company’s executive chairman. He is founder and primary owner of Blue Origin, the launch company whose New Glenn rocket Amazon contracted with to use for some of its Kuiper satellite launches.

Amazon refuted allegations of conflicts of interest with Bezos, saying he was recused from some meetings that were convened to consider launch agreements with his space company Blue Origin.

Amazon deployed its first two test satellites for the Kuiper network in October.

To deploy the remaining thousands of satellites, the company last year announced a bulk launch deal for 83 launches – the largest commercial rocket procurement ever – from various rocket companies, including Blue Origin, Europe’s Arianespace and United Launch Alliance, a joint venture of Boeing and Lockheed Martin.

Amazon announced earlier this month it had bought three launches from SpaceX to help deploy the Kuiper satellites.

The plaintiffs have until February 2024 to counter Amazon’s motion to dismiss.

(Reporting by Joey Roulette; Additional reporting by Tom Hals in Wilmington, Delaware; Editing by Leslie Adler and Sandra Maler)