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2023-08-28 (Public) Verified Shareholder Derivative Complaint
2023-08-28 (Public) Verified Shareholder Derivative Complaint
Transaction ID 70731887
Case No. 2023-0868-NAC
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
or “Plaintiff”), by and through its undersigned counsel, asserts this action on behalf
Wendell P. Weeks (“Weeks” and collectively, the “Board”). The allegations of this
Complaint are based upon Plaintiff’s knowledge as to itself, and upon information
information and of internal books, records and documents produced by the Company
in response to Plaintiff’s demand (the “Demand”) made under 8 Del. C § 220 (the
the Court will question business decisions where directors and officers “fail[] to
exercise any business judgment and fail[] to make any good faith attempt to fulfill
directors and officers do not act in good faith when they know that they are making
without regard to whether the decisions can inflict injury or loss on the corporation
1
The Company confirmed its production in response to the Demand was complete
on August 18, 2023.
2
In re Walt Disney Co. Deriv. Litig., 825 A.2d 275, 278 (Del. Ch. 2003) (emphasis
in original).
2
2. This case presents just such a situation. Amazon’s directors and
discharge their fiduciary duties. By approving the related-party contracts during two
having protected the negotiation process from Bezos’ glaring conflict of interest, and
without having conducted any real scrutiny of the contracts, the Amazon Board
* * *
to users around the globe. Amazon applied for a license to deploy its vast Kuiper
FCC granted its approval in July 2020. In total, Amazon planned to deploy 3,236
satellites into space over the next decade, at a cost of several billion dollars. The
FCC gave Amazon only six years to launch half of its planned constellation (i.e., it
had to launch 1,618 satellites by July 30, 2026), and only nine years to deploy the
entire 3,236 satellite constellation into orbit (i.e., it had to launch all 3,236 satellites
3
by July 30, 2029). With the FCC’s timestamped approval, Project Kuiper took on a
new urgency.
4. For a company known for its delivery vans and other decidedly
of its planned constellation, Amazon would have to arrange for several dozen rocket
contracts with third-party providers to launch the satellites to space on time and on
company, Blue Origin. Bezos founded Blue Origin nearly two decades before his
operating a space company. Blue Origin remains wholly-owned by Bezos, who has
personally funded it for years by selling off swathes of his Amazon stock. Blue
4
6. At exactly the same time that the FCC granted Amazon’s license in July
that Amazon was in discussions with Bezos-owned Blue Origin and three other
companies for contracts to launch hundreds of Project Kuiper’s satellites into orbit.
Management had to inform the Audit Committee about these negotiations because
Amazon’s CEO, director, and largest stockholder on one side, and as Blue Origin’s
owner and primary funding source on the other. These contracts were also
single rocket launches routinely cost upwards of $100 million. Indeed, at this time,
Amazon management told the Audit Committee that the contracts would cost more
than $ .
the world—SpaceX—was not among the four companies presented to the Audit
Elon Musk—has by far the most proven rocket launch track record in history, having
now completed some 235 successful launches of its Falcon 9 rocket. SpaceX is also
known to be one of the most cost-effective launch providers, due to its ability to re-
5
8. Bezos was intimately familiar with SpaceX and Musk’s success, as
Blue Origin has repeatedly lost out to SpaceX in competing for lucrative government
launch contracts. Each time, Musk has publicly taunted Bezos’ loss on Twitter; and
each time, Bezos has filed legal protests and challenges seeking to overturn the
government’s decisions to choose SpaceX over Blue Origin. In one notable instance,
Blue Origin appealed the United States government’s choice to award a multi-
billion-dollar lunar contract to SpaceX, even though the government explained that
it chose SpaceX because Blue Origin’s bid was nearly double SpaceX’s offered cost.
In the face of SpaceX’s proven reliability and cost advantages, Bezos-led Amazon’s
decision to not even consider SpaceX as a launch provider illustrates the glaring
conflict of interest Bezos’ affiliation with both Amazon and Blue Origin presented,
and the substantial impact these conflicts had on the Board’s ability to protect the
best interests of the Company and its stockholders in negotiating the contracts.
9. At the time the Audit Committee was first notified of these launch
contracts in July 2020, a host of factors should have prompted the Audit Committee
to step up and actually exercise its oversight responsibility. Any of the critical risks
associated with Project Kuiper—the importance and sheer number of the launch
stood to gain from Bezos steering launch contracts to Blue Origin—standing alone
6
should have prompted a responsible board to immediately educate itself and take
ownership of the process to protect the interests of Amazon and its public
stockholders.
10. A responsible board would, for example, engage experts and advisors,
fully oversee and inform itself about the contract negotiations, implement safeguards
to insulate these negotiations from conflicts of interest, wall Bezos off from
negotiations, and ensure that Amazon was conducting a full and fair procurement
process that Bezos could not skew in favor of his personal rocket company.
11. The Audit Committee—none of whom have any experience with rocket
launches—took none of these steps. Instead, it left Bezos and his loyal management
team to commandeer the process of selecting and negotiating with the launch
providers—including with Bezos-owned Blue Origin and its New Glenn rocket and
with other entities that planned to use Blue Origin engines in their rockets. For a
full year and a half, the Board sat, ostrich-like, while the negotiation process
unfolded without their involvement or oversight. Indeed, the Board did not even
bother to ask for—and did not receive—any updates as to the status of the
negotiations.
12. In January 2022, nearly 18 months after the Audit Committee was first
informed that Bezos and his management team were negotiating related-party
transactions with Bezos’ rocket company, Bezos and his management team returned
7
to the Audit Committee with two fully-negotiated related-party contracts—one with
Blue Origin and one with an entity Blue Origin provided rocket engines to—for the
Committee to approve. First, Amazon planned to contract with Blue Origin directly
for up to 27 launches aboard the New Glenn rocket for total payments of up to $
United Launch Services (“ULS”) for 38 launches aboard a rocket called the Vulcan
would flow to Blue Origin supplying engines to ULS. In total, Amazon would be
transactions.
13. Beyond the conflicted nature of these contracts, there was another
glaring problem: Blue Origin’s lack of reliability. Since its founding, Blue Origin’s
rocket development track record has featured more blemishes and setbacks than
successes. Blue Origin needed well over a decade to develop a small rocket meant
to take humans into space for only a few minutes at a time. In 2015, Blue Origin set
out to develop the New Glenn, which was a much larger rocket—featuring seven
cargo to orbit. Blue Origin’s New Glenn rocket has yet to take flight, and Blue
8
Origin has yet to complete development of the engine on which ULS’ rocket depends.
And its timeline to achieve these milestones keeps extending. Blue Origin originally
predicted that the New Glenn rocket would take off in 2020. Then in 2021. Then
in 2022. Today, it claims the rocket will fly in 2023. As of the filing of this
complaint, the New Glenn and the Blue Origin-reliant Vulcan Centaur remain firmly
14. None of this troubled the Board. During a January 31, 2022 meeting,
the Audit Committee received a brief summary of the terms of the contracts. It had
no information about how Bezos and his management team conducted the
negotiations with Blue Origin. It had no information about the level of Bezos’
involvement. It had no information about how many other launch providers (if any)
Bezos and his management team explored contracting with. It had no information
about Blue Origin’s struggles to develop the New Glenn, about how these struggles
about how Blue Origin planned to overcome these struggles. It did not receive a
presentation or any other materials about these contracts. It did not receive any
guidance from any outside expert as to whether these contracts were commercially
15. Worst of all, the Audit Committee did not even try to gather more
information or ask any questions. The minutes from the January 31, 2022 meeting
9
reflect the Audit Committee’s utter lack of concern in approving $ worth of
Upon information and belief, these related-party transactions were only one of many
agenda items for an Audit Committee meeting that lasted a little over three hours. 3
16. Two months later, in March 2022, the full Amazon Board continued
Blue Origin and ULS contracts to the full Board for approval, together with a third
contract that did not involve Blue Origin. This third contract was with a European
Foods, and would send more than $ to Bezos’ Blue Origin. Unsurprisingly,
SpaceX was not even mentioned as a possible launch provider: an omission made all
3
Plaintiff makes this allegation on information and belief because, as explained at
¶49 n.55, infra, this document is heavily redacted, preventing Plaintiff from having
direct insight into the full details of the Audit Committee’s agenda at this meeting.
10
the more troubling by Blue Origin’s longstanding struggles to get its rocket to
actually work.
18. These contracts also made Amazon’s Project Kuiper program critically
Origin for up to 78% of its total planned launches, and to launch up to of the
total Kuiper satellites contemplated in these three contracts. At the time of the March
3, 2022 Board meeting, Blue Origin’s New Glenn rocket was more than two years
behind schedule, and Blue Origin had yet to complete developing the engine on
19. The Board did nothing. In stark contrast to Amazon’s $13.7 billion
advisor, the Board here did not engage any experts or advisors at all. The Board
only received a brief summary of the terms of the contracts. The Board did not ask
for or receive any information about the negotiations of the contracts, how providers
were identified and selected, or the handling of Bezos’ conflicts of interest. The
and received no information about the New Glenn rocket’s years of delays.
Operating almost entirely in the dark, the Board took less than 40 minutes to
11
rubberstamp an $ transaction that would send $ to Bezos’ own
rocket company.
20. In total, between the Audit Committee’s single meeting and the Board’s
single brief meeting, Amazon’s directors likely devoted barely an hour before
21. The Board completely abdicated its fiduciary duties in approving these
contracts. Any one of a number of factors—the risk, the historic size of the contracts,
heightened diligence over these massive contracts. But the Board knowingly
adopted a posture of indifference and instead reduced its role to almost nothing,
Origin for a year and a half, with no Board oversight. The net result of these
negotiations, unsurprisingly, is that Amazon has hung Project Kuiper’s fate on Blue
rocket company with no Board protections or oversight; and excluded the most
obvious and affordable launch provider, SpaceX, from its procurement process
4
Amazon’s heavy redactions of the documents produced in response to Plaintiff’s
Section 220 Demand make it impossible to determine precisely how much time the
Audit Committee devoted to discussing the contracts with Blue Origin and ULS.
See ¶49 n.55, infra.
12
because of Bezos’ personal rivalry with Musk. Plaintiff brings this action to remedy
the Board’s knowing and deliberate indifference to their fiduciary duties in entering
JURISDICTION
22. This Court has jurisdiction over this action pursuant to 10 Del. C. § 341.
24. This Court has jurisdiction over Amazon pursuant to 10 Del. C. §3111.
THE PARTIES
A. PLAINTIFF
stockholder and has been an Amazon stockholder at all times relevant to the claims
asserted herein.
B. NOMINAL DEFENDANT
C. DEFENDANTS
founded Amazon from the garage of his Seattle home in 1994 and has been the
Company’s visionary leader ever since, controlling all aspects of the Amazon’s
operations and strategy. Indeed, throughout Amazon’s history and evolution, Bezos
13
has remained its single most dominant influence. Market observers have noted that
under Bezos’ leadership, Amazon “was an intensely personal venture, run by one of
the wealthiest men in the world according to his own desires and reflecting his own
projects, devoting virtually limitless resources to make his commands a reality. For
example, Amazon developed the Alexa virtual assistant after Bezos sent a casual
[Bezos] came up with the idea of a smart speaker in January 2011, back
in the era of Google Plus and the iPod Shuffle. Bezos emailed his top
deputies that month and declared, “We should build a $20 device with
its brains in the cloud that’s completely controlled by our voice.”
28. For the next nearly four years, Bezos obsessively micromanaged the
project, pushing teams in Atlanta and Gdansk to make speech recognition seamless.
He put in place a surreal testing protocol that involved hiring temps to spend days in
empty apartments chattering away to silent speakers, and berated executives who
29. Bezos was Chairman of the Board from 1994 until he became Executive
Chair in July 2021. Bezos served as Amazon’s Chief Executive Officer (“CEO”)
from May 1996 to July 2021 and as President from the Company’s founding until
July 1999 and again from October 2000 to July 2021. Further, Bezos is Amazon’s
14
largest stockholder, beneficially owning 1,258,288,970 Amazon shares, or 12.3% of
30. Defendant Andrew P. Jassy has been Amazon’s President, CEO, and a
director since July 2021. Bezos personally mentored Jassy and hand-picked Jassy
to succeed him as CEO. Jassy has been an Amazon employee since 1997. Bezos
recruited Jassy to join Amazon, and later installed Jassy to lead Amazon Web
Services (“AWS”) where Jassy served as CEO from April 2016 to July 2021 and as
31. Jassy has held various leadership roles across the Company, including
32. Jassy has been rewarded handsomely for his loyalty to Bezos. Since
Bezos installed Jassy to head AWS, and through 2022, Jassy has received total
stock awards, and $1,896,271 in other compensation. Jassy is the second largest
Commander of U.S. Cyber Command from May 2010 through March 2014, and
Director of the National Security Agency and Chief of the Central Security Service
from August 2005 through March 2014. IronNet is a software development and
service provider that provides cybersecurity services to both public- and private-
35. On June 25, 2019, IronNet announced its partnership with AWS to
March 15, 2021, IronNet entered into a merger agreement with LGL Systems
On June 23, 2021, in the run-up to the IronNet Merger, Bezos’ AWS announced it
had named IronNet the Best Cybersecurity Solution for Public Sector Organizations
37. On August 26, 2021, IronNet completed its merger, capitalizing in part
on Bezos’ AWS award ahead of the stockholder vote on the IronNet Merger.
16
IronNet’s stock price climbed to over $40 per share by mid-September 2021. At the
same time, Alexander took advantage of IronNet’s good fortune and soaring stock
price and sold 85% of his holdings, netting $5 million in stock sale proceeds thanks
an Amazon director.
as an Amazon director.
17
41. Defendant Judith A. McGrath has been an Amazon director since July
Amazon director.
42. Defendant Indra K. Nooyi has been an Amazon director since February
2019. Nooyi serves as Chair of Amazon’s Audit Committee. Upon information and
belief, Nooyi has no experience or expertise in satellite rocket launches. Nooyi has
as an Amazon director.
2008.
18
45. Defendant Wendell P. Weeks has been an Amazon director since
and belief, Weeks has no experience or expertise in rocket launches. Weeks has
46. Defendants Bezos and Jassy are referred to collectively herein as the
SUBSTANTIVE ALLEGATIONS
47. Soon after he founded Amazon in 1994, Bezos used his newfound
wealth to fulfill one of his lifelong ambitions: to found a space company. In 2000,
Bezos founded Blue Origin, with the goal of taking both humans and cargo to space
and beyond. Today, Bezos remains Blue Origin’s only owner, and he self-funds the
company by selling some $1 billion of his Amazon stock each year. 5 Bezos
5
Franklin Foer, Jeff Bezos’s Master Plan, THE ATLANTIC, November 2019.
6
Id.
19
48. Bezos’ creation of Blue Origin grew from his lifelong obsession with
outer space. In high school, Bezos showed a great interest in space-related classes,
and claimed that the future of mankind lies beyond Earth. During his high school
valedictory speech, Bezos “dreamed aloud of the day when millions of his fellow
earthlings would relocate to colonies in space. A local newspaper reported that his
intention was ‘to get all people off the Earth and see it turned into a huge national
park.’”7
49. But even from these early days, Bezos’ passion for space travel was not
interview soon after his high school graduation, Bezos talked about his dream of
building hotels, amusement parks, and colonies for humans who were in orbit around
the Earth. Part of his rationale, explained the 18-year old Bezos, was to preserve the
50. In its early years, Blue Origin focused primarily on developing rockets
to take people into space. Blue Origin first developed a passenger rocket named
New Shepard, with the first test vehicle taking flight in 2006. This single-stage
booster rocket with a small crew capsule sitting atop was designed to carry a handful
passengers to sub-orbital space for short durations, with total trips lasting only
7
Id.
20
around 10 minutes. New Shepard followed a simple straight up-and-down flight
path, meant to give passengers a brief experience of space and weightlessness before
returning to Earth.
51. Blue Origin made slow progress developing New Shepard. It took Blue
Origin 9 years after the initial test flight in 2006 to complete testing of the rocket
engine that powered New Shepard, known as the BE-3. By February 2016, Blue
Origin had only built three New Shepards, one of which was lost to an explosion
during a test flight. It took Blue Origin another five years to complete its first crewed
mission on New Shepard, with Bezos himself flying on the rocket’s inaugural
designed to carry payloads into orbit around Earth. Blue Origin named this orbital
launch vehicle the “New Glenn,” and it would be powered by multiple BE-4 engines
(the more powerful successor to the BE-3 engine that propels the New Shepard). As
with the New Shepard, Blue Origin intended for New Glenn’s launcher to be fully
reusable, with the rocket landing vertically back on Earth after deploying its payload
to orbit.
21
53. New Glenn was a vastly more powerful and complex rocket than its
New Shepard predecessor. New Shepard relied on a single BE-3 engine that
rocket science.8 New Glenn, by contrast, was designed to launch with seven BE-4
engines that were each much larger than the New Shepard’s BE-3 engine, and which
would combine to generate four million pounds of thrust at liftoff. 9 This increased
the complexity and added to the difficulty of ensuring that the New Glenn would be
fully reusable: a goal that was not just a huge technological challenge, but that was
54. At the time Blue Origin announced the New Glenn, it also stated that
the new rocket would take its first test flight in 2020. Once this project was
hundreds of engineers between 2016 and 2018.10 In 2018, Blue Origin made several
8
Eric Berger, Four Huge Rockets Are Due to Debut in 2020—Will Any Make It?,
ARS TECHNICA (July 24, 2018), https://arstechnica.com/science/2018/07/the-year-
2020-could-see-the-unheard-of-debut-of-four-big-rockets-or-not/.
9
Id.
10
Eric M. Johnson, Bezos Throws Cash, Engineers at Rocket Program as Space
Race Accelerates, REUTERS (Aug. 3, 2018), https://www.reuters.com/article/us-
space-blueorigin/bezos-throws-cash-engineers-at-rocket-program-as-space-race-
accelerates-idUSKBN1KO0HN.
22
fundamental design changes to the New Glenn and to the BE-4 engine that was due
to power it, which cast the company’s predicted 2020 launch date in serious doubt.
55. That same year, in discussions with its earliest customers, Blue Origin
projected 2020 launch date, and predicted delays of at least one year in bringing the
new rocket into orbit.12 Despite these private and public concerns, Blue Origin stuck
56. By 2020, it quickly became clear that Blue Origin was not close to
launching New Glenn. This failure was driven in large part by Blue Origin’s
2002 to achieve many of the same goals that fuel Bezos’ space ambitions. Like
Bezos, Musk sought to develop a fully-reusable rocket that could eventually be used
11
Id.
12
Eric Berger, Four Huge Rockets Are Due to Debut in 2020—Will Any Make It?,
ARS TECHNICA (July 24, 2018), https://arstechnica.com/science/2018/07/the-year-
2020-could-see-the-unheard-of-debut-of-four-big-rockets-or-not/.
23
to transport humans to Mars, and fulfill his goal of making humankind a “multi-
planetary species.” Unlike Bezos, however, Musk saw rapid and impressive success
from Omelek Island in the Marshall Islands, marking the first successful orbital
launch by a privately funded company. The next year, in 2009, a SpaceX Falcon 1
59. Reflecting its rapid pace of development, SpaceX soon retired the
Falcon 1 rocket and replaced it with the larger and more powerful reusable Falcon
9. SpaceX launched the Falcon 9 rocket for the first time in June 2010. In 2012, a
Falcon 9 rocket carried a SpaceX Dragon 1 cargo capsule to orbit and docked with
the International Space Station (“ISS”). Since then, the Falcon 9 and Dragon 1
completed 23 cargo missions to the ISS, until Dragon 1 was retired in 2020.
commercial launch contracts, and expanded its development of the Dragon capsules
to carry human passengers to orbit, as well as cargo. In the summer of 2020, SpaceX
launched a Falcon 9 with two NASA astronauts to the ISS, becoming the first private
company to send a crewed aircraft into space. Illustrating SpaceX’s vast advantage
over Blue Origin, Blue Origin’s New Shepard did not carry passengers into space
until 2021—on a flight that only lasted a few minutes. For his part, Musk has taken
24
every opportunity to publicly mock Bezos and Blue Origin, as detailed further
below.
competitor to Blue Origin when the two went head-to-head for valuable
governmental and military launch contracts. In 2019, Blue Origin, SpaceX, and
other companies competed for the $3.4 billion National Security Space Launch
Phase 2 Launch Service Procurement (“NSSL”), awarded by the United States Air
Force. The NSSL is intended to assure reliable access to deliver payloads to space
for the United States Department of Defense and other governmental and military
Government Accountability Office in 2019, challenging certain criteria that the Air
Force was using to evaluate and award the launch contracts under the NSSL.
62. In August 2020, the United States Air Force announced the winning
bidders for the NSSL; Blue Origin was not among them. The Air Force instead
selected SpaceX and United Launch Alliance (“ULA”) to provide launches for the
13
Space Force Awards National Security Space Launch Phase 2 Launch Service
Contracts to ULA, SpaceX, AIR FORCE (Aug. 7, 2020),
https://www.af.mil/News/Article-Display/Article/2305576/space-force-awards-
national-security-space-launch-phase-2-launch-service-contra/.
25
63. Losing out entirely on the NSSL was a crushing blow for Blue Origin.
Blue Origin’s senior vice president responsible for New Glenn, Jarrett Jones, bluntly
stated that not being included in the NSSL “was a big hit for us” and that Blue Origin
“had to consider the economics” after this loss.14 In Jones’ estimation, losing out on
revenue.15
64. Only four months later, the Air Force announced that it was terminating
an award it had previously granted Blue Origin for the development of the New
Glenn. In October 2018, the United States Air Force announced that it had awarded
Blue Origin $500 million for the development of the New Glenn as a potential
competitor for future military contracts. In December 2020, however, the Air Force
terminated this award; Blue Origin had received only $255.5 million of the $500
million that it had originally been awarded, leaving it with a $244.5 million hole to
65. These setbacks delayed the development of the New Glenn. Blue
Origin executive Jones stated that Blue Origin had to “re-baseline” the New Glenn’s
14
Jeff Foust and Sandra Erwin, Blue Origin Delays First Launch of New Glenn to
Late 2022, SPACENEWS (Feb. 25, 2021), https://spacenews.com/blue-origin-
delays-first-launch-of-new-glenn-to-late-2022/.
15
Id.
16
Id.
26
timeline and development plan.17 In February 2021, driven by the loss of major
expected sources of funding and revenue, Blue Origin publicly delayed the projected
66. The effect of the delays in the New Glenn’s development was not
limited only to Blue Origin, but was also felt by other rocket companies that were
depending on Blue Origin’s engines for use in their own rockets. Most notably,
ULA (which won part of the NSSL contract that Blue Origin lost out on) planned to
use Blue Origin’s BE-4 engines in its next-generation Vulcan Centaur rocket that
remained under development at this time. Because ULA’s Vulcan Centaur depended
development delays directly impacted the development and testing of the Vulcan
Centaur. In February 2021, when Blue Origin was forced to delay the projected
launch of the New Glenn to late 2021, ULA was forced to similarly announce that
the Vulcan Centaur would also not launch until the fourth quarter of 2021.
67. In 2020, Blue Origin again competed against SpaceX and other
companies for contracts under NASA’s Human Landing System (“HLS”) program.
17
Id.
18
New Glenn’s Progress Towards Maiden Flight, BLUE ORIGIN (Feb. 25, 2021),
https://www.blueorigin.com/news/new-glenns-progress-towards-maiden-flight/.
27
The HLS program is a key part of NASA’s Artemis mission, which aims to return
American astronauts to the surface of the moon by 2024. Initially, Blue Origin fared
well with NASA. In 2020, NASA awarded $1 billion as part of “study contracts” to
several companies for design and concept development for NASA’s next crewed
lunar lander. Of this $1 billion, NASA awarded $579 million to a team led by Blue
Origin, $135 million to SpaceX, and $253 million to a team headed by Dynetics, a
subsidiary of Leidos Holdings, Inc. Earning by far the largest share of NASA’s
study contracts should have put Blue Origin in prime position to win the actual HLS
contracts.
68. But it didn’t. In April 2021 (only two months after Blue Origin publicly
announced the delay of the New Glenn), NASA announced that it had awarded the
entire HLS contract—worth a staggering $2.9 billion—to SpaceX. As was his wont,
69. Bezos was furious. The next month, in May 2021, Blue Origin filed a
manner in which NASA had selected SpaceX. Blue Origin criticized NASA’s award
28
as “flawed” and claimed that NASA had “moved the goalposts at the last minute.” 19
In reality, however, Blue Origin lost the HLS contract for a simple reason: its $5.99
billion bid was more than double SpaceX’s $2.9 billion bid.20
70. On July 26, 2021, Bezos issued an open letter complaint to NASA
administrator Bill Nelson, in which Bezos tried to use his own vast personal wealth
to compensate for Blue Origin’s inability to compete with SpaceX on the merits.
SpaceX. That decision broke the mold of NASA’s successful commercial space
NASA and the industry in the long run, Bezos offered to “waiv[e] all payments in
the current and next two government fiscal years up to $2B to get the program back
on track right now.”22 Bezos made clear that this $2 billion offer was “not a deferral,
19
Christian Davenport, Jeff Bezos Challenges NASA Moon-contract Award to Elon
Musk’s SpaceX, WASHINGTON POST (Apr. 26, 2021),
https://www.washingtonpost.com/technology/2021/04/26/jeff-bezos-challenges-
nasa-moon-contract-award-elon-musks-spacex/.
20
See Matter of: Blue Origin Fed'n, LLC; Dynetics, Inc.-A Leidos Co., B-419783,
2021 WL 3545283, at *25 (July 30, 2021).
21
Blue Origin, Open Letter to Administrator Nelson (July 26, 2021),
https://www.blueorigin.com/news/open-letter-to-administrator-nelson.
22
Id.
29
but is an outright and permanent waiver of those payments.”23 In other words, Bezos
bid if NASA would only reconsider its decision to award SpaceX the entirety of the
HLS contract. In a further reflection of his desperation, Bezos also offered to “accept
a firm, fixed-priced contract for this work, cover any system development cost
overruns, and shield NASA from partner cost escalation concerns.” 24 In an industry
that is infamous for technical complexity, lengthy delays, and cost overruns, this
72. Bezos’ transparent and last-ditch attempt to win the HLS contract was
not well received. In response, NASA’s Deputy Administrator Lori Garver stated:
“NASA can’t just ‘take offers’ because funding is offered. There’s absolutely
nothing to stop Blue from moving forward with their own money to get in a better
73. Just days later, on July 30, 2021, the GAO formally rejected Bezos and
Blue Origin’s protest against the decision to award the entire $2.9 billion contract to
23
Id.
24
Id.
25
Joey Roulette, Jeff Bezos Offers NASA $2 Billion to Pick Blue Origin’s Lunar
Lander in Last-Minute Plea, THE VERGE (July 26, 2021),
https://www.theverge.com/2021/7/26/22594038/jeff-bezos-blue-origin-nasa-lunar-
lander-2-billion.
30
SpaceX. In announcing its decision, the GAO explained that “SpaceX submitted the
lowest-priced proposal with the highest rating” and that “the offers submitted by
74. Predictably as clockwork, Musk made sure to get his say in:
proceeded to appeal the GAO’s decision in the United States Court of Federal
26
Statement on Blue Origin – Dynetics Decision, GOVERNMENT ACCOUNTABILITY
OFFICE (July 30, 2021), https://www.gao.gov/press-release/statement-blue-origin-
dynetics-decision.
31
Claims. This lawsuit followed “months of potshots, ridicule, and criticism.” 27 In
his appeal, Bezos took pointed jabs at both NASA and SpaceX, accusing NASA of
“inexplicably disregard[ing] key flight safety requirements for only SpaceX, in order
to select and make award to a SpaceX proposal that NASA’s evaluation team
relations campaign against SpaceX’s Lunar Starship Lander, which won NASA’s
HLS contract. In August 2021, Blue Origin published an infographic on its website,
which attacked SpaceX’s Lunar Starship lander as “immensely complex and high
risk,” but described Blue Origin’s Blue Moon lander as “safe, low-risk,” and “fast”:
27
Victor Tangermann, Bitter Jeff Bezos Sues NASA Over SpaceX Contract,
FUTURISM (Aug. 26, 2021), https://futurism.com/jeff-bezos-sues-nasa.
28
Michael Sheetz, Judge Releases Redacted Lunar Lander Lawsuit From Bezos’
Blue Origin Against NASA-SpaceX Contract, CNBC (Sep. 22, 2021),
https://www.cnbc.com/2021/09/22/jeff-bezos-blue-origin-redacted-lunar-lander-
lawsuit-nasa-spacex.html.
32
77. Later in August, Bezos updated this graphic to make even more attacks
on SpaceX. Witnessing Bezos’ desperate attempts to wrest the HLS contract from
SpaceX, Musk couldn’t pass up the opportunity to taunt Bezos yet again:
33
78. On November 4, 2021, the Court of Federal Claims rejected Blue
Origin’s appeal of the GAO’s decision. In explaining its decision, the Court noted
that Blue Origin’s “proposal was priced well above NASA’s available funding and
34
was itself noncompliant.”29 Keeping up with past practice, Musk again taunted
29
Blue Origin Fed'n, LLC v. United States, 157 Fed. Cl. 74, 81 (2021).
35
79. At the same time that Bezos, through Blue Origin, was fighting
NASA’s decision to award SpaceX the HLS contract, Bezos, through Amazon, was
also fighting SpaceX’s plan to launch the second generation of satellites as part of
its Starlink network (described further below). In August 2021, Amazon filed
“notice of an ex parte meeting” with the FCC, asking the FCC to reject proposed
revisions that SpaceX had submitted for its Starlink satellite network. In the FCC
proceeding, Amazon took a number of pointed shots at SpaceX that laid bare Bezos’
dislike of Musk. Amazon told the FCC: “Whether it is launching satellites with
conduct of SpaceX and other Musk-led companies makes their view plain: rules are
for other people, and those who insist upon or even simply request compliance are
deserving of derision and ad hominem attacks.” 30 Amazon continued: “If the FCC
30
David Shepardson, Amazon.Com Goes For Jugular in FCC Spat With Spacex's
Musk, REUTERS (Sept. 8, 2021), https://www.reuters.com/technology/amazoncom-
goes-jugular-fcc-spat-with-spacexs-musk-2021-09-08/.
31
Id.
36
80. Again, Musk taunted Bezos’ latest legal complaints against him:
81. In 2018, Bezos and Amazon began to develop a new initiative called
37
constellation of Low Earth Orbit satellites to provide low-latency, high-speed
world.”32
similarly aimed to provide fast internet access around the world via a vast
Starlink in 2015; by 2017, it had obtained a license from the FCC to launch a
constellation of 7,518 satellites. SpaceX launched the first Starlink satellites into
orbit in 2018 on its own rockets, and opened a beta testing program to the public in
November 2020.
32
AMZN000134 at -142. Citations to “AMZN000___” are to documents produced
by Amazon in response to Plaintiff’s Section 220 Demand.
38
83. When Bezos and Amazon publicly announced Project Kuiper in 2019,
its similarity to Starlink prompted yet another jab from Musk, with Musk calling
Bezos a “copycat”:
84. In April 2019, Amazon applied to the FCC for permission to launch
3,236 Project Kuiper satellites into Lower Earth Orbit. From that point on, Project
Kuiper grew quickly. By May 2020, Amazon projected that Project Kuiper would
33
AMZN000134 at -142.
39
remained in the research and development stage; production satellite launches were
85. On July 30, 2020, the FCC approved Amazon’s request to launch its
Project Kuiper constellation. Pursuant to the FCC’s order and 47 CFR § 25.164(b),
Amazon was required to “launch and operate 50 percent of its satellites no later than
July 30, 2026, and Kuiper must launch the remaining space stations necessary to
complete its authorized service constellation, place them in their assigned orbits, and
operate each of them in accordance with the authorization no later than July 30,
2029.”35 In other words, pursuant to its license from the FCC, Amazon had to launch
and operate 1,618 Project Kuiper satellites by July 30, 2026, and launch and operate
the remaining 1,618 by July 30, 2029. This put considerable time pressure on
Amazon. It not only had to quickly complete development of its Kuiper satellites
in-house, but it also had to figure out a way to deliver several hundred of these
34
AMZN000134 at -142.
35
In the Matter of Kuiper Sys., LLC Application for Auth. to Deploy & Operate A
Ka-Band Non-Geostationary Satellite Orbit Sys., 35 F.C.C. Rcd. 8324 (2020).
40
IV. THE BOARD ALLOWS BEZOS AND HIS MANAGEMENT TEAM
TO NEGOTIATE MULTI-BILLION DOLLAR CONTRACTS WITH
BLUE ORIGIN WITHOUT ANY OVERSIGHT OR PROTECTIONS
86. The FCC’s deadline heightened both the time pressure and the risks of
Project Kuiper. At exactly the same time that the FCC approved the Project Kuiper
constellation, and despite its unreliable track record, Bezos positioned Blue Origin
the Audit Committee that Amazon was engaged in discussions with Blue Origin,
for Project Kuiper.37 Amazon management also informed the Audit Committee that
the launch vehicle that ULA would use for Project Kuiper would “incorporate[] an
”39 Management clarified that Amazon was not requesting formal Audit
36
ULA is a joint venture between Boeing and Lockheed Martin. Amazon’s Section
220 documents interchangeably refer to negotiations and contracts with ULS (United
Launch Services) and ULA (United Launch Alliance), but there appears to be no
meaningful distinction between the two.
37
AMZN000155 at -159.
38
Id.
39
Id.
41
Committee approval at the time, but was simply giving the Committee a “heads up”
that it would seek formal approval if Amazon decided to pursue launch agreements
with either Blue Origin or ULA (because ULA would use Blue Origin engines) as
89. The July 28, 2020 memo identifying the unsupervised negotiations with
related parties concerning highly valuable contracts should have prompted the Audit
management’s negotiations with Blue Origin and ULA. Instead, the Audit
Committee did not bat an eye. Indeed, although the Audit Committee met on July
28, 2020, the meeting’s minutes do not even mention Amazon’s negotiations with
Blue Origin.41 Reflecting its utter lack of concern about this huge capital expense in
a transaction with Amazon’s CEO and largest stockholder, the Audit Committee also
did not take any steps to oversee the negotiation process or to insulate the process
from conflicts of interest. For the next several months, Bezos and his management
team were given free rein to negotiate both sides of the launch contracts, and were
40
AMZN000159.
41
The minutes for this meeting reflect only that the Audit Committee received an
update regarding “litigation and Code of Conduct” matters, with all other material
redacted as “non-responsive” to Plaintiff’s Section 220 demand. AMZN000160 at
-161.
42
free to exploit information he learned through Amazon about competitors’ services
of the program.44
91. This presentation again noted that Audit Committee approval would be
transactions.45 This disclosure (this time made to the full Board, rather than just to
the Audit Committee) again prompted no protective action from the Board: no
42
AMZN000162.
43
AMZN000162 at -171.
44
AMZN000162 at -172.
45
AMZN000162 at -168 n.6.
43
meeting and presentation and was not recused from any part of the Board’s
discussion.46
92. The two management memoranda to the Audit Committee and the
Board were remarkable for a number of reasons. The Board was fully aware that
were key risks. The Board was also aware that Bezos and Amazon
management were actively negotiating these critical and expensive contracts with
Blue Origin (owned by Bezos) and ULA (which relied on Blue Origin’s engines).
The Board also learned that the most glaringly obvious launch provider and Blue
Origin rival, SpaceX, was not even under consideration. The Board was aware that
these contracts would be worth at least $ , making the launch contracts the
acquisition for which the Board engaged financial and legal advisors to provide
46
AMZN000262.
47
See Whole Foods Market, Inc., Schedule 14A (July 21, 2017), at 27, 30
(referencing Goldman Sachs and Sullivan & Cromwell serving as Amazon’s
respective financial and legal advisors in connection with the Whole Foods
acquisition).
44
93. While Bezos remained free to negotiate both sides of Amazon’s
contract with Blue Origin, the Amazon Board met on May 25, 2021 to consider a
smaller, interim launch services agreement (“LSA”) between Amazon and ULS.
This LSA was for nine launches of Project Kuiper’s satellites using ULS’s Atlas V
launch vehicles (the “ULS LSA”).48 The ULS LSA involved a committed spend of
$ .
94. The Board was not provided any materials concerning the ULS LSA.
No outside experts advised the Board on whether the terms of the ULS LSA were
commercially reasonable or fair to Amazon. But the Board was told—in front of
Jeff Bezos—that they effectively had no choice but to approve the ULS LSA.
49
48
AMZN000457; AMZN000466.
49
AMZN000457 at -462.
45
95. Tellingly, even though Amazon was seeking to
nowhere to be found. SpaceX’s exclusion is all the more inexplicable because the
launches Amazon acquired on the ULS Atlas V cost more than SpaceX’s
launches on SpaceX’s Falcon 9 cost a relatively paltry $62 million at the time.
Compounding this cost advantage, the Falcon 9 also boasts a higher payload capacity
than the Atlas V. Given these factors, Amazon’s persistent refusal to even consider
SpaceX—and the Board’s failure to question its exclusion—lays bare the extent to
minimal guidance or discussion, the Audit Committee and the Board would soon
approve even larger contracts that would funnel billions of dollars to cash-starved
Blue Origin: contracts that the Board left Bezos free to negotiate himself.
97. On January 31, 2022, after allowing Bezos to freely run the process of
identifying launch providers (including the decision to not even consider SpaceX)
and to fully negotiate on behalf of both Amazon and Blue Origin for a year and a
46
half, Amazon management presented a summary of two fully-negotiated, related-
party contracts involving Blue Origin to the Audit Committee for approval. 50 These
LSAs included:
98. Together, under the terms of the Bezos Related-Party LSAs, Blue
directly and $ indirectly via ULS). Despite the fact that these were related-party
founder, and despite the fact that it had no insight whatsoever into how these
50
The agenda to and materials for this meeting are attached hereto as Exhibit A.
51
Ex. A at 635-636.
47
contracts were negotiated or whether any alternatives were considered, the Audit
99. The Bezos Related-Party LSAs were only one of several items on Audit
Committee’s agenda for its meeting on January 31, 2022, and were listed as agenda
item F (i.e., the Audit Committee discussed five items before the multi-billion-dollar
Bezos Related-Party LSAs).52 Because Amazon redacted the rest of the agenda for
were on the Committee’s agenda for this meeting. But of a 2 1/3 rd page agenda,
nearly one full page’s worth of redacted agenda items appear after the “Potential
Related Person Transactions” listed as agenda item F, suggesting that the Audit
Committee was due to discuss several topics after the Bezos Related-Party LSAs. 53
a.m., and concluded at 1:50 p.m. (a total duration of 3 hours and 20 minutes). 54 The
11:20 a.m. Given its seemingly extensive agenda, the Audit Committee in all
52
See Ex. A at 628-630.
53
Id.
54
The minutes of this meeting are attached hereto as Exhibit B.
48
likelihood spent no more than a few minutes discussing the Bezos Related-Party
101. That the Audit Committee spent such little time discussing the Bezos
Related-Party LSAs is not surprising, in light of the fact that the Audit Committee
was given very little information to actually discuss. The Audit Committee did not
receive a presentation about the Bezos Related-Party LSAs. The Audit Committee
did not hear from, nor did it receive any materials or analysis from, an independent
expert in the launch and satellite industry. The Audit Committee did not receive any
information about how Amazon negotiated the Bezos Related-Party LSAs; did not
know how many other counterparties Amazon negotiated with (if any); did not know
was not chosen; and, most importantly, did not know the extent to which Bezos
himself was involved in negotiating the contracts with his very own rocket company.
55
This entire meeting only lasted three hours and twenty minutes. Assuming that
the Audit Committee took no breaks at all, that the Committee spent equal time on
each agenda item, and even assuming that the Bezos Related-Party LSAs were the
last item on the Audit Committee’s agenda (which they clearly were not), the
Committee would have spent a mere 33 minutes discussing the Bezos Related-Party
LSAs. Given that a full page’s worth of agenda items and two and a half hours of
scheduled time that followed this agenda item, the Audit Committee is likely to have
devoted no more than a few minutes to discussing the Bezos Related-Party LSAs.
Because this uncertainty is caused entirely by Amazon’s decision to redact simple
agenda items, all reasonable inferences regarding the Audit Committee’s discussion
of the Bezos Related-Party LSAs should be drawn in Plaintiff’s favor.
49
102. The only information that the Audit Committee received about the
Bezos Related-Party LSAs at this meeting was four brief pages that provided a vague
summary of the key terms of the contracts. And this minimal amount of material
raises even more troubling questions—questions that the Audit Committee did not
bother to ask. For example, the Audit Committee was told that
56
The Audit Committee had no idea, and did not bother to ask.
103. Those four brief pages contained other details that should have caused
a responsible, functioning Audit Committee’s ears to perk up. For example, for both
of the Bezos Related-Party LSAs, the Audit Committee was told that
56
Ex. A at 633.
50
57
104.
insight into how the LSAs were negotiated and into the extent of Bezos’ role, the red
flags identified above—prompted the Audit Committee to do its job. Instead, the
Audit Committee summarily approved the Bezos Related-Party LSAs. 58 Worse, the
57
Ex. A at 635. Specifically, regarding the fee for the ULS LSA, the Audit
Committee was told:
Id. Regarding
the costs for the Blue Origin LSA, the Audit Committee was told:
Id. at 636.
58
Ex. B at 854.
51
Audit Committee rapidly approved these contracts in a single meeting despite not
having any knowledge or expertise in rocket launch contracts, without any guidance
or analysis from qualified advisors, without any insight into how the contracts were
negotiated, and without knowing the extent to which Bezos was involved in the
negotiations.
106. Two months later, the full Board somehow contrived to out-abdicate
videoconference for Amazon management to present three LSAs to the Board for
approval: the two Bezos Related-Party LSAs and one LSA with Arianespace.59 The
details and costs of the two Bezos Related-Party LSAs remained the same as
107. The Final LSAs made clear that Amazon had decided to pin the success
of its entire Kuiper program on Blue Origin. Amazon chose Blue Origin to launch
launches). Amazon also chose ULS—whose rocket’s ability to fly depends entirely
59
The agenda to and materials for this meeting are attached hereto as Exhibit C.
52
on Blue Origin engines—to launch another of its satellites (on 38 launches).
, Amazon was relying on Blue Origin and its engines to launch more than
of its licensed Kuiper constellation of 3,236 satellites, and 73% of its contracted
68 launches. If Amazon
depending on
Blue Origin. In other words, if Bezos’ Blue Origin failed, so would Amazon’s
Project Kuiper.
108. At its March 3, 2022 meeting, the Board’s only topic of discussion was
the three Final LSAs.60 Unlike the Audit Committee, the full Board had never
previously discussed the Final LSAs, and had not previously received any materials
concerning the Final LSAs. This March 3 meeting was, therefore, the first and only
time61 the Amazon Board as a whole learned anything about the Final LSAs that
60
The minutes for this meeting are attached hereto as Exhibit D.
61
The March 3, 2022 Board meeting is the only time that the Board as a whole
discussed the Final LSAs, or anything concerning the selection of launch providers
for Project Kuiper. As part of its Section 220 production, Amazon produced a
document titled “Board Meeting Agenda Items and Consent Topics – 2019-2022.”
This document is attached hereto as Exhibit E. Every single line of this list is
redacted as “non-responsive,” except for two: the March 3, 2022 meeting when the
Board approved the Final LSAs, and the Board’s May 25, 2021 meeting when it
approved the unrelated contract with ULS to use ULS’s legacy Atlas V rocket. This
document indisputably demonstrates that the Board discussed Amazon’s selection
of launch providers at only one meeting. See Exhibit E at 849-851.
53
would commit Amazon to spending up to $ —the second-largest capital
commitment, nearly 45% would go to the struggling rocket company founded and
109. Mirroring the Audit Committee’s abdication, the Board was given
presentation. The Board received no expert opinion or analysis. The Board received
the process, which (if any) other launch providers were considered, or, indeed, why
Amazon was choosing to pin the fate of Project Kuiper on a rocket company (Blue
Origin) that had proven itself to be woefully inept at actually producing rockets.
110. Instead, as with the Audit Committee, the full Board received scant
information—a 2.5-page summary of the basic terms of the Final LSAs. These
pages summarized the number of launches each company would provide, the total
62
$ to Arianespace + up to $ to Blue Origin + up to $
to ULS = $ .
63
Up to $ to Blue Origin directly + $ to Blue Origin indirectly
via ULS, because ULS relied on Blue Origin’s engines.
54
number of satellites each would launch, and the cost parameters of the three
contracts.64
111. Armed with this bare minimum of information, and without any insight
into Bezos-led management’s negotiation and bidding process, the Board needed
corporate funds to a company controlled by its founder and Executive Chair. But
the Amazon Board still somehow only needed 40 minutes to review, discuss, and
approve these contracts that they were learning about for the very first time.
112. Together with the likely few minutes that the Audit Committee had
devoted to discussing the Bezos Related-Party LSAs, the Amazon Board as a whole
needed barely one hour across only two meetings to approve $ worth of
launch contracts, which would send $ to Bezos’ Blue Origin. And this
space and satellite industry—because it had none. Amazon is not, of course, a space
64
See Ex. C at 646-648.
65
Ex. D. Reinforcing their lackadaisical attitude towards exercising their fiduciary
obligation to rigorously scrutinize transactions between Amazon and Bezos, two of
Amazon’s nominally independent directors—Defendants Huttenlocher and Nooyi—
did not even attend this meeting. Bezos himself was recused from the meeting, after
having been allowed to freely involve himself in negotiating the Bezos Related-Party
LSAs for nearly two years.
55
company. It is primarily an online marketplace that has only recently expanded into
terrestrial—offerings. For all its weightless ambition, Project Kuiper lies very much
outside the scope of Amazon’s core competency, and none of its directors appear to
which they had no familiarity. The Amazon Board did the opposite and, as detailed
further below, ultimately approved LSAs that are unfair to the Company.
114. The process by which the Audit Committee and the Board
rubberstamped the Final LSAs was irredeemably flawed. As described above, the
procurement process, and blindly approving the LSAs with the bare minimum of
time and attention. This non-existent process unsurprisingly had the effect of
56
Amazon management, led by Bezos, negotiated the Final LSAs
with Blue Origin and ULS, with no Board oversight or
protections whatsoever;
The Board did not receive any presentations about the Final
LSAs, but instead only received a vague summary of the
contracts’ terms;
116. In the most glaring example of this unfairness, Amazon appears to not
only four launch providers, ultimately choosing three—only one of which was
unaffiliated with Blue Origin. Despite being the launch provider with the most
proven track record and the lowest prices in the industry, SpaceX was seemingly not
considered by Amazon.
66
Although the minutes of this meeting claim that the board “asked questions of
management on aspects of the proposed LSAs, and discussion ensued,” the minutes
provide absolutely no detail about these questions. See Ex. D. Further, given that
this meeting lasted only 40 minutes in total, the amount of time left for the Board to
ask meaningful questions between management’s presentation and the Board’s
formal rubberstamping likely was minimal.
57
117. As described in Sections II.B and II.C, supra, SpaceX has had
remarkable success launching its various Falcon rockets, and became the first private
spaceflight company to deliver cargo and humans to the ISS. SpaceX has also set
records for the most launches of a single type of rocket in a year, and has deployed
dozens of satellites for third-party customers to orbit. It has also, of course, launched
hundreds of its own Starlink satellites into orbit. This track record stands in stark
contrast to Blue Origin and its New Glenn, which has suffered repeated delays and
setbacks. Worse, as of the filing of this complaint, more than two years after New
Glenn was first supposed to take to the skies, Bezos’ much-vaunted rocket on which
Amazon has pinned Project Kuiper’s fortunes has yet to take off.
118. On top of its proven reliability, SpaceX was also likely to represent a
considerably more affordable launch provider than at least two of the unproven
companies that Amazon chose. At the time that Amazon was negotiating the LSAs,
SpaceX publicly advertised that launches aboard its Falcon 9 rocket cost
approximately $62 million.67 SpaceX also states that the Falcon 9 is capable of
lifting payloads of 22,800 kilograms to lower Earth orbit (which is the orbit where
Amazon’s Kuiper satellites will be deployed). Based on public reports and industry
expectations that each Kuiper satellite will weigh approximately 600 kilograms, this
67
In March 2022, after Amazon had already entered into the Final LSAs, SpaceX
increased the advertised cost of Falcon 9 launches from $62 million to $67 million.
58
suggests that each launch of the Falcon 9 could deploy some 36 Kuiper satellites into
$ .
cost for SpaceX that equals or easily beats the per-satellite costs that Amazon
committed to in the Final LSAs. SpaceX’s recent launches of the Falcon 9 to deploy
its own Starlink satellites into orbit have carried approximately 21-22 satellites,
which are each estimated to weigh around 800 kilograms. 68 This suggests an actual
28 Kuiper satellites per launch. Even on the basis of these conservative assumptions,
the Falcon 9 would cost Amazon some $2.2 million per satellite. This
68
See Mike Wall, SpaceX Launches 22 Starlink Satellites, Lands Rocket at Sea,
SPACE.COM (Aug. 16, 2023), https://www.space.com/spacex-starlink-launch-group-
6-10; Stephen Clark, Spacex Unveils First Batch of Larger Upgraded Starlink
Satellites, SPACEFLIGHT NOW (Feb. 26, 2023),
https://spaceflightnow.com/2023/02/26/spacex-unveils-first-batch-of-larger-
upgraded-starlink-satellites/.
59
120. By excluding SpaceX, Bezos and his management team minimized bid
competition for the launch agreements and likely committed Amazon to spending
hundreds of millions of dollars more than it would have otherwise had to. For
example, if SpaceX were to launch the satellites that Amazon instead allocated
allocated to ULS, this contract would likely have cost Amazon some $ ,
121. SpaceX’s vast cost advantage means that Amazon likely could have
saved hundreds of millions of dollars by allocating even a small portion of its Kuiper
could have guaranteed that at least a portion of the Kuiper constellation reached orbit
69
This conservatively assumes SpaceX costs of $2.2 million per satellite, as
described above, multiplied by satellites. An even more conservative
assumption of $2.5 million per satellite with SpaceX still yields savings of some
$ ($ with SpaceX; $ contracted with
Arianespace).
70
This conservatively assumes SpaceX costs of $2.2 million per satellite, as
described above, multiplied by satellites. An even more conservative
assumption of $2.5 million per satellite with SpaceX still yields savings of some
$ ($ with SpaceX; $ million contracted with ULS).
60
on schedule—just the type of insurance Amazon tried to obtain through its contract
122. For his part, Musk has publicly stated that SpaceX is willing to provide
satellites into orbit for other companies under its SmallSat Rideshare Program,
established in 2019. For example, in early March 2023, SpaceX agreed to launch
hundreds of satellites into space for Rivada Space Networks GmbH (“Rivada”).
300 satellites for Rivada on twelve Falcon 9 missions that are scheduled for liftoff
proven launch services remain available to Starlink competitors—on the same terms
available to anyone else. While discussing SpaceX’s launches for OneWeb, Musk
stated that “[w]e charged them the same as anyone else.”71 During this discussion,
71
Micah Maidenberg, Elon Musk’s SpaceX Now Has a ‘De Facto’ Monopoly on
Rocket Launches, WALL STREET JOURNAL (July 7, 2023),
https://www.wsj.com/articles/elon-musks-spacex-now-has-a-de-facto-monopoly-
on-rocket-launches-3c34f02e.
61
Musk also acknowledged the obvious: “[I]f SpaceX had a goal of blocking rivals, it
124. Other Starlink rivals that chose SpaceX to launch their satellites have
SpaceX, satellite internet provider EchoStar’s head of operations stated, “You have
remains virtually the only proven, affordable launch provider with the “capacity and
Amazon’s Project Kuiper, a fair and robust bidding process overseen by a diligent
board would have at the very least considered SpaceX. As described above, SpaceX
not only has a proven track record, but would have been far cheaper than at least
two, if not all three, of Amazon’s chosen launch providers. This proven reliability
could have been invaluable to Amazon, which faces a July 30, 2026 deadline to
launch 1,618 Kuiper satellites into orbit. Choosing a reliable launch provider with
a proven rocket could have helped Amazon meet this FCC deadline and hedged
72
Id.
73
Id.
74
Id.
62
against the risk of delays in the development of the other next-generation rockets
126. Instead, Amazon chose three providers that have each yet to prove their
rockets can actually fly, and two of which depend on Blue Origin’s BE-4 engines
that are now years behind schedule. Blue Origin’s struggles—which were apparent
years before its LSA with Amazon—imperil the very viability of the entire Kuiper
program, which Amazon’s current CEO Jassy has described as a potential “fourth
ignoring potential candidates like SpaceX, Amazon’s supine Board placed this
exclusion of SpaceX has one obvious explanation: Bezos’ personal rivalry with
Musk. As detailed in Sections II.B and II.C, supra, SpaceX and Blue Origin have
competed for several lucrative government contracts, with Blue Origin losing out to
SpaceX at virtually every turn. In response, Bezos has resorted to public letters of
complaint, legal appeals, and lawsuits, each effort growing in desperation to wrest
government contracts away from Musk and SpaceX. And each time, Musk has
responded by publicly taunting Bezos, making crude and sexual jokes at Bezos’
expense and mocking Bezos for treating suing SpaceX as a full-time job.
63
128. After being told that Amazon was in discussions with Blue Origin
(while Bezos was still Amazon’s CEO), the Audit Committee implemented no
For a year and a half, Bezos was free to identify and negotiate with launch providers
for Amazon, while also free to negotiate against Amazon on behalf of Blue Origin.
Given their bitter track record, Bezos had every reason to exclude Musk’s SpaceX
from the process entirely. And Bezos, it must be assumed, could not swallow his
pride to seek his bitter rival’s help to launch Amazon’s satellites. Bezos’ unchecked
of the most reliable and most affordable launch provider from Amazon’s already-
129. Further, once Amazon announced that it had entered into the multi-
billion-dollar Final LSAs on April 5, 2022, Amazon’s stockholders were less than
on April 5, when the Final LSAs were announced; and continued to slide during the
130. Since approving the Final LSAs more than a year ago, Amazon has yet
to launch even a prototype of its Kuiper satellite into orbit. Yet, Amazon has already
64
paid approximately $1.7 billion to the three launch providers, including $585 million
to Blue Origin directly, and an unknown additional amount to Blue Origin indirectly
via ULS.
develop its New Glenn rocket have continued. After delaying its original test launch
window in 2018 from 2020 to late 2021, the New Glenn has yet to take flight. In
early 2021—while Bezos-led Amazon was actively negotiating with Bezos-led Blue
Origin—Blue Origin delayed the New Glenn’s launch again to the fourth quarter of
2022.
132. Then, in March 2022—the very same month the Board rubberstamped
the Final LSAs—Blue Origin announced that the New Glenn would not fly in 2022
at all as it had promised. When pressed for an updated timeline, a Blue Origin
133. Blue Origin’s struggles have continued into 2023. In March 2023, one
of Blue Origin’s BE-4 engines (which will power both the New Glenn and Vulcan
Centaur rockets, and therefore underpin the entire Kuiper program) exploded ten
75
Emre Kelly, Blue Origin Again Delays Upcoming New Glenn Rocket's First
Launch From Florida, FLORIDA TODAY (Mar. 23, 2022),
https://www.floridatoday.com/story/tech/science/space/2022/03/23/blue-origin-
again-delays-new-glenn-rockets-first-florida-launch/7130846001/.
65
seconds into a static fire test.76 This particular engine was meant to complete its
testing process in July 2023, and then be used on ULA’s second launch of Vulcan
Centaur rocket.
134. Separately, and also in March 2023, one of ULA’s Vulcan Centaur
originally planned to launch this particular rocket in May 2023. Instead, in June
2023, ULA announced that it had identified the cause of the explosion, and was
shipping the rocket from the launch pad back to ULA’s factory for further
modifications. This means that ULA’s maiden flight of the Vulcan Centaur is
135. In turn, this also means that Amazon’s launch of its prototype Kuiper
rockets are jeopardizing Project Kuiper, Amazon announced in August 2023 that it
planned to launch its prototype satellites not on the Vulcan Centaur at all, but on the
136. With this forced switch to the Atlas V, Amazon now expects its
prototype satellites to launch only in the fourth quarter of 2023—some six months
76
Michael Sheetz, Jeff Bezos’ Blue Origin Rocket Engine Explodes During Testing,
CNBC (July 11, 2023), https://www.cnbc.com/2023/07/11/jeff-bezos-blue-origin-
be-4-rocket-engine-explodes-during-testing.html.
66
behind schedule. Amazon management originally told the Board that it planned to
launch its prototype satellites in the second quarter of 2023. If Amazon actually
launches its prototype satellites in the fourth quarter of 2023 (which remains highly
uncertain), it will have well under three years to complete validation testing, finalize
the design of its satellites, produce its constellation of 1,618 satellites with the final
design, and launch all 1,618 satellites into orbit. This is an impossibly tight timeline,
though not one of its chosen rockets have yet had a single successful flight.
137. Tellingly, when asked by the press for an update on Project Kuiper in
July 2023 following news of ULA’s delay, Amazon refused to give one. Instead,
Amazon simply regurgitated what it learned from ULA—that ULA plans to launch
the Vulcan Centaur by the end of 2023.77 Even more alarmingly, during recent
77
Michael Kan, Amazon's Project Kuiper Satellite Internet System Faces Yet
Another Delay, PCMAG (July 18, 2023), https://www.pcmag.com/news/amazons-
project-kuiper-satellite-internet-system-faces-yet-another-delay.
78
See Michael Sheetz, Jeff Bezos’ Blue Origin Rocket Engine Explodes During
Testing, CNBC (July 11, 2023), https://www.cnbc.com/2023/07/11/jeff-bezos-blue-
origin-be-4-rocket-engine-explodes-during-testing.html.
67
138. The near-constant drumbeat of delays and bad news from Blue Origin
and its business partner and customer, ULA, now threatens to jeopardize the entire
Kuiper program, underscoring the harm the Board’s utter failure to comply with its
fiduciary duties has caused to Amazon. The brief summary terms sheets provided
to the Audit Committee and the Board in assessing the Bezos Related-Party LSAs—
New Glenn and the BE-4 engine. Further, the minutes from the only two meetings
discussion about the rocket’s development, about previous delays, or about why
Amazon should entrust the vast majority of its Kuiper network to Blue Origin’s long-
troubled rocket.
139. Nor is it clear whether the Board ensured that Amazon will have any
protections, monetary or otherwise, in the event that Blue Origin fails to develop the
New Glenn in time to launch the many hundreds of Kuiper satellites that it is
supposed to. Indeed, with Amazon having already paid more than half a billion
140. In stark contrast to the constant setbacks that Amazon’s three chosen
suppliers have suffered, SpaceX has continued to thrive since the Board approved
the Final LSAs. SpaceX accounted for 66% of customer flights from American
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launch sites in 2022, and a dominant 88% of such flights in the first six months of
2023.79 Musk himself recently estimated that SpaceX would carry a full 80% of the
mass launched from Earth into space in 2023, underscoring the sheer dominance that
SpaceX has over the launch industry because of its reliability and its low cost. 80
that it launched one of its Falcon 9 rockets for a record 16th time—a hugely
impressive reusability milestone, particularly when set against the fact that Blue
Origin may prove unable to reuse any of its rockets at all. 81 By July, SpaceX had
already conducted more than 40 successful launches in 2023: in other words, more
launches in six months than Blue Origin will supposedly provide to Amazon over
several years.
142. By completely abdicating its fiduciary duties, the Board has already
exposed Amazon to substantial harm and placed the Company’s entire Kuiper
program at needless risk. And with each passing day, as Amazon’s chosen launch
79
Micah Maidenberg, Elon Musk’s SpaceX Now Has a ‘De Facto’ Monopoly on
Rocket Launches, WALL STREET JOURNAL (July 7, 2023),
https://www.wsj.com/articles/elon-musks-spacex-now-has-a-de-facto-monopoly-
on-rocket-launches-3c34f02e.
80
Id.
81
Amy Thompson, SpaceX Sets a New Reusability Record, THE HILL (July 11,
2023), https://thehill.com/homenews/space/4090715-spacex-sets-a-new-
reusability-record/.
69
partners (Blue Origin in particular) continue to struggle and SpaceX continues to
prove itself, this Board-inflicted harm continues to grow. Plaintiff brings this action
DERIVATIVE ALLEGATIONS
the Company as a direct result of the breaches of fiduciary duties by the Defendants.
144. Plaintiff has owned Amazon stock continuously during the time of the
145. Plaintiff will adequately and fairly represent the interests of Amazon
and its shareholders in enforcing and prosecuting its rights and has retained counsel
146. Plaintiff did not make a demand on the Board to bring suit asserting the
claims set forth herein because pre-suit demand was excused as a matter of law.
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oversee and protect Amazon in connection with its negotiation of multi-billion dollar
launch contracts with Blue Origin and ULS. Bezos is Amazon’s founder and largest
stockholder, and served as Amazon’s CEO until July 2021. At that time, Bezos
transitioned to Executive Chair, and appointed his protégé Jassy to replace him as
CEO. Throughout the entire period that Amazon negotiated the Final LSAs, Bezos
led Amazon’s management team. Bezos also founded and owns Blue Origin.
148. The Audit Committee was notified of these hugely expensive related-
party negotiations in July 2020, while the Board as a whole was notified just four
months later, in November 2020. Despite being told that Bezos-led Amazon was
Rubinstein, Stonesifer, and Weeks did nothing to oversee these negotiations, did
nothing to ensure that Bezos’ obvious conflict of interest would not jeopardize
Amazon’s interests, and did nothing to ensure that these negotiations would be
conducted at arm’s-length.
149. These Director Defendants also never questioned why the space
industry’s most successful and most proven launch provider, SpaceX, was not even
under consideration. As detailed in Section II, supra, Bezos and Musk are bitter
rivals. Blue Origin has repeatedly lost out to SpaceX in competing for lucrative
government launch contracts, and Musk has publicly and repeatedly antagonized
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Bezos with Blue Origin’s failures. Bezos was plainly motivated to not permit a
rival. But even though this rivalry has nothing to do with Amazon, Amazon suffered
substantial financial harm as a result of Bezos’ personal war with Elon Musk. Bezos’
and Blue Origin’s rivalry with SpaceX means that Amazon was unable to consider
a launch provider that is not only far cheaper, but that has a proven, reliable heavy-
lift rocket: something to which none of Amazon’s three chosen counterparties can
lay claim.
engaging in virtually no scrutiny once the Bezos-led Final LSAs were fully
and Weeks), the Bezos Related-Party LSAs were only one of many different items
on the Committee’s agenda for its January 2022 meeting, and most likely received
no more than a few minutes’ worth of discussion before they were breezily approved.
Likewise, for the full Board, which had never previously learned anything about the
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Gorelick, McGrath, Rubinstein, Stonesifer, and Weeks signed off on the Final LSAs
at this meeting.82
Defendant Jassy because he is Bezos’ hand-picked protégé and successor, has reaped
$305 million in compensation for serving Bezos at Amazon, and currently serves as
Amazon’s CEO. After many years of being mentored for the CEO role by Bezos
and serving as one of his chief lieutenants, Jassy is plainly not independent of Bezos.
In addition, Jassy is not independent for the additional reason that he currently serves
Bezos freely negotiated on behalf of both Amazon and Blue Origin, because Bezos
has an indisputable material financial and personal interest in the Final LSAs, and
received the FCC’s license in 2020, Bezos put Blue Origin at the front of Amazon’s
queue of potential launch providers—despite knowing that its New Glenn rocket
was years behind schedule. Bezos-led Amazon also completely excluded Bezos’
longtime personal rival Musk’s launch company from the process, despite SpaceX
82
Defendants Bezos, Nooyi, and Huttenlocher did not attend this meeting.
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being the most obvious choice to, at the very least, hedge some of the risk associated
with choosing three unproven rockets. Amazon’s selection of the aging Atlas V
rocket for nine launches rather than SpaceX underscores the extent to which Bezos’
153. Under these circumstances, the Board cannot be expected to bring the
claims asserted herein, and the actions of the Board challenged herein cannot be
CAUSES OF ACTION
COUNT I
Breach of Fiduciary Duty
(Derivatively Against The Director Defendants)
154. Plaintiff realleges the preceding paragraphs as set forth above and
Company and its shareholders. As such, they owe the Company the highest duties
156. The Director Defendants had a duty to evaluate and consider the Final
LSAs and ensure that they were fair to Amazon and its stockholders including, but
not limited to, by evaluating and considering alternative agreements with other
74
157. The Director Defendants breached their fiduciary duties and did not act
in good faith because they knew they were making material decisions about the
regard to whether the decision to enter into the LSAs with Blue Origin and ULA
would cause the Company and its stockholders injury and loss. As discussed above,
the Director Defendants failed to oversee the negotiation of the LSAs, failed to
adequately informed, failed to adequately deliberate, and adopted a “we don’t care
owned by Bezos.
Director Defendants were not acting in good faith toward the Company and breached
COUNT II
Breach of Fiduciary Duty
(Derivatively Against the Officer Defendants)
160. Plaintiff realleges the preceding paragraphs as set forth above and
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161. Bezos, as Executive Chair of Amazon, and Jassy, as Amazon’s CEO,
are fiduciaries of the Company and its stockholders. As such, they owe the Company
the highest duties of good faith, fair dealing, due care, candor and loyalty when
162. Bezos and Jassy breached their fiduciary duties as officers of Amazon.
Amazon management dominated and directed the process through which the
Company selected, negotiated and entered in the LSAs, including by selecting which
entities (including Blue Origin) to enter into agreements with and failing to apprise
the Board fully of the negotiation, process, risks, and terms of the LSAs.
in pursing and structuring the related-party LSAs, the Officer Defendants did not act
in good faith, failed to exercise due care, and acted disloyally towards the Company
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PRAYER FOR RELIEF
(f) Such other and further relief as this Court may deem just and
proper.