DuPont Co.’s board doesn’t have to face a $1 billion investor lawsuit claiming directors were responsible for the company’s botched attempt to develop herbicide-resistant crops, a Delaware judge ruled.
DuPont directors properly oversaw executives’ efforts to come up with a competing product to Monsanto Co.’s Roundup Ready line of genetically modified crops and shouldn’t be sued for wasting corporate assets on the project, Delaware Chancery Court Judge Sam Glasscock ruled Tuesday.
The board “acted in good faith” when refusing to acquiesce to shareholder demands that officials be held responsible for wrongfully incorporating Monsanto’s technology for herbicide-tolerant soybeans into their own brand of seeds, the judge concluded.
A Pennsylvania pension fund that holds DuPont shares sued the directors after a federal jury in St. Louis found in 2012 that DuPont officials infringed Monsanto’s patented gene technology. The panel awarded Monsanto $1 billion in damages.
DuPont’s Pioneer seed unit has struggled to compete with Monsanto in developing profitable genetically modified crops, such as Roundup Ready soybeans that withstand the company’s weed killer. Monsanto reported more than $8.5 billion in sales of its genetically modified corn and soybeans last year, according to data compiled by Bloomberg.
Genetically modified crops, which contain genes added from other species, account for about one-third of commercial seed sales with a global market of about $15.7 billion.
DuPont’s failure to grab a bigger share of the market has drawn criticism from billionaire investor Nelson Peltz, who wants a seat on DuPont’s board. Shareholders are set to vote on Peltz’s bid for a director’s slot at Wednesday’s annual meeting.
Dan Turner, a spokesman for Wilmington, Delaware-based DuPont, said Tuesday the company was pleased Glasscock dismissed the case.
The Ironworkers District Council of Philadelphia & Vicinity Retirement & Pension Plan sued DuPont officials, including Chief Executive Officer Ellen Kullman, accusing them of failing to properly supervise development of biotech crops. Kullman also serves as head of DuPont’s board.
The DuPont officials’ miscues led to the $1 billion jury award and a judge’s finding that the company lied about whether it misappropriated Monsanto’s soybean technology, the fund said in court filings.
After losing the soybean case, Monsanto agreed to set aside the $1 billion verdict in exchange for DuPont licensing the newest Roundup Ready beans for $1.75 billion in royalties to be paid through 2023.
Glasscock found that Kullman and other directors, after reviewing the handling of the Monsanto case and the biotech-crop project as a whole, properly refused the fund’s request to sue the officials who sought to develop the DuPont line of genetically modified seeds.
The fund wasn’t able to produce any evidence that raised a “reasonable doubt about the board’s good faith in declining to pursue a waste claim,” he said.
The case is Ironworkers v. Andreotti, CA9714, Delaware Chancery Court (Wilmington).