DuPont Shareholder Sues Board Over $1 Billion Court Loss
A DuPont Co. (DD) shareholder sued company directors and Chief Executive Officer Ellen Kullman, claiming mismanagement of the seed business led to a $1 billion judgment that threatens to wipe out the company’s cash.
In a complaint filed yesterday in U.S. District Court in Wilmington, Delaware, shareholder Robert Zomolosky asked a judge to force Kullman and the board to pay any damages stemming from DuPont’s loss of a patent lawsuit involving Monsanto Co. (MON)’s weed killer, Roundup. The jury award, the third-biggest last year, could grow to $3 billion depending on future legal rulings, according to the lawsuit.
“The DuPont board lost sight of its mandate and its responsibilities, and acquiesced in unlawful legal maneuvers and deceptive public statements in conscious disregard of its obligations,” Zomolosky claimed in the complaint.
The patent case grew out of the company’s effort to compete with Monsanto’s Roundup Ready crop business, which held 90 percent of the market for soybean and cotton seeds as of 2008, according to the lawsuit. Because DuPont’s research wasn’t producing results, company managers used Monsanto’s technology to try to create seeds that could resist Roundup, a key requirement for farmers, Zomolosky claims.
The Wilmington, Delaware-based company plans to appeal the jury’s verdict, according to the complaint, and has asked the judge to overturn the award.
DuPont’s General Counsel Thomas L. Sager said in an e- mailed statement that the company handled the Monsanto patent case appropriately.
“We are confident in the appropriateness of all our actions and the points raised in this lawsuit are simply a repetition of those we have repeatedly addressed in the course of the Monsanto litigation,” Sager said.
Monsanto sued in 2009 and won its case in August when a federal jury in St. Louis, where Monsanto is based, ruled against DuPont.
During that patent lawsuit, U.S. District Judge Richard Webber ruled that DuPont “knowingly perpetrated a fraud against the court,” by lying in court and to investors about its right to use Monsanto’s seed technology.
DuPont falsely claimed that it acted within the terms of a 2002 licensing contract, and continued to publicly state that position even after it was precluded from making such arguments to the jury, Webber said.
The shareholder complaint, filed on behalf of the company as a so-called derivative lawsuit, seeks a jury trial, corporate governance improvements and unspecified damages from directors.
The lawsuit also says DuPont’s board “took no known actions against any of the malefactors,” wrongly gave Kullman a pay raise, and “has failed to enact a meaningful ‘clawback policy’” to recover its money.
The case is Zomolosky v. Kullman, 13-cv-00094, U.S. District Court, District of Delaware (Wilmington).
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