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ICON Aircraft Shareholders Resoundingly Defeat Motion to Dismiss in Stolen IP Derivative Action
- Client News
- January 12, 2023
Representing minority shareholders of ICON Aircraft Inc., including private equity funds and the former CEO of Boeing, Paul, Weiss defeated a motion to dismiss by ICON’s majority shareholder, Pudong Science and Technology Investment (PDSTI), allowing the case to proceed towards trial.
In their lawsuit filed in June 2021 in the Delaware Court of Chancery, our clients allege that PDSTI and certain ICON board members appointed by PDSTI breached their fiduciary duties, among other claims, by expropriating ICON’s technological assets to China. Specifically, they accuse PDSTI of using its controlling stake in ICON, a California-based light aircraft maker, to systematically dismantle the company and destroy its value in furtherance of PDSTI’s goal of expropriating ICON’s proprietary design and manufacturing technology to a PDSTI affiliate.
The minority shareholder plaintiffs allege that the majority of ICON’s 11-member board were too conflicted to reasonably consider the shareholders’ demands because PDSTI threatened directors with removal if they did not vote with PDSTI, and then did remove them if they acted independently. Our complaint cites detailed instances of directors and executives resigning in protest of PDSTI’s actions. PDSTI contended that plaintiffs failed to show that a demand on the board was futile.
In a post-argument ruling on January 12, Vice Chancellor J. Travis Laster agreed with our arguments. As reported in Law360, the vice chancellor called PDSTI a “bullying controller” and noted that a ruling in PDSTI’s favor would make a “farce” of a bedrock test for shareholders’ standing to bring derivative actions. “The question right now is whether there is reason to doubt that this board could consider demand, that they would actually sue the controller," Vice Chancellor Laster said in his oral ruling. "Boy, is there reason to doubt that."
The Paul, Weiss team includes litigation partner William Isaacson and counsel Melissa Felder Zappala and Matthew Stachel.