Del. High Court Nixes Suit Against DuPont Over Seed Fiasco

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By Michael Greene

Jan. 28 — A DuPont Co. investor can't revive a derivative lawsuit alleging that officers and directors breached their fiduciary duties in connection with the company's efforts to compete with Monsanto's “Roundup Ready” seed, the Delaware Supreme Court ruled Jan. 28.

In a brief order, the state high court affirmed a May 2015 Delaware Chancery Court decision dismissing the case on the ground that the investor failed to show E.I. du Pont de Nemours & Co.'s board wrongfully rejected a demand to take legal action on the company's behalf .

Business Judgment Not Rebutted

The claims filed by the stockholder, a Pennsylvania pension fund, arose out of DuPont's attempts to develop its own competitor product to “Roundup Ready.”

Finding it difficult to develop a commercially viable product, DuPont began working on a product that combined, or “stacked,” its own technology with Monsanto's.

Subsequently, Monsanto sued DuPont in federal district court for patent infringement, which led to a jury awarding Monsanto $1 billion in damages. However, the companies agreed to set aside the jury award by entering into a settlement in which DuPont agreed to pay Monsanto $1.7 billion over 10 years in exchange for a licensing agreement.

In his April 2015 decision, Vice Chancellor Sam Glasscock III said the investor failed to show that the board's refusal to take legal action was an invalid exercise of business judgment.

Similar Action

In a related development, the U.S. Court of Appeals for the Third Circuit Jan. 15 affirmed the dismissal of a derivative lawsuit filed against DuPont's board for allegedly ignoring red flags that it was infringing Monsanto's patent. The court, applying Delaware law, concluded that the shareholder wasn't excused from asking the DuPont board to file the action: Zomolosky v. Kullman, 2016 BL 11150.

To contact the reporter on this story: Michael Greene in Washington at

To contact the editor responsible for this story: Yin Wilczek at

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