By Scott Hamilton
Nov. 1, 2021, © Leeham News: A nasty trade secret theft lawsuit between two companies vying to compete in aftermarket freighter conversions expanded this month to include Fortress Investments and the National Institute for Aviation Research at Wichita State University (NIAR).
Last July, Mammoth Freighters LLC, Wagner Aeronautical and their principals filed a lawsuit in the US Southern District of California against Sequoia Aircraft Conversions and its principals. Mammoth alleged Sequoia and its founders stole trade secrets from Mammoth to start their company in competition to Mammoth.
Mammoth’s principals initially approached Sequoia’s principals to partner and pursue P2F conversions of the Boeing 777-200LR and 777-300ER. When agreements could not be reached, the parties went their separate ways. In late 2019, Mammoth alleges in the lawsuit, it discovered the newly formed Sequoia was using materials, designs, engineering, and business plans shared in pursuit of the partnership to develop its own P2F program. By 2021, Mammoth found funding from Fortress. Sequoia found its own funding and had partnered with NIAR for engineering.
Sequoia denied the allegations, claiming the documents weren’t labeled confidential and proprietary. The plaintiffs also waited nearly a year and a half before bringing the lawsuit. Sequoia also claims that Mammoth and its principals have “unclean” hands, a legal term meaning “An equitable defense that bars relief to a party who has engaged in inequitable behavior (including fraud, deceit, unconscionability, or bad faith) related to the subject matter of that party’s claim.” The company claims Mammoth principals presented to Sequoia proprietary documents from Boeing, Precision Conversions and IAI Bedek. Wagner was the Precision Conversions engineer for the Boeing 757 P2F program.
It also points to a court case in Arizona in which one of Mammoth’s principals was found liable for trade secrets theft. A $3.8m judgement was issued and the principal declared bankruptcy.
A settlement conference was held in the US Southern District of California in September, but there apparently was an unsuccessful outcome. Sequoia on Oct. 14 filed a Motion to Compel Production of records under subpoena from Fortress. Fortress is not a party to the lawsuit, but as Mammoth’s deep pockets, Sequoia seeks records from Fortress relevant to Mammoth’s claim that Sequoia engaged in trade secrets theft. Fortress objects to turning over documents.
Then on Oct. 22. Mammoth asked the court for permission to file an amended complaint to include NIAR and Wichita State university. Following discovery, Mammoth now claims NIAR “willingly” received Mammoth trade secrets from Sequoia.
IAI Bedek announced its 777-300ER P2F program in 2019 with lessor GECAS as its launch customer. While Mammoth and Sequoia are duking it out in court, IAI announced a second conversion line to supplement its one in Tel Aviv. This one is in Abu Dhabi, a prime location for the Big 3 Middle East airlines, each of which operate large fleets of 777-300ERs. Etihad Airways, headquartered in Abu Dhabi and one of the Big 3, partnered with IAI in this project.
According to market intelligence, Mammoth hoped for a launch order from Emirates Airline. But Emirates instead placed its order for 777-300ERF conversions with IAI Bedek to be done in Abu Dhabi. Market intelligence also indicated that another customer Mammoth is counting on appears near to placing an order with IAI. Other potential customers are also pausing while the lawsuit continues, according to market intelligence.