A new 777-300ER freighter conversion program is at the center of a lawsuit filed by Wagner Aeronautical and Mammoth Freighters against Sequoia Aircraft Conversions and its founder David Dotzenroth, among others.
According to a complaint filed with the U.S. District Court for the Southern District of California on May 25, the plaintiffs claim that Dotzenroth maliciously misappropriated confidential and proprietary information in order to launch a competing conversion program for the 777-300ER that Sequoia announced in late September 2020, in partnership with Wichita State University’s National Institute for Aviation Research (NIAR).
Sequoia told Cargo Facts at the time that it was building a team with prior experience across multiple P2F platforms.
Wagner Aeronautical founder Bill Wagner has been involved in conversion programs for models including the 727, 737, 747, 757 and 767. He founded Mammoth Freighters in late 2020 with Bill Tarpley, chief executive of Creative Conversion Management and former chief operating officer of Cargo Aircraft Management, for the purpose of executing a 777 conversion program.
In addition to David Dotzenroth and his company, Sequoia Aircraft Conversions, the other defendants in the case are CAI Consulting, of which Dotzenroth is president and CEO, his son Wiley Dotzenroth, and Andrew Mansell and Steven Welo, partners in finance and lease advisory firm Split Rock Aviation.
Claiming loss of proprietary assets, competitive advantage and potential customers and partners, Wagner and Mammoth are seeking compensatory damages, “punitive or statutory damages in excess of $50 million,” and an injunction that will prevent Sequoia from using and benefiting from trade secrets, according to the complaint.
Bill Wagner began planning a 777 conversion with Tarpley and Dotzenroth around 2017 or 2018, and provided the engineering and technical expertise based on his experience with previous conversion products, according to the filing. Tarpley, meanwhile, was responsible for project management and the financial, marketing and customer aspects. The two claim they were confident that their combined know-how and experience would be sufficient to secure investment and certification, and that Dotzenroth, “who lacked expertise and experience with conversion programs,” would be able to help attract funding for the program, the complaint states.
Wagner and Tarpley claim they spent more than a year developing the business plan, budget and schedule roadmap, and that Dotzenroth had access to this information and other confidential emails and documents, including how they intended to approach and negotiate with investors and customers. According to the complaint, Dotzenroth’s contributions to the project were “minimal” because he lacked engineering and technical expertise.
The three men began meeting with potential investors and customers in late 2018, but by mid-2019 had not managed to secure funding for their project, according to the allegations. Around May 2019, they entered discussions with an investment firm, at which point, Tarpley drafted an LLC agreement for a company in which each of the three would hold a one-third stake. However, Tarpley “struggled to find a role for Dotzenroth that would justify the one-third ownership interest,” according to the allegations.
Wagner and Tarpley then decided to proceed without Dotzenroth and no longer included him in their communications after a June 2019 meeting, according to the complaint.
In November 2019, Dotzenroth set up a meeting with the NIAR and invited Wagner, but arranged for Wagner to tour the facilities while he delivered a presentation on the conversion program, the plaintiffs said.
Then, in early 2021, Dotzenroth and Sequoia presented the conversion program to “an air cargo operator,” identifying the intellectual property owner as Sequoia, according to the plaintiffs.
Sequoia, for its part, announced in February 2021 that it had engaged with Split Rock Aviation to bring its 777-300ER conversion to market.
Meanwhile, Wagner and Tarpley became co-CEOs of Mammoth Freighters on Dec. 1, 2020. Under an April 2021 agreement between Mammoth and Wagner Aeronautical, Wagner Aeronautical would obtain and maintain an STC for a 777-300ER conversion, implement these conversions, and provide engineering and technical support. Wagner Aeronautical also “agreed to assign and transfer to Mammoth Freighters all intellectual property rights in work performed under [that] agreement,” according to the filing.
Wagner and Tarpley allege that Sequoia had derived its conversion program from their own business plan and roadmap, and that Dotzenroth had tried to recruit Wagner and Tarpley because “he could not create a competitive conversion program on his own.”
Sequoia has allegedly already approached “some of the largest air freight companies,” the complaint states. Wagner and Tarpley claim that, as a result of the defendants’ actions, Mammoth Freighters stands to lose customers because “only a limited number of potential customers exist,” referring to “a large air cargo operator and two leading express delivery services” as examples.
Dotzenroth did not provide a comment to Cargo Facts by press time today.
The defendants must file a response within twenty-one days of service of the claim, according to the Federal Rules of Civil Procedure.
Cargo Facts EMEA, taking place June 2-3 as a virtual experience, is the event for exploring opportunity in the EMEA region. The event continues to bring together the best, brightest, and most innovative executives in the global air cargo industry. Learn more and register at www.cargofactsemea.com.