First Solar Wins Dismissal of Putative Securities Class Action

On June 23, 2023, Judge Michael T. Liburdi of the U.S. District Court for the District of Arizona dismissed with prejudice all claims brought against Cravath clients First Solar, Inc. and its executives (collectively, “First Solar”) in a purported securities class action litigation concerning the company’s Series 6 solar module and its Project Development business.

First Solar is a solar technology company that manufactures thin‑film solar modules and sells turn‑key solar power systems to customers through its Project Development business. Plaintiffs, two pension funds that purchased First Solar stock, sued First Solar under Sections 10(b) and 20(a) of the Securities Exchange Act alleging that First Solar made misstatements concerning the cost‑per‑watt and watts‑per‑module capabilities of its new Series 6 solar module and misled investors with statements concerning First Solar’s future business opportunities in its Project Development business while the company was considering a sale. Cravath filed a motion to dismiss Plaintiffs’ amended complaint in August 2022, arguing that Plaintiffs had failed to allege loss causation, scienter or falsity. Judge Liburdi heard oral argument in early January. Shortly thereafter, Judge Liburdi granted First Solar’s motion to dismiss, while providing Plaintiffs leave to amend.

Plaintiffs filed a second amended complaint in February 2023, recycling their allegations concerning First Solar’s Series 6 solar modules and Project Development business. Cravath filed a renewed motion to dismiss the second amended complaint also in February 2023, again arguing that Plaintiffs failed to allege loss causation, scienter or falsity. In his June 2023 decision, Judge Liburdi dismissed all of Plaintiffs’ claims, adopting Cravath’s loss causation and scienter arguments. For loss causation, Judge Liburdi found that none of Plaintiffs’ three alleged disclosures were corrective, as none had any connection back to the alleged misstatements and because much of the information provided therein only confirmed information that had been disclosed to the market on a previous earnings call. For scienter, Judge Liburdi concluded that Plaintiffs’ claims—including those concerning First Solar executives’ alleged “access to information” and the core operations doctrine—failed to show that First Solar had any intent to defraud.

The Cravath team was led by partners Karin A. DeMasi and Lauren M. Rosenberg, who argued the original motion to dismiss, and included associates Jill E. Greenfield, Sarah G. Edwards and Kaitlin S. Phillips.

The case is Palm Harbor Special Fire Control & Rescue District Firefighters Pension Plan, et al. v. First Solar, Inc., et al., No. CV‑22‑00036‑PHX‑MTL (D. Ariz.).