In my recent roundup of the top stories in the world of directors’ and officers’ liability and insurance, I noted that a host of macroeconomic factors – such as supply chain disruptions and labor supply constraints — continue to weigh on companies and, in some instances, translate into securities class action litigation. I have also noted in numerous prior posts how COVID-19 has itself resulted in securities lawsuit filings. In the latest example of a securities suit filing resulting from these various phenomena, last week a shareholder plaintiff filed a securities lawsuit against the robotic aircraft systems development and service company AeroVironment after the company delivered disappointing results due to supply chain woes resulting from COVID-19. The complaint is both representative of these types of cases and illustrative of how these kinds of concerns, even after a significant time lag, can result in a current securities lawsuit filing. A copy of the plaintiff’s August 30, 2023, complaint can be found here.


AeroVironment develops and services robotic aircraft and missile systems for governments and other customers.  According to the subsequently filed securities lawsuit complaint, in 2021, at the beginning of the company’s 2022 fiscal year, the company made a series of positive statements about its ability to deliver on its financial and operational commitments despite a series of “continuing macroeconomic challenges.” In particular, the company emphasized its ability to continue to meet its objectives despite COVID-19 disruptions and supply chain challenges. In discussing the company’s expected revenue for 2022, company officials cited the company’s strategic acquisitions that expanded its portfolio by six product lines. The company officials also cited the company’s record backlog, which the officials said would protect the company’s revenue streams.

In September 2021, when the company released its results for the first quarter of fiscal 2022, the company’s officials provided reassuring statements about the company’s ability to manage the impacts of COVID-19 and related supply chain disruption. In reconfirming the company’s guidance for the 2022, the company officials cited several factors including the company’s backlog metrics. Among other things, during the earnings call, company executives said that the company had managed the impact of COVID-19 “extremely well.”

However, in December 2021, in connection with the company’s earning release for the second quarter of fiscal 2022, the company released disappointing results and reduced its guidance for the full fiscal year 2022. In explaining these developments, company officials said that “The negative impact from supply chain delays, extended procurement cycles due to the global COVID-19 pandemic, slower decision making in Washington tied to Continuing Resolution related budget uncertainties and staffing shortages have prevented us from realizing the growth and bottom line results expected at the start of this fiscal year.” According to the subsequently filed securities lawsuit complaint, the company’s share price declined nearly 27% on this news.

The Lawsuit

On August 30, 2023, a plaintiff shareholder filed a securities class action lawsuit in the Eastern District of Virginia against AeroVironment and certain of its directors and officers. The complaint purports to be filed on behalf of investors who purchased the company’s securities between Jun 29, 2021, and December 7, 2021.

The complaint cites numerous public statements the company and its executives made during the class period with respect to the company’s anticipated revenues, as well as about the impact on company operations from COVID-19, supply chain difficulties, labor supply disruptions, and related governmental actions affecting the company’s business.

The complaint alleges that the defendants “created the false impression that they possessed reliable information pertaining to the Company’s projected growth and record backlog and also minimized any risk from COVID-19, specifically explaining that they were monitoring supply chain issues and affirmed that their record backlog would provide a basis for strong growth.”  The complaint went on to allege “In truth, AeroVironment had been experiencing a decline in sales in all of their core businesses” and that “Defendants misled investors by providing the public with materially flawed revenue guidance for fiscal 2022.”

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the plaintiff class.


There are several interesting things about this new lawsuit but the most interesting to me is the significant lapse of time between the events described in the complaint and the date the complaint was filed. The complaint’s allegations, all of which are based on events that took place some time ago, are based on developments and circumstances from a much earlier phase of the pandemic and describe supply chain constraints from that earlier time. The fact that a complaint is only arising now based on circumstances from that earlier time suggests the possibility that the risk of COVID-19-related litigation could continue, perhaps for some time, and that earlier supply chain issues could continue to result in securities litigation.

At a minimum, the lawsuit is yet another example of the phenomenon I described in my recent round up of D&O issues – that is, of macroeconomic factors that are affecting companies’ operations and financial results that translate into securities class action litigation. It seems likely that these factors will continue to result in securities lawsuit filings in the months ahead and could make a significant contributing to the number of securities lawsuits filed overall in 2023.

As I have documented in this site, since the initial outbreak of the pandemic in March 2020, COVID-19 has been a significant contributing factor in securities lawsuit filings. By my count, this lawsuit is the 71st COVID-related lawsuit to be filed since March 2020, and the ninth COVID-related securities lawsuit to be filed so far this year. It is really remarkable that even though we are well into the fourth year of the pandemic, COVID-related securities suits are still being filed. As I noted above, the significant lag time reflected in this lawsuit does suggest we could continue to see COVID-related securities suits for some time to come. In any event, it is already clear that once again this year COVID-related securities suits will remain a significant factor in the number of annual securities class action lawsuit filings.