As I noted in my recent year-end wrap up, one of the top D&O stories of 2021 was the surge of SPAC-related securities litigation during the year. Most of these SPAC-related lawsuits have only just been filed, and it remains to be seen how they will fare. However, in a development that may represent an early sign concerning the prospects for these cases, on January 14, 2022, a federal district court substantially denied the motion to dismiss in the securities class action lawsuit filed last year against electric vehicle battery developer and manufacturer, QuantumScape. As discussed below, the court’s dismissal motion ruling has several noteworthy features. Northern District of California Judge William H. Orrick’s January 14, 2022 in the QuantumScape case can be found here.
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And Again: Another Post-SPAC Merger EV Company Hit with Securities Suit
As I have noted on this site (most recently here), electric vehicle companies that have merged with publicly traded SPACs have become a favored target for plaintiffs’ securities lawyers. In the latest example of this phenomenon, on December 23, 2021, a plaintiff shareholder filed a securities class action lawsuit against the EV company Faraday Future Intelligent Electric, Inc., which merged with a SPAC on July 21, 2021. Like many of the EV companies that have been sued, Faraday Future’s stock price dropped after it was the subject of a short seller report. A copy of the complaint against Faraday Future can be found here.
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Yet Another Post-SPAC-Merger Electric Vehicle Company Hit with Securities Suit
In the latest securities class action lawsuit to be filed against a post-SPAC-merger electric vehicle company, a plaintiff shareholder has filed a securities suit against the EV company Arrival SA, following the company’s announcement in November 2021 of a slowdown in its production schedule and of the company’s need to raise additional capital. As discussed below, the new lawsuit against Arrival has several characteristics in common with other SPAC-related securities suits that have been filed this year. A copy of the complaint that was filed against Arrival on December 22, 2021 can be found here.
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Nikola Settles SEC Proceedings for $125 Million
Nikola, the electric vehicle company that became a publicly traded company through a June 3, 2020 merger with a SPAC, has reached an agreement to pay $125 million to settle proceedings the SEC brought against the company relating to misrepresentations its former CEO Trevor Milton and the company made about the company’s EV production capabilities. In the settlement, the company neither admitted nor denied the SEC’s allegations. The SEC’s December 21, 2021 press release about the settlement can be found here. The SEC’s December 21, 2021 order instituting cease and desist proceedings against Nikola can be found here. The company’s December 21, 2021 press release about the settlement can be found here.
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Deep-Sea Mining Company Hit with SPAC-Related Securities Suit
A Canadian-based deep-sea mining company is the latest firm to be hit with a SPAC-related securities class action lawsuit. The company, which plans to mine the seabed for materials to be used in electric vehicles batteries, merged with a SPAC in September 2021. The company’s share price recently declined following news reports and a short-seller report questioning the company’s financing, licensing, and its claimed sustainability credentials. A copy of the October 28, 2021 complaint can be found here.
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Electric Vehicle Company Hit with Post-SPAC-Merger Securities Suit
In the latest SPAC-related securities class action lawsuit filing, a plaintiff shareholder has filed a securities class action suit against electric vehicle company Lightning eMotors and certain of its directors and officers, after the company disappointed investors in its first post-SPAC-merger financial release. As discussed below, the Lightning eMotors SPAC-merger transaction was already the subject of a separate, prior Delaware Chancery Court action. A copy of the new federal court securities class action lawsuit complaint can be found here.
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Another Post-SPAC Merger Electric Vehicle Company Securities Suit
In the latest example of a post de-SPAC transaction electric vehicle company getting hit with a securities class action lawsuit, a plaintiff shareholder has filed a securities suit against Canoo, Inc. as well as against the former directors and officers of the SPAC into which Canoo merged in December 2020. The new lawsuit is one of many securities suits that have been filed against companies in the electric vehicle industry. The underlying circumstances may illustrate some of the pitfalls involved when a fledgling private firm becomes a publicly traded company. The plaintiff’s April 2, 2021 complaint can be found here.
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Another Short Seller-Targeted Post-DeSPAC Electric Vehicle Company Hit with a Securities Suit
In a pattern that is becoming familiar, Lordstown Motors, an electric vehicle company that recently merged into a publicly traded SPAC and that was the subject of an even more recent short seller report, has been hit with a securities class action lawsuit. The defendants named include only executives of the vehicle company and do not include any former officers of the SPAC. A copy of the March 18, 2021 complaint can be found here.
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