In the latest securities class action lawsuit involving a company that recently became publicly traded through a merger with a SPAC, a biodegradable plastics company and certain of its directors and officers have been hit with securities suit following media reports questioning the company’s claims about the biodegradability of its products. The company, Danimer Scientific, is one of several recently sued companies that completed a SPAC merger in December 2020. A copy of the May 14, 2021 complaint against Danimer can be found here.
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SPAC-Related Securities Suit Filed Against Plastics Recycling Company
In the latest example of a company that went public through a recent merger with a SPAC getting hit with a securities class action lawsuit, a plaintiff shareholder has filed a securities suit against plastics recycler PureCycle Technologies, certain of its executives, and the former chairman of the company’s SPAC merger partner. Like many of the recent SPAC-related securities lawsuit filings, this new lawsuit followed shortly after the publication of a highly critical short-sellers report. A copy of the plaintiff’s complaint can be found here.
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Online Gaming Platform Hit with Post-SPAC Merger Securities Suit
In the latest SPAC-related securities class action lawsuit filing, a plaintiff shareholder has initiated a securities suit against Skillz, Inc., an online gaming platform that in December 2020 merged with Flying Eagle Acquisition Corp. (FEAC), a publicly traded special purpose acquisition company (SPAC). The share price of the post-merger publicly traded company declined after short sellers issued reports questioning the company’s revenue recognition practices and other financial details. The lawsuit followed after the share price decline. The individual defendants named in the securities complaint include the former President of FEAC, who became a director of Skillz following the merger. A copy of the plaintiff’s May 7, 2021 complaint can be found here.
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SPAC-Related State Court Merger Objection Litigation
In reporting in prior posts on SPAC-related litigation, I have primarily focused on federal court securities class action litigation (for example, here). In addition to the federal court litigation, there has also recently been state-court SPAC-related litigation filed, as I have also briefly noted (here, for example). In early April 2021, the Akin Gump law firm published a client alert memo noting that, at the time, over thirty SPACs has been sued in merger objection lawsuits filed in New York state court. In a May 5, 2021 post on her On the Case blog (here), Alison Frankel updated the Akin Gump filing data and reported that there have now been over 60 New York state court SPAC-related lawsuits filed. As Frankel’s article notes, the litigation itself is only part of the picture, as the plaintiffs’ lawyers involved have also been active in presenting SPACs with pre-lawsuit demand letters as well.
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Dismissal Denied in Domestic Corruption-Related Securities Suit
A federal district judge has denied the defendants’ motion to dismiss in a securities class action lawsuit arising out of an electric utility’s eight-year involvement in a domestic bribery scheme. The court’s ruling has several interesting features relating to the securities litigation exposures from domestic corruption. Northern District of Illinois Judge Virginia M. Kendall’s April 21, 2021 opinion in the Exelon Corporation securities suit can be found here. An April 28, 2021 memo about the ruling from the Shearman & Sterling law firm can be found here.
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Akazoo SPAC-Related Litigation Partially Settled for $35 Million
In what is a notable development in the emerging SPAC-related securities class action litigation scene, the parties to a SPAC-related securities suit involving the streaming media company Akazoo company have reached a partial settlement in the aggregate amount of $35 million. The deal is a partial settlement because claims remain pending against other defendants. As discussed below, the settlement has a number of interesting features. It is, in any event, a noteworthy data point for the discussion about SPAC-related litigation exposures.
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COVID-19 Securities Suits Continue to Accumulate
After more than a year of lockdowns, social distancing, and sheer disruptions of life, we are all more than ready to be done with the coronavirus outbreak and to move on. Unfortunately, the virus is not done with us yet. In places like Brazil and India, COVID-19 continues to exact a grim toll. Just as I, like all of the rest of you, had assumed in the early stages of the outbreak that we would be done with the coronavirus by now, I also thought we would be done with coronavirus-related litigation by now as well. However like COVID-19 itself, coronavirus-related litigation continues on despite our expectations. As discussed below, in the past week, two more coronavirus-related securities class action lawsuits were filed, as the pandemic-related litigation phenomenon continues.
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SPAC and Target Company Hit with Pre-Merger 10b-5 Class Action Suit
Readers of this blog know that there have been several SPAC-related securities class action lawsuits filed in 2021, with the suits mostly coming in after the de-SPAC transaction has been completed. Even readers who think they get the idea already will want to be sure to take a look at the new SPAC-related lawsuit that came in earlier this week. What makes this one different is that, though the lawsuit names both the SPAC and the SPAC merger target company as defendants, the merger, though announced, has not yet even taken place. And, mind you, this is not your garden variety merger objection lawsuit, it is a full blown 10b-5 class action lawsuit. Interested? Read on.
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SPAC-Related Securities Suit Survives Dismissal Motion
As I have noted in recent blog posts, there have already been several securities class action lawsuits filed this year related to the current wave of SPAC activity. These recently filed lawsuits have only just been filed and have not yet made their way to the dispositive motion stage. However, there are also other earlier-filed SPAC-related lawsuits pending, involving SPAC-related transactions that preceded the current SPAC wave. One of these earlier filed securities lawsuits involves Alta Mesa Resources, a company that collapsed within the first year after it was formed in a 2018 merger with a SPAC. On April 14, 2021, Southern District of Texas Judge George C. Hanks, Jr. denied the defendants’ motion to dismiss in the Alta Mesa case, in a ruling that may be of interest in relation to the numerous more-recently filed SPAC-related lawsuits. A copy of the order denying the defendants’ motion to dismiss can be found here.
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Tracking Two Emerging Securities Litigation Trends: SPACs and Supply Chain Disruption
Electric vehicle battery company Romeo Power, which became a publicly traded company through a December 2020 merger with a SPAC, has been hit with a securities class action lawsuit following a share price decline after its announcement of a disruption in its supply chain. The new lawsuit is interesting both because of the SPAC angle and because it resulted from supply chain issues. The new lawsuit against Romeo Power was, in fact, one of two securities suits filed last week arising out of supply chain disruption. As discussed below, supply chain disruption could represent an emerging new area of corporate and securities litigation exposure. I also discuss below the fact that the new lawsuit involves yet another de-SPAC company in the electric vehicle industry
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