In a win for Wiley Rein’s client, the Delaware Superior Court has held that an opt-out securities case related back to the original securities class action because the cases were “based on the same subject, have a causal connection, and primarily rely on the same facts or occurrences.” First Solar, Inc. v. National Union Fire Ins. Co., C.A. No. N20C-10-156 MMJ CCLD (Del. Super. Ct. June 23, 2021). The court thus denied the insured’s motion for summary judgment and granted the insurers’ motion to dismiss the coverage action because the opt-out case was “fundamentally identical” to the securities class action and therefore deemed a Claim first made prior to the inception of the insurance policies at issue.
The underlying securities class action alleged that a solar-power company and individual defendants violated federal securities laws by engaging in a fraudulent scheme to convince investors and the public that they had a winning formula for making solar power competitive with fossil fuels. A number of shareholders opted out from the securities class action and filed a securities lawsuit in the same court. The opt-out case similarly alleged that the company and the same current and former officers and directors engaged in a fraudulent scheme to oversell the company’s ability to make solar power competitive with fossil fuels – otherwise known as grid parity.
The company agreed to settle the opt-out case for $19 million, and the opt-out plaintiffs agreed to dismiss the lawsuit. The company’s primary and first excess D&O carriers denied coverage for the settlement on the grounds that the opt-out case relates back to and is deemed first made at the time of the securities class action, which was prior to the inception of the policies.
In the ensuing coverage litigation, the company argued that the opt-out case did not relate back to the securities class action because the two cases were not “fundamentally identical,” which the company argued is the applicable standard under Pfizer Inc. v. Arch Insurance Company. The company pointed to alleged differences between the actions, including the (i) different plaintiffs; (ii) differed class periods; (iii) different alleged wrongful conduct; (iv) different allegations regarding grid parity; (v) different dates of alleged corrective disclosures; (vi) different legal bases; and (vii) different relief sought.
The court determined that it need not accept the company’s “unilateral characterizations of the claims.” The court concluded that the opt-out case and the securities class action had “substantial similarities,” including (i) some of the same plaintiffs; (ii) the same defendants; (iii) overlapping class periods; (iv) overlapping allegations regarding violations of SEC Rules 10b-5 and 20; and (v) overlapping disclosures. The court further emphasized that the cases “involve the same fraudulent scheme” regarding the company’s alleged misrepresentations about grid parity. The court noted that the most striking difference between the underlying cases was the type of damages sought by the opt-out plaintiffs, and that difference was not enough to separate the cases. The court thus held that the similarities between the opt-out case and the securities class action “outweigh any differences and go beyond mere ‘thematic similarities’” because “[b]oth actions are based on the same subject, have a causal connection, and primarily rely on the same facts or occurrences.”
The court therefore held that the opt-out case and the securities class action were “fundamentally identical,” and the opt-out case was a claim first made at the time of the securities class action, prior to the inception of the policies. The court granted the insurers’ motion to dismiss without addressing their secondary arguments regarding the special matter exclusion, notice provisions, or consent-to-settle provisions.
"original" - Google News
June 26, 2021 at 01:44AM
https://ift.tt/3xRuZCP
Delaware Superior Court Holds Opt-Out Case is “Fundamentally Identical” to Original Securities Class Action First Made Before Policy Period - JD Supra
"original" - Google News
https://ift.tt/32ik0C4
https://ift.tt/35ryK4M
Bagikan Berita Ini
0 Response to "Delaware Superior Court Holds Opt-Out Case is “Fundamentally Identical” to Original Securities Class Action First Made Before Policy Period - JD Supra"
Post a Comment