Mineworkers' Pension Scheme v. First Solar Inc.

Summary

Purchasers of publicly traded securities (the Class) brought claims against First Solar, Inc. (FSI) after FSI stock plummeted in connection with manufacturing defects. The Class alleged FSI wrongfully and fraudulently concealed defects, made misrepresentations, and reported false financial statement information. The Class further alleged FSI violated the Securities Exchange Act of 1934, as well as Securities Exchange Commission Rule 10b-5. It was contended that the Class suffered economic losses after FSI disclosed the "product defects and attendant financial liabilities to the market." FSI's motion for summary judgment was partially denied. The district court held the loss causation test under Nuveen Municipal High Income Opportunity Fund v. City of Alameda applied regarding losses allegedly suffered by the Class, yet the court stayed the action pending an interlocutory appeal with regard to the proper test.

Affirmed. Under Nuveen, "'a plaintiff can satisfy loss causation by showing that the defendant misrepresented or omitted the very facts that were a substantial factor in causing the plaintiff's economic loss.'" Nuveen held that a plaintiff must only show a "'causal connection' between the fraud and the loss" to prove loss causation. The panel opined that loss causation may also be proven "by showing that the stock price fell upon the revelation of an earnings miss." However, "the 'ultimate issue' under either theory 'is whether the defendant's misstatement, as opposed to some other fact, foreseeably caused the plaintiff's loss.'" Here, the district court's application of the proximate loss causation test was proper.

— David Mendenhall