Danimer Scientific, Inc. Class Action Lawsuit
- Company Name
- Danimer Scientific, Inc.
- Stock Symbol
- Relevant Period
- October 5, 2020 to May 4, 2021
- Motion Deadline
- July 13, 2021
- Eastern District of New York
The Danimer Scientific, Inc. class action lawsuit charges Danimer Scientific and its top executives with violations of the Securities Exchange Act of 1934 and seeks to represent all persons and entities that purchased or otherwise acquired Danimer Scientific securities between October 5, 2020 to May 4, 2021 (the “Class Period”). The Danimer Scientific class action lawsuit was commenced on May 14, 2021 in the Eastern District of New York and the first-filed complaint is captioned Rosencrants v. Danimer Scientific, Inc., No. 21-cv-02708.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Danimer Scientific securities during the Class Period to seek appointment as lead plaintiff in the Danimer Scientific class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the Danimer Scientific class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the Danimer Scientific class action lawsuit. An investor’s ability to share in any potential future recovery of the Danimer Scientific action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff of the Danimer Scientific class action lawsuit or have questions concerning your rights regarding the Danimer Scientific class action lawsuit, please provide your information here or contact counsel, J.C. Sanchez of Robbins Geller, at 800/449-4900 or 619/231-1058 or via e-mail at email@example.com. Lead plaintiff motions for the Danimer Scientific class action lawsuit must be filed with the court no later than July 13, 2021.
In December 2020, Live Oak Acquisition Corp., a publicly traded special purpose acquisition company (“SPAC”), consummated a business combination with Meredian Holdings Group, Inc., a performance polymer company specializing in bioplastic replacements for traditional petrochemical-based plastics. Following the business combination, Live Oak changed its name to “Danimer Scientific, Inc.,” changed its business to legacy Danimer Scientific’s business, and replaced its management with legacy Danimer Scientific’s management. Since 2020, Danimer Scientific has sold polyhydroxyalkanoates (“PHAs”) commercially under its proprietary “Nodax” brand name for usage in a wide variety of plastic applications including water bottles, straws, and food containers, among others. Danimer Scientific has touted Nodax as a 100% biodegradable, renewable, and sustainable plastic, which is purportedly superior to traditional plastics because of its advanced biodegradability. Danimer Scientific attributes Nodax’s advanced biodegradability to microorganisms in nature that eat the bioplastic.
The Danimer Scientific class action lawsuit alleges that, throughout the Class Period, defendants made false and misleading statements and failed to disclose that: (i) Danimer Scientific had deficient internal controls; (ii) as a result, Danimer Scientific had misrepresented, among other things, its operations’ size and regulatory compliance; (iii) defendants had overstated Nodax’s biodegradability, particularly in oceans and landfills; and (iv) as a result, Danimer Scientific’s public statements were materially false and misleading at all relevant times.
On March 20, 2021, The Wall Street Journal (“WSJ”) published an article entitled “Plastic Straws That Quickly Biodegrade in the Ocean, Not Quite, Scientists Say” addressing, among other things, Danimer Scientific’s claims that Nodax breaks down far more quickly than fossil-fuel plastics. The WSJ article alleged that, according to several experts on biodegradable plastics, “many claims about Nodax are exaggerated and misleading.” While Danimer Scientific reportedly asserts its claims are factual, the article cites at least one expert as stating that making broad claims about Nodax’s biodegradability “is not accurate” and is “greenwashing.” On this news, Danimer Scientific’s stock price fell nearly 13%, damaging investors.
Then, on April 22, 2021, analyst Spruce Point Capital Management issued a report on Danimer Scientific writing that Danimer Scientific represented “Another Go Around At Plastic Alternatives With Several Corporate Governance Red Flags: 65%-100% Downside Risk.” In this report, Spruce Point alleged that “Danimer’s growth expansion story is likely to fail as did others that have previously tried. The most surprising aspect of Danimer’s business is not its lackluster technology, as highlighted by the Wall Street Journal’s March 2021 article, but the several corporate governance red flags we have found involving the past and current CEOs, the CTO and current Danimer executives and Directors.” Spruce Point continued: “We question the independence of Danimer’s scientific research as Danimer has been a financial backer of the University of Georgia Lab and several professors who authored the supporting research. . . . We also believe Danimer has concealed, through numerous website changes and omission of past press releases, a pattern of conflicting and irreconcilable statements on capacity, facility size, and capex costs . . . .” On this news, Danimer Scientific’s stock price fell an additional 8%.
Finally, on May 4, 2021, Spruce Point issued a follow up report writing that: “Insights From Danimer FOIA Show Smoking Gun Evidence of Pricing Inflation And Slackness in Capacity.” Spruce Point continued that “with the benefit of a recently released [FOIA] request from the Kentucky Department of Environmental Protection, we have evidence that suggests Danimer’s production figures, its pricing, and rosy financial projections are wildly overstated. Monthly Kentucky PHA production figures have been restated by up to 100% after coming public. Danimer’s PHA average selling price appears to be 30% - 42% below management’s claims. Moreover, Danimer’s recently reported production figures are so far below their actual capacity, that it calls into question why is Danimer telling investors it needs hundreds of millions of dollars in capacity expansion?” On this news, Danimer Scientific’s shares further fell an additional 6%, damaging investors.
With 200 lawyers in 9 offices nationwide, Robbins Geller Rudman & Dowd LLP is the largest U.S. law firm representing investors in securities class actions. Robbins Geller attorneys have obtained many of the largest shareholder recoveries in history, including the largest securities class action recovery ever – $7.2 billion – in In re Enron Corp. Sec. Litig. The 2020 ISS Securities Class Action Services Top 50 Report ranked Robbins Geller first for recovering $1.6 billion for investors last year, more than double the amount recovered by any other securities plaintiffs’ firm.