District of Arizona Certifies Class of First Solar Investors
On October 8, 2013, Judge David G. Campbell of the United States District Court for the District of Arizona published an order granting plaintiffs’ motion to certify a class of persons who purchased or otherwise acquired First Solar, Inc. stock during the April 30, 2008 through February 28, 2012 class period.
Led by lead plaintiffs Mineworkers’ Pension Scheme and British Coal Staff Superannuation Scheme, the First Amended Complaint for Violation of the Federal Securities Laws detailed the nearly four-year scheme in which defendants publicly manipulated First Solar’s key operating metrics while concealing from investors the existence and scope of First Solar’s solar panel defects and failure rates. Defendants’ misstatements and omissions of fact during the class period inflated the price of First Solar shares, which dropped precipitously as the market absorbed defendants’ prior fraudulent conduct, causing substantial detriment to the class.
After lead plaintiffs defeated defendants’ attempt to dismiss the complaint in December 2012, the parties engaged in intensive discovery and briefing concerning lead plaintiffs’ motion for class certification. With most of the factors courts consider in certifying a class undisputed upon the close of briefing (including lead plaintiffs’ ability to fairly and adequately protect the interests of the class), the parties and the court ultimately focused on Rule 23(b)(3)’s predominance element, which turned on whether lead plaintiffs could utilize the fraud on the market theory of investor reliance by showing that First Solar stock had traded in an efficient market.
On October 8, 2013, following full briefing and oral argument, Judge Campbell concluded that lead plaintiffs had sufficiently demonstrated that First Solar stock had traded in an efficient market during the class period, and that common questions of law or fact, including whether members of the class relied on defendants’ public misrepresentations, would predominate over questions affecting only individual class members. In reaching his conclusion, Judge Campbell deemed it “significant” that a majority of the factors courts commonly consider in determining market efficiency were “without dispute” from defendants, including that First Solar stock had traded at high weekly volumes on “the NASDAQ, a major and well-developed securities market,” was widely followed and reported on by securities analysts, and had substantial market makers and institutional investors.
Judge Campbell granted lead plaintiffs’ motion to certify the class, appointed Robbins Geller as class counsel, and appointed lead plaintiffs as representatives of the class. More recently, defendants attempted to delay the litigation of the case in light of the Supreme Court’s grant of a petition for certiorari in Halliburton Co. v. Erica P. John Fund, Inc., f/k/a Archdiocese of Milwaukee Supporting Fund, Inc. On November 25, 2013, Judge Campbell rejected defendants’ argument, authorized lead plaintiffs to proceed with discovery, and ordered defendants to begin their document production in January 2014.
Smilovits v. First Solar, Inc., No. 2:12-cv-00555, Order (D. Ariz. Oct. 8, 2013).