MolyCorp Investors Defeat Motion for Summary Judgment in Securities Class Action
On May 25, 2016, the Honorable Raymond P. Moore of the District of Colorado issued an order denying defendants’ motion for summary judgment in In re Molycorp, Inc. Securities Litigation. Molycorp is a mining company based in Colorado that specializes in the extraction and processing of rare earth elements.
The case alleges that Molycorp and certain of its officers and directors made false and misleading statements during the February 7, 2011 through November 10, 2011 class period. Specifically, the action alleges that defendants issued false and misleading statements about what rare earth elements the company could extract from its Mountain Pass mine located in California while at the same time reaping over $1.5 billion in unlawful insider stock sales. As the truth about Molycorp’s business leaked into the market, the price of Molycorp stock plummeted, and as a result, Molycorp investors lost hundreds of millions of dollars.
In denying defendants’ motion, the court stated that “the Court cannot understand, apart from a purely strategic point of view, why the motion for summary judgment was filed in the first place. . . . Such a process is certainly placing the cart before the horse.”
Later in the order, in discussing the parties’ discovery obligations, and whether the individual defendants had “control” over Molycorp’s production of relevant documents, the court noted: “[I]rrespective of the issue of control, the Individual Defendants appear to not have any problem with obtaining documents and declarations from Molycorp, while the Plaintiffs do not have such ease of access. This is untenable from a fairness, as well as an evidentiary standpoint, and the Court has various avenues in which to correct it.”
In re Molycorp, Inc. Sec. Litig., No. 1:12-cv-00292-WJM-KMT (D. Colo. May 25, 2016).