Mineworkers' Pension Scheme v. First Solar Inc

Facts

Pension (Ps) are purchasers of First’s (D) publicly traded securities between April 30, 2008, and February 28, 2012. During the Class Period, D's stock fell from nearly $300 per share to nearly $50 per share. Ps sued D and its officers, alleging violations of §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities Exchange Commission Rule 10b-5. Ps contend that Ds engaged in several acts of fraud, including wrongfully concealing product defects, misrepresenting the cost and scope of the defects, and reporting false information on financial statements. Ds filed a motion for summary judgment. The district court stayed the action because it perceived two competing lines of case law in the Ninth Circuit regarding loss causation. One line of cases represents the rule that 'drawing a causal connection between the facts misrepresented and the plaintiff's loss will satisfy loss causation.' The court interpreted a second group of cases to adopt a 'more restrictive view,' in which 'securities fraud plaintiffs can recover only if the market learns of the defendants' fraudulent practices. It is not enough that plaintiffs are injured by the consequences of those practices.' The court applied the following test: '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.' The court certified the following question for interlocutory appeal under 28 U.S.C. § 1292(b): Can a plaintiff prove loss causation by showing that the very facts misrepresented or omitted by the defendant were a substantial factor in causing the plaintiff's economic loss, even if the fraud itself was not revealed to the market, or must the market actually learn that the defendant engaged in fraud and react to the fraud itself

Issues

Rule of Law

Holding and Decision

Legal Analysis

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