Citing Professor James several times in its ruling, the court found that defendants successfully rebutted the Basic presumption of reliance and denied class certification in its entirety.
Retained by Quinn Emanuel
Overview
Plaintiffs filed a putative class action against Enovix Corporation, an early-stage technology company developing lithium-ion batteries, alleging that the company misled investors regarding the viability of its California manufacturing facility. Plaintiffs claimed that Enovix concealed from investors that a portion of the manufacturing equipment had failed necessary acceptance tests. The plaintiffs claimed that the “truth” was revealed through three alleged corrective disclosures, which discussed continued setbacks and culminated in the announcement that the California location would be repurposed to focus on innovation.
Defense counsel retained Cornerstone Research to support Christopher James of the University of Florida in analyzing the relevant economic evidence at the class certification stage.
Class Certification Expert Testimony
Defendants advanced two price impact arguments. First, they argued that there was a complete lack of price impact because of a mismatch between the alleged misstatement and the three alleged corrective disclosures. Second, defendants argued that, at a minimum, there was no price impact evidence from the last two alleged corrective disclosures because by that point the alleged truth would already have been incorporated into Enovix’s stock price.
Professor James opined that the economic evidence was consistent with the alleged misstatement having had no price impact by the time the last two alleged corrective disclosures occurred. His reports also developed several analytical building blocks—including a detailed review of company disclosures and analyst commentary surrounding the alleged misstatement and the alleged corrective disclosures—that defendants relied on to support their mismatch argument.
Plaintiffs’ Motion Denied
Citing Professor James several times in its ruling, the U.S. District Court for the Northern District of California accepted defendants’ mismatch argument. The court found, citing In re Goldman Sachs Group Inc. Securities Litigation, that the defendants successfully rebutted the Basic presumption of reliance and denied class certification.