5 NINTH CIRCUIT CASES1 Mineworkers Pension Scheme v. First Solar, Inc., 881 F.3d 750 (9th Cir. 2018) - Loss Causation Standard First Solar, Inc. (“First Solar”) is one of the world’s largest producers of photovoltaic solar panel modules. In July 2010, First Solar disclosed an “excursion,” or deviation, that had occurred in its manufacturing process and that potentially resulted in early power loss for affected solar modules comprising 4% of the total products First Solar manufactured within the relevant time period. At the time, First Solar reported that it had accrued ap- proximately $30 million in expenses to replace affect- ed modules. Thereafter, in February 2012, First Solar announced lower-than-expected revenue and earnings for the fourth quarter of 2011, reduced 2012 revenue guidance below analyst estimates, and pre-tax charges of $393 million related to goodwill impairment and $60 million related to restructuring activities. First Solar’s stock declined 11% the following day. Investors filed a securities class action lawsuit against First Solar and its officers, alleging that defendants wrongfully concealed certain defects associated with the company’s solar panels, misrepresented the cost and scope of the defects, and reported false informa- tion in their financial statements, in violation of Sections 10(b) and 20(a), and Rule 10b-5 of the 1934 Act. After the district court denied defendants’ first motion to dismiss, and subsequent proceedings, First Solar filed a motion for summary judgment on all claims. The U.S. District Court for the District of Arizona granted in part and de- nied in part that motion, holding that plaintiffs had advanced triable issues of material fact on several claims. The district court stayed the action, however, because it perceived two competing lines of case law in the Ninth Circuit regarding loss causation. Under the first and more restrictive line of case law – which would have supported summary judgment in favor of defendants – loss causation could be proven only if the market learned of defendants’ fraud, and could not be proven if investors merely were injured by the consequences of the fraudulent practices as opposed to an actual revelation of fraud. Under the second line of case law – the more general proximate cause test – loss causation could be established if there was a causal connection between the facts misrepresented or concealed, and the alleged loss. The district court adopted the second line of case law, but certified for an interlocutory appeal the question of which loss causation test applies in the Ninth Circuit. The Ninth Circuit affirmed the lower court’s conclusion that the correct test for loss causation under the 1934 Act is the general proximate cause test, relying on its prior decision in Lloyd v. CVB Financial Corporation, 811 F.3d 1200 (9th Cir. 2016). Specifically, the Ninth Circuit concluded: “That a stock price drop comes immediately after the revelation of fraud can help to rule out alterna- tive causes. But that sequence is not a condition of loss causation.” Rather, to establish loss causation under the 1934 Act, a plaintiff need only establish that the “defen- dant’s misstatement, as opposed to some other fact, foreseeably caused the plaintiff’s loss.” A petition for review of the Ninth Circuit’s decision currently is pending before the Supreme Court. 1 The allegations and facts set forth in the case summaries herein are taken from the courts’ decisions or, for cases to watch, from the pleadings, and we are not commenting on the truth or accuracy of the allegations and facts.