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Supreme Court of Delaware
January 19, 2022, Submitted; March 16, 2022, Decided
No. 217, 2021
[*1007] SEITZ, Chief Justice:
In this appeal we review whether a securities class action and [**2] a later follow-on action were related actions, such that the follow-on action was excluded from insurance coverage under later-issued policies. The Superior Court found that the follow-on action was "fundamentally identical" to the first-filed action and therefore excluded from coverage under the later-issued policies. Even though the court applied an incorrect standard to assess the relatedness of the two actions, we affirm nonetheless because under either the erroneous "fundamentally identical" standard or the correct relatedness standard defined by the policies, the later-issued insurance policies did not cover the follow-on action.
According to the allegations of the complaint, First Solar, Inc. ("First Solar") manufactures solar panels and sells photovoltaic ("PV") power plants.1 First Solar [*1008] competes in the renewable energy space and has installed PV facilities throughout the world. In March 2012, First Solar stockholders filed a class action lawsuit against the company alleging that it violated federal securities laws by making false or misleading public disclosures.2 The parties refer to the original suit as the Smilovits Action. The Smilovits plaintiffs alleged that from April [**3] 30, 2008, to February 28, 2012, First Solar:
(1) misrepresented that it "had a winning formula for reducing manufacturing costs so rapidly and dramatically as to make solar power competitive with fossil fuels"; (2) "perpetuated [its] fraudulent self-portrayal by concealing and misrepresenting the nature and extent of major manufacturing and design defects in [its] solar modules"; (3) misrepresented its financials; (4) artificially inflated its stock prices; (5) allowed individuals to engage in insider trading; (6) manipulated the cost-per-watt metrics; and (7) understated its expenses in violation of General Accepted Accounting Principles ("GAAP").3
National Union Fire Insurance Company of Pittsburgh, PA ("National Union") provided insurance coverage for the Smilovits Action under a 2011-12 $10 million "claims made" directors and officers insurance policy.
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274 A.3d 1006 *; 2022 Del. LEXIS 93 **; 2022 WL 792158
FIRST SOLAR, INC., Plaintiff Below, Appellant, v. NATIONAL UNION FIRST INSURANCE COMPANY OF PITTSBURGH, PA and XL SPECIALTY INSURANCE COMPANY, Defendants Below, Appellees.
Subsequent History: Case Closed April 4, 2022.
Prior History: [**1] Court Below: Superior Court of the State of Delaware. C.A. No. N20C-10-156 (CCLD).
Solar, coverage, related claim, wrongful act, Insurers, policies, misrepresentations, manufacturing, relatedness, insurance policy, damages, parity, grid, misrepresented, violations, costs, cost-per-watt, complaints, overlap, fraudulent scheme, solar power, stock price, inflated, parties, argues, panels, circumstances, similarities, concealed, decisions
Civil Procedure, Pleadings, Complaints, Requirements for Complaint, Appeals, Standards of Review, De Novo Review, Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Judicial Review, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Ordinary & Usual Meanings, Plain Language