On December 2, 2021, Judge Cormac J. Carney of the United Stated District Court for the Central District of California denied, in substantial part, a motion to dismiss a putative securities class action against an electric truck manufacturer (the “Company”) for allegedly misleading investors by overhyping its production capabilities and its prospects for winning a multibillion-dollar contract to revamp the U.S. Postal Service’s (“USPS”) delivery fleet in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Farrar v. Workhorse Grp., Inc., No. 2:21-cv-02072 (C.D. Cal. Dec. 2, 2021). Plaintiff alleged the Company made false and misleading statements in 2020 and early 2021 about the viability of the Company’s bid for the USPS contract and the Company’s “backlog” of customer orders. Plaintiff also alleged the Company made misrepresentations regarding its use of Payroll Protection Program (“PPP”) funds provided by the federal government during the COVID-19 pandemic. The Court denied the Company’s motion to dismiss on all but the PPP claims.

In 2017, USPS selected the Company—along with five other manufacturers—to supply electric vehicle prototypes for evaluation. Plaintiff alleges that, although the Company was able to deliver the six required protype vehicles, it did not have the manufacturing capacity to produce additional trucks like the prototype. Additionally, plaintiff alleges that the prototype vehicle “had experienced failures during testing,...

Read Full Story: https://www.jdsupra.com/legalnews/central-district-of-california-denies-30171...