December 4, 2020: The case against Aqua Metals and its three co-founders — Stephen Clarke, Selwyn Mould and Tom Murphy — was dismissed on at the end of November in the court of judge Haywood Gilliam of the Northern District of California.
The court granted the defendants’ motion to dismiss, holding that the plaintiffs — Plymouth County Retirement Association and Denis Taillefer, and 1103371 Ontario Ltd — failed to plead any actionable material misstatements or scienter [knowingly committing a wrongdoing].
The plaintiffs brought this securities class action “on behalf of investors who purchased or otherwise acquired common stock of Aqua Metals” between May 19, 2016 and November 9, 2017,
According to the court record, the plaintiffs had alleged that the company and three senior officials had ‘made materially false and misleading statements concerning the company’s novel recycling technology and its commercialization process’.
In a second complaint, the plaintiffs had alleged that the company “failed to disclose the problems the company experienced in attempting to scale up its technology for commercialization, misrepresented the commercialization timeline, misrepresented the production efficacy of its recycling program and related revenues, and issued misleading statements concealing the challenges of the new technology.”
The plaintiffs had claimed that the company knew of ‘significant problems’ with its recycling technology, “which included issues related to scaling for commercialization, and misleadingly ‘stage’ investor and analyst visits to misrepresent the success of the company’s commercialization operations.”
In rejecting the claims, the court said the plaintiffs had failed to adequately put forward their arguments, and that the alleged misstatements by Aqua Metals were protected as forward-looking statements and therefore as statements of opinion were non-actionable and not false.
The courts said that while Aqua Metals had claimed success in testing its technology, it had given no assurance that it would be able to replicate the process on a commercial scale.
“The plaintiffs failed to adequately allege that such statements were false or misleading and were otherwise non-actionable statements of corporate optimism or puffery,” the court said.
