Mineworkers’ Pension Scheme; British Coal Staff Superannuation Scheme v. First Solar Incorporated

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MINEWORKERS’ PENSION SCHEME;
BRITISH COAL STAFF
SUPERANNUATION SCHEME,
Plaintiffs-Appellees,
v.
FIRST SOLAR INCORPORATED;
MICHAEL J. AHEARN; ROBERT J.
GILLETTE; MARK R. WIDMAR; JENS
MEYERHOFF; JAMES ZHU; BRUCE
SOHN; DAVID EAGLESHAM,
Defendants-Appellants.
No. 15-17282
D.C. No.
2:12-cv-00555-
DGC
OPINION
Appeal from the United States District Court
for the District of Arizona
David G. Campbell, District Judge, Presiding
Argued and Submitted October 18, 2017
San Francisco, California
Filed January 31, 2018
Before: Sidney R. Thomas, Chief Judge, and J. Clifford
Wallace and Consuelo M. Callahan, Circuit Judges.
Per Curiam Opinion

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MINEWORKERS’ PENSION SCHEME V. FIRST SOLAR 2
SUMMARY*
Securities Fraud
The panel affirmed the district court’s denial in part of
defendants’ motion for summary judgment in an action under
the Securities Exchange Act of 1934.
The panel held that a general proximate cause test is the
correct test for loss causation under the Act, and there is no
requirement that the defendant’s fraud have been revealed to
the market.
COUNSEL
Jordan Eth (argued), Paul Flum, Judson E. Lobdell, and
James R. Sigel, Morrison & Foerster LLP, San Francisco,
California; Joseph N. Roth, Osborn Maledon P.A., Phoenix,
Arizona; for Defendants-Appellants.
Luke O. Brooks (argued), Jason A. Forge, Daniel S.
Drosman, and Michael J. Dowd, Robbins Geller Rudman &
Dowd LLP, San Diego, California; Matthew S. Melamed,
Andrew S. Love, and Susan K. Alexander, Robbins Geller
Rudman & Dowd LLP, San Francisco, California; for
Plaintiffs-Appellees.
* This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.

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MINEWORKERS’ PENSION SCHEME V. FIRST SOLAR 3
OPINION
PER CURIAM:
We consider the question certified by the district court for
interlocutory appeal under 28 U.S.C. § 1292(b)1 as to the
correct test for loss causation under the Securities Exchange
Act of 1934. We conclude that a general proximate cause
test—the test ultimately applied by the district court—is the
proper test.
I
First Solar, Inc., is one of the world’s largest producers of
photovoltaic solar panel modules. The Plaintiffs represent
purchasers of First Solar, Inc.’s publicly traded securities
between April 30, 2008 and February 28, 2012 (“the Class
Period”). Plaintiffs allege that, during the Class Period, First
Solar discovered a manufacturing defect causing field power
loss and a design defect causing faster power loss in hot
climates. Plaintiffs allege that First Solar wrongfully
concealed these defects, misrepresented the cost and scope of
1 “A non-final order may be certified for interlocutory appeal where
it ‘involves a controlling question of law as to which there is substantial
ground for difference of opinion’ and where ‘an immediate appeal from
the order may materially advance the ultimate termination of the
litigation.’” Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 687–88
(9th Cir.2011) (quoting 28 U.S.C. § 1292(b)). “A substantial ground for
difference of opinion exists where reasonable jurists might disagree on an
issue’s resolution . . . .” Id. at 688. Given these standards and the posture
of the case, we are satisfied that the district court and the motions panel
of this court properly determined that certification was appropriate in this
case.

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MINEWORKERS’ PENSION SCHEME V. FIRST SOLAR 4
the defects, and reported false information on their financial
statements.
During the Class Period, First Solar’s stock fell from
nearly $300 per share to nearly $50 per share. The
individually named Defendants, who are First Solar officers
and executives, purchased or sold First Solar stock during the
Class Period. Steep declines in First Solar’s stock, beginning
on July 29, 2010, followed the release of quarterly financial
disclosures reporting the defects and associated costs, the
departure of First Solar’s CEO, and disappointing financial
results.
Plaintiffs sued First Solar and its officers, alleging
violations of §§ 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Securities Exchange Commission Rule 10b-
5. They allege that Defendants engaged in several acts of
fraud, including wrongfully concealing product defects,
misrepresenting the cost and scope of the defects, and
reporting false information on financial statements. Plaintiffs
allege that when First Solar later disclosed product defects
and attendant financial liabilities to the market, First Solar’s
stock price fell, resulting in Plaintiffs’ economic loss.
Defendants filed a motion for summary judgment on all
claims. The district court granted Defendants’ motion in part
and denied in larger part, holding that Plaintiffs advanced
triable issues of material fact on several claims. However,
the district court stayed the action because it perceived two
competing lines of case law in the Ninth Circuit regarding
loss causation.
According to the district court, one line of cases
represents the rule that “drawing a causal connection between

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MINEWORKERS’ PENSION SCHEME V. FIRST SOLAR 5
the facts misrepresented and the plaintiff’s loss will satisfy
loss causation.” These cases are Nuveen Municipal High
Income Opportunity Fund v. City of Alameda, 730 F.3d 1111
(9th Cir. 2013); Berson v. Applied Signal Technology, Inc.,
527 F.3d 982 (9th Cir. 2008); and In re Daou Systems Inc.,
411 F.3d 1006 (9th Cir. 2005). The court interpreted a
second group of cases to adopt a “more restrictive view,” in
which “[s]ecurities fraud plaintiffs can recover only if the
market learns of the defendants’ fraudulent practices. It is not
enough that plaintiffs are injured by the consequences of
those practices.” These cases are Oregon Public Employees
Retirement Fund v. Apollo Group Inc., 774 F.3d 598 (9th Cir.
2014); Loos v. Immersion Corp., 762 F.3d 880 (9th Cir.
2014); In re Oracle Corp. Securities Litigation, 627 F.3d 376
(9th Cir. 2010); and Metzler Investment GMBH v. Corinthian
Colleges, Inc., 540 F.3d 1049 (9th Cir. 2008).
After considering circuit law, the district court applied the
following loss causation test: “A plaintiff can satisfy loss
causation by showing that the defendant misrepresented or
omitted the very facts that were a substantial factor in causing
the plaintiff’s economic loss.” Nuveen, 730 F.3d at 1120
(internal quotation marks omitted). The court certified the
following question for interlocutory appeal under 28 U.S.C.
§ 1292(b):
[W]hat is the correct test for loss causation in
the Ninth Circuit? Can a plaintiff prove loss
causation by showing that the very facts
misrepresented or omitted by the defendant
were a substantial factor in causing the
plaintiff’s economic loss, even if the fraud
itself was not revealed to the market (Nuveen,
730 F.3d at 1120), or must the market actually

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MINEWORKERS’ PENSION SCHEME V. FIRST SOLAR 6
learn that the defendant engaged in fraud and
react to the fraud itself (Oracle, 627 F.3d at
392)?
II
The Securities Exchange Act of 1934, codified at
15 U.S.C. § 78a et seq., imposes statutory requirements on a
judicially-implied private damages action rooted in common
law tort actions for deceit and misrepresentation. Dura
Pharm., Inc. v. Broudo, 544 U.S. 336, 341 (2005). The Act
defines “loss causation” as the plaintiff’s “burden of proving
that the act or omission of the defendant alleged to violate
this chapter caused the loss for which the plaintiff seeks to
recover damages.” 15 U.S.C. § 78u-4(b)(4). This inquiry
requires no more than the familiar test for proximate cause.
Dura, 544 U.S. at 346; accord Lloyd v. CVB Fin. Corp.,
811 F.3d 1200, 1210 (9th Cir. 2016); Loos, 762 F.3d at 887;
Oracle, 627 F.3d at 394; Daou, 411 F.3d at 1025. To prove
loss causation, plaintiffs need only show a “causal
connection” between the fraud and the loss, Nuveen, 730 F.3d
at 1119; Daou, 441 F.3d at 1025, by tracing the loss back to
“the very facts about which the defendant lied,” Nuveen,
730 F.3d at 1120. “Disclosure of the fraud is not a sine qua
non of loss causation, which may be shown even where the
alleged fraud is not necessarily revealed prior to the economic
loss.” Id.
Our most recent decision on loss causation, Lloyd, was
published after the district court’s order and clarifies the
applicable rule. In Lloyd, the plaintiffs pleaded loss causation
by alleging that defendant CVB’s fraudulent conduct led to
a subpoena, and that when the market learned of the
subpoena, the stock price dropped as a market reaction.

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MINEWORKERS’ PENSION SCHEME V. FIRST SOLAR 7
811 F.3d at 1210–11. We explained that “loss causation is a
‘context-dependent’ inquiry as there are an ‘infinite variety’
of ways for a tort to cause a loss.” Id. at 1210 (citing Assoc’d
Gen. Contractors of Cal., Inc. v. Cal. State Council of
Carpenters, 459 U.S. 519, 536 (1983)) (internal citation
omitted). “Because loss causation is simply a variant of
proximate cause, the ultimate issue is whether the defendant’s
misstatement, as opposed to some other fact, foreseeably
caused the plaintiff's loss.” Id. (citing Dura, 544 U.S. at
343–46) (internal citation omitted). In Lloyd, though the
plaintiffs pleaded that the market understood the subpoena to
be a revelation of fraud, id. at 1210–11, we did not suggest
that this path is the only way to satisfy loss causation.
Indeed, we affirmed the opposite: the plaintiffs simply
“adequately pleaded ‘a causal connection between the
material misrepresentation and the loss.’” Id. at 1211
(quoting Dura, 544 U.S. at 342).
The cases that the district court cites for the proposition
of a more restrictive test should be understood as fact-specific
variants of the basic proximate cause test, as clarified by
Lloyd. Revelation of fraud in the marketplace is simply one
of the “infinite variety” of causation theories a plaintiff might
allege to satisfy proximate cause. Id. at 1210. When
plaintiffs plead a causation theory based on market revelation
of the fraud, this court naturally evaluates whether plaintiffs
have pleaded or proved the facts relevant to their theory.
E.g., Metzler, 540 F.3d at 1059, 1063 (holding that plaintiffs
failed to plead loss causation where plaintiffs’ theory was that
“Corinthian’s fraud was revealed to the market, causing
Metzler’s losses” but “[t]he TAC does not allege that the June
24 and August 2 announcements disclosed—or even
suggested—[the fraudulent activities] to the market”). But
our approval of one theory should not imply our rejection of

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MINEWORKERS’ PENSION SCHEME V. FIRST SOLAR 8
others. A plaintiff may also prove loss causation by showing
that the stock price fell upon the revelation of an earnings
miss, even if the market was unaware at the time that fraud
had concealed the miss. See Berson, 527 F.3d at 989–90;
Daou, 411 F.3d at 1026. That a stock price drop comes
immediately after the revelation of fraud can help to rule out
alternative causes. See Dura, 544 U.S. at 342–43. But that
sequence is not a condition of loss causation. Nuveen,
730 F.3d at 1120.
This rule makes sense because it is the underlying facts
concealed by fraud that affect the stock price. See Jay W.
Eisenhofer et al., Securities Fraud, Stock Price Valuation,
and Loss Causation, 59 BUS. LAW. 1419, 1444 (2004). Fraud
simply causes a delay in the revelation of those facts. The
“ultimate issue” under either theory “is whether the
defendant’s misstatement, as opposed to some other fact,
foreseeably caused the plaintiff’s loss.” Lloyd, 811 F.3d at
1210.
III
The district court held that the evidence, if accepted by
the jury, could satisfy the proximate cause loss causation test
with respect to five of the six alleged stock price declines.
We conclude that the district court applied the correct test in
making that determination. We need not, and do not, reach
any other issue presented by this case.
AFFIRMED.

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