Smilovits v. First Solar Incorporated ( 2019 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Mark Smilovits, individually and on behalf No. CV12-0555-PHX-DGC of all others similarly situated, 10 ORDER Plaintiffs, 11 v. 12 First Solar, Inc.; Michael J. Ahearn; Robert 13 J. Gillette; Mark R. Widmar; Jens Meyerhoff; James Zhu; Bruce Sohn; and 14 David Eaglesham, 15 16 17 The parties have filed many motions in limine (“MILs”). The Court previously 18 ruled on Plaintiffs’ MILs 1 and 10. See Docs. 547 and 548. This order will rule on the 19 remaining MILs.1 20 Plaintiffs’ MIL 2 (Doc. 492). Plaintiffs ask the Court to preclude Defendants from 21 introducing: (1) an “intervening or superseding acts of third parties” defense, and (2) a 22 “reliance on others” defense because Defendants failed to provide Plaintiffs information 23 required by discovery requests. But these defenses have been withdrawn by Defendants 24 1 The parties have filed multiple motions to file documents under seal, which the 25 Court will address in a separate order. See Docs. 468, 511, 551, 589, 639, 649. The parties have lodged the proposed sealed versions of the documents on the Court’s electronic case 26 filing (“ECF”) system pending rulings on the motions to seal, and have also filed redacted public versions of the documents on the ECF system. See LRCiv 5.6(b)-(c). Where 27 appropriate, and as noted below, this order cites to some of the lodged documents, which will be filed on the ECF system (either under seal or in the public record) once the Court 28 rules on the motions to seal. Where the Court cites to a sealed version of a MIL, it will also provide a citation to the redacted public version. 1 and were stricken by the Court with Defendants’ consent. Doc. 401 at 46-47. As a result, 2 these affirmative defenses are not part of this case and will not be presented to the jury in 3 argument or instructions. Plaintiffs’ MIL does not ask that any other evidence be 4 precluded, and therefore is denied as moot.2 5 Plaintiffs’ MIL 3 (Doc. 493). Plaintiffs seek to preclude Defendants from 6 introducing: (1) a “truth-on-the-market” defense, and (2) a “safe harbor” or “bespeaks 7 caution” defense because Defendants failed to provide Plaintiffs information required by 8 discovery requests. These defenses have also been withdrawn by Defendants and were 9 stricken by the Court with Defendants’ consent. Doc. 401 at 46-47. As a result, these 10 affirmative defenses are not part of this case and will not be presented to the jury in 11 argument or instructions. Plaintiffs’ MIL does not ask that any other evidence be 12 precluded, and therefore is denied as moot.3 13 Plaintiffs’ MIL 4 (Docs. 474 (lodged sealed version), 494 (public redacted 14 copy)). Plaintiffs ask the Court to preclude defendants from introducing evidence or 15 testimony at trial that: (1) they received, considered, or relied on the advice of counsel 16 during the Class Period; (2) lawyers reviewed or approved Defendants’ public disclosures 17 or insider sales of First Solar stock during the Class Period; or (3) Defendants relied on 18 lawyers’ involvement in any such review or approval processes during the Class Period. 19 Plaintiffs contend that Defendants waived the advice-of-counsel defense by withholding 20 thousands of documents on the basis of the attorney-client privilege, including documents 21 related to disclosure issues, and by instructing witnesses not to disclose attorney-client 22 communications in depositions. Defendants respond that they “will not assert an ‘advice 23 of counsel’ defense or present evidence about the content of legal advice.” Doc. 592 at 2. 24 2 To the extent Plaintiffs attempt in this motion to preclude Defendant from 25 presenting evidence that counters Plaintiffs’ proof of their claims, the motion is denied. Plaintiffs discovery requests focused on affirmative defenses, which have been withdrawn. 26 The requests did not seek evidence unrelated to affirmative defenses, and Plaintiffs never asked the Court to require Defendants to produce any other specific evidence in response 27 to their request. Rule 37 sanctions would be unwarranted in such a situation. 28 3 Same point as footnote 1. 1 The Court rules as follows: (1) Defendants cannot present at trial any attorney- 2 client communication they refused to disclose during discovery on privilege grounds. 3 (2) There will be no advice-of-counsel defense. Such a defense will not be presented to 4 the jury through argument or instructions. (3) The Court cannot conclude, however, that 5 Defendants’ refusal to disclose the contents of specific communications should preclude 6 them from making any reference to counsel in their evidence and arguments at trial. The 7 Court must draw precise lines during trial, but its current view is that Defendants may 8 present evidence that counsel reviewed corporate disclosures and stock-sale plans or 9 attended meetings, but may not present evidence that counsel approved the disclosures or 10 plans or that Defendants relied on what the lawyers said about the disclosures or plans. 11 Presenting evidence of lawyer approval or Defendant reliance while withholding the actual 12 communications that constituted the approval or resulted in the reliance would be unfair to 13 Plaintiffs. It would leave the impression that the lawyers provided unqualified approval of 14 all that Defendants did, without actually disclosing what the lawyers said or did not say 15 and without affording Plaintiffs the opportunity to know, test, or address the actual 16 communications. Plaintiffs’ MIL 4 is granted in part and denied in part as set forth 17 above. 18 Plaintiffs’ MIL 5 (Docs. 475 (lodged), 495 (public)). Plaintiffs seek to preclude 19 Defendants from introducing evidence, questions, or argument concerning Plaintiffs’ 20 experts’ compensation in this case. Plaintiffs base this request on the fact that a defense 21 expert refused to provide total compensation information. Defendants assert that Plaintiffs 22 took the same position in a deposition, but the transcript does not support their position. 23 See Doc. 594-2 at 4. The rule at trial will be the same for both parties. Unless the parties 24 reach a different agreement, both sides will be limited to eliciting the following 25 compensation information: (a) the hourly rate paid for the expert’s time and the time of any 26 of the expert’s staff members, and (b) the total hours incurred by the expert and his or her 27 staff members on this case. Experts should come to trial prepared to answer these questions 28 1 – the Court will not accept an assertion that the expert does not know this information. 2 With this order in place, the MIL is denied. 3 Plaintiffs’ MIL 6 (Doc. 496). Plaintiffs ask the Court to preclude Defendants’ from 4 calling Bernhard Beck to testify at trial because Defendants never disclosed him as required 5 by Rule 26(a)(1)(A). Defendants do not dispute that they failed to disclose Mr. Beck under 6 Rule 26(a)(1)(A) or in a supplement under Rule 26(e), but they oppose the motion. 7 Defendants first assert that Rule 26 disclosure was not required because Mr. Beck’s 8 role as a key German customer of First Solar with involvement in the LPM issue was well 9 known to Plaintiffs through the production of many documents, some of which are now 10 listed on Plaintiffs’ exhibit list. But none of these documents satisfied a primary purpose 11 of Rule 26(a)(1)(A) – to inform Plaintiffs that Defendants might call Mr. Beck as a witness 12 at trial. Plaintiffs are “entitled to rely on the ‘critical’ purpose of Rule 26(a)(1)(A) – ‘to 13 inform them which witnesses [] the disclosing party may use to support its claims or 14 defenses.’” McCollum v. UPS Ground Freight Inc., 2013 WL 105225, at *1-2 (D. Ariz. 15 Jan. 9, 2013) (citation omitted). This disclosure obligation continues throughout the 16 litigation under Rule 26(e). A party who fails to timely identify a witness as required by 17 Rule 26(a)(1)(A) “is not allowed to use that . . . witness to supply evidence . . . at a trial, 18 unless the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1). 19 Defendants have not shown that the failure to identify Beck as a potential witness was 20 substantially justified. 21 Defendants argue that they complied with Rule 26(a)(3) by disclosing Beck more 22 than 30 days before trial. True, but Rule 26(a)(3) is a “pretrial” disclosure, not a discovery 23 disclosure. It is made in preparation for trial and expressly states that it is “[i]n addition 24 to the requirements in Rule 26(a)(1).” Fed. R. Civ. P. 26(a)(3)(A) (emphasis added). It 25 neither trumps nor satisfies the Rule 26(a)(1)(A) disclosure obligation during discovery 26 and the Rule 26(e) duty to timely supplement.4 In this highly complex case, a 27 4 The two district court cases cited by Defendants (Docs. 596, 597 at 3) are not controlling authority, and Sarantis v. ADP, Inc., No. CV-06-2153-PHX-LOA, 2008 WL 28 4057007, at *6 (D. Ariz. Aug. 28, 2008), is distinguishable as it concerned rebuttal and impeachment witnesses disclosed in response to supplemental disclosures from the 1 September 13, 2019 disclosure, less than three months before trial and several years after 2 the close of fact discovery, is not harmless. Plaintiffs may have known Beck’s role in some 3 events related to this case, but they did not know that Defendants might call him to testify 4 and they lost the opportunity during discovery to depose him or inquire further concerning 5 his anticipated testimony. 6 Because Defendants failure to disclose Beck as required by Rule 26(a)(1)(A) was 7 not substantially justified or harmless, Beck may not testify at trial. Fed. R. Civ. P. 8 37(c)(1). The MIL is granted. 9 Plaintiffs’ MIL 7 (Docs. 476 (lodged), 497 (public)). Plaintiffs seek to preclude 10 Defendants from presenting evidence and argument regarding the impact of a purported 11 5% measurement tolerance on First Solar’s 10-year performance warranty. Plaintiffs first 12 note that Defendants admitted in their answer that First Solar warranted that solar modules 13 installed in accordance with agreed-upon specifications will produce at least 90% of their 14 initial nameplate power output rating during the first 10 years, and at least 80% during the 15 following 15 years. Plaintiffs assert that this admission precludes Defendants from now 16 contending that the warranty has a 5% measurement tolerance and that this tolerance means 17 the warranty is not triggered until 85% power production. 18 But the 5% measurement tolerance is in the warranty itself, immediately following 19 the 90% and 80% warranties. See Doc. 598 at 2. Whether that measurement tolerance has 20 the effect Defendants claim is a factual issue for trial. Defendant’s answer, which mirrors 21 the actual language from the warranty, does not foreclose an argument about how the 90% 22 and 80% warranties are to be measured. 23 Nor is the issue foreclosed by Defendants’ withholding of privileged documents that 24 might bear on the measurement tolerance issue. Plaintiffs do not contend that Defendants 25 incorrectly claimed that the relevant documents are privileged. (If Plaintiffs believed the 26 opposing party. Defendants reliance on In re First Alliance Mortgage Co., 471 F.3d 977 (9th Cir. 2006), is not persuasive because the Ninth Circuit merely found that the trial court 27 did not abuse its discretion in permitting the testimony of late-disclosed witnesses. It also found the late disclosure harmless. Id. at 1000 (“Even had it been error for the district court 28 to admit these witnesses, there is nothing to suggest that Lehman was significantly hampered in its ability to prepare for trial or to examine these witnesses.”). 1 privilege was wrongly invoked, they should have raised the issue with the Court long ago.) 2 Doc. 598 at 3-4. And if the documents are properly privileged, then withholding them does 3 not foreclose the parties from litigating an issue on which they bear. Privileged 4 communications often bear on factual issues in a dispute. Plaintiffs argue that Defendants 5 cannot use the privilege as a sword and a shield, but Defendants are not using the privilege 6 as a sword. They avow that they will not base their 5% measurement tolerance position on 7 legal advice from counsel. Doc. 598 at 2. 8 Finally, Plaintiffs suggest that the 5% measurement tolerance is a recently-raised 9 defense, but, as noted above, the measurement tolerance is in the warranty itself. And 10 Defendants identify documents and deposition testimony produced during discovery that 11 reflect Defendants’ measurement tolerance position. The MIL is denied. 12 Plaintiffs’ MIL 8 (Doc. 498). Plaintiffs seek to preclude Defendants from 13 introducing evidence or argument at trial regarding the lack of a restatement or government 14 investigation of First Solar’s financial results. Plaintiffs assert that such evidence is 15 irrelevant and would serve no purpose other than to mislead the jury about the legal 16 standards for a civil securities fraud suit. The Court disagrees. While the lack of a 17 restatement of the financials and an SEC investigation do not establish the absence of fraud 18 as a matter of law, they are relevant facts in this case that the jury may consider in deciding 19 whether Defendants made material misstatements or omissions with scienter. Plaintiffs, of 20 course, are free to counter this evidence by showing that Defendants must approve any 21 restatement of the financials and that the SEC might decline an enforcement action for any 22 number of reasons. The Court does not conclude that the probative value of this evidence 23 is substantially outweighed by the danger of unfair prejudice, jury confusion, or waste of 24 time. Fed. R. Evid. 403. Plaintiffs may object or seek a clarifying instruction if they 25 believe this or any other evidence is improper or unduly prejudicial at trial. The MIL is 26 denied. 27 Plaintiffs’ MIL 9 (Docs. 477 (lodged), 499 (public)). Plaintiffs seek to preclude 28 Defendants from introducing evidence of, or opinions or argument relating to, events that 1 post-date the Class Period, including First Solar’s post-Class Period stock price 2 movements. The MIL sweeps too broadly and is an improper attempt to pre-try the case. 3 Plaintiffs may object at trial to evidence they believe is irrelevant or inadmissible under 4 Rule 403. The Court will be far better equipped to rule on specific evidence issues at that 5 time. 6 The only specific evidence Plaintiffs identify are the post-Class-Period prices of 7 Defendants’ stock. Plaintiffs suggest that any such evidence would be an indirect attempt 8 to persuade the jury that Plaintiffs have not been damaged. But the Court will instruct the 9 jury on the proper measure of damages, and Defendants note that their own damages 10 expert, Dr. Kleidon, does not calculate damages using post-Class-Period share prices. 11 Doc. 600 at 4. Defendants also note that they do not intend to argue that damages should 12 be reduced by stock-price movements after the 90-day PSLRA period. Id. The Court will 13 consider any objections or requests for clarifying instruction Plaintiffs assert during trial. 14 This MIL is denied. 15 Plaintiffs’ MIL 11 (Docs. 478 (lodged), 501 (public)). Plaintiffs seek to preclude 16 Defendants from offering evidence, argument, or testimony regarding a memorandum 17 prepared by its independent auditor, PricewaterhouseCoopers, LLP (“PwC”), nearly a year 18 after the Class Period ended. Plaintiffs argue that the evidence is an irrelevant, after-the- 19 fact effort by PwC to justify its own auditing work, and that any testimony about the 20 memorandum would constitute improper lay opinion evidence. 21 The Court cannot conclude at this point that evidence regarding the memorandum 22 should be excluded. Its relevancy or lack of relevancy will be clearer during trial. And 23 whether testimony about the memorandum will be admissible under Rule 701 will also be 24 clearer. The Court therefore denies the MIL. To avoid the possibility of unfair prejudice, 25 however, Defendants are instructed not to mention the memorandum in their opening 26 statement or in evidence without first raising this issue with the Court. This should be done 27 at a time when the Court and the parties can discuss the evidence without keeping the jury 28 waiting. 1 Plaintiffs’ MIL 12 (Docs. 479 (lodged), 502 (public)). Plaintiffs seek to preclude 2 Defendants from offering evidence, argument, or opinions related to China’s participation 3 in the solar energy industry, asserting that such evidence is irrelevant and inadmissible 4 under Rule 403. The Court denies the motion. The effect of Chineses competition on First 5 Solar’s business, market share, and stock price is relevant to loss causation – whether the 6 stock price drops identified by Plaintiffs were due to Defendants’ fraud or other market 7 forces. The Court cannot conclude that the evidence will improperly waste time or confuse 8 issues under Rule 403. 9 Plaintiffs’ MIL 13 (Docs. 480 (lodged), 503 (public)). Plaintiffs seek to preclude 10 Defendants from arguing or introducing evidence that First Solar did not develop, or could 11 not develop, a correlation between STBi and field power loss prior to April 1, 2008. This 12 request is based on the assertion that Defendants did not produce documents created before 13 April 1, 2008, and thereby precluded Plaintiffs from countering Defendants’ assertion that 14 the correlation was not possible until 2010. Plaintiffs cite only Defendants’ initial 15 discovery response in support of this argument. They do not assert that they ever raised 16 this specific issue with Defendants, and they did not raise it with the Court despite the fact 17 that the Court made itself available for discovery conference calls and held many with the 18 parties. The Court’s Case Management Order stated that, “[a]bsent extraordinary 19 circumstances, the Court will not entertain fact discovery disputes after the deadline for 20 completion of fact discovery.” Doc. 131 at 2. What is more, documents dated April 1, 21 2008 and later give Plaintiffs two years of information before the alleged correlation was 22 developed in 2010, and yet Plaintiffs cite no such document to support their assertion that 23 the correlation could have been made earlier. The MIL is denied. 24 Plaintiffs’ MIL 14 (Docs. 481 (lodged), 504 (public)). Plaintiffs seeks to preclude 25 defense experts William W. Holder and John J. Huber from presenting overlapping and 26 duplicative testimony. The Court’s Scheduling Order states: “Each side shall be limited 27 to one retained or specially employed expert witness per issue.” Doc. 438 at 1 n.1. The 28 Court will not permit overlapping and duplicative expert testimony at trial. The Court 1 cannot conclude at this time, however, that Plaintiffs’ MIL should be granted. Defendants 2 assert that they do not intend to present duplicative testimony, but instead require two 3 experts to address the distinct GAAP and MD&A opinions of Plaintiffs’ expert, Paul 4 Regan. This issue may be addressed, if necessary, after Plaintiffs’ expert has testified and 5 in light of the testimony Defendants propose to elicit from their experts. The MIL is 6 denied. 7 Plaintiffs’ MIL 15 (Docs. 482 (lodged), 505 (public)). Plaintiffs seek to preclude 8 Defendants from offering evidence of, or argument relating to, the aggregate damages 9 suffered by the Class. Plaintiffs contend that damages will be calculated on a per-share 10 basis, not on an aggregate basis, and that any argument or evidence regarding aggregate 11 class damages would be irrelevant and unfairly prejudicial. Defendants agree that damages 12 will be calculated on a per-share basis and assert that they do not intend to present any 13 aggregate damages figure estimating what the overall recovery would be for the Class. 14 Defendants expect that the verdict form will ask jurors to decide per-share damages. In 15 light of this agreement between the parties, the Court denies Plaintiffs’ MIL as moot. 16 Should any party conclude during trial that the aggregate class recovery should be 17 mentioned in any way, counsel should raise the issue with the Court before mentioning it 18 to the jury. 19 The Court will not preclude the parties from presenting evidence or argument 20 comparing LPM or hot climate-related costs (or lost revenue) to First Solar’s loss in market 21 value on relevant disclosure dates. That analysis is used by experts from both sides and 22 provides an important basis for per-share loss calculations and comparisons between the 23 experts’ opinions. 24 Plaintiffs’ MIL 16 (Doc. 506). Plaintiffs seek to preclude Defendants from calling 25 Plaintiffs to testify through live testimony or deposition or introducing class members’ 26 trading records at trial. Plaintiffs contend that this is a class action on behalf of all persons 27 who purchased First Solar stock during the Class Period, proceeding on the fraud-on-the 28 market theory of reliance, that the jury will be tasked with adjudicating Defendants’ class- 1 wide liability, and that Plaintiffs’ transactions, conduct, or knowledge, like those of every 2 other Class member, are only relevant to individualized issues. 3 Defendants respond that they do not intend to introduce evidence about absent class 4 members, but that they do intend to call the Lead Plaintiffs and their investment manager 5 and introduce their investment documents. Defendants note, correctly, that the 6 presumption of reliance created by the fraud-on-the-market theory is rebuttable. Basic v. 7 Levinson, 485 U.S. 224, 245-47 (1988). They assert that the trial must address the claims 8 of the Lead Plaintiffs, and that their testimony will be relevant to rebut the presumption of 9 reliance. 10 Of all the cases cited by the parties, the Court finds the discussion in In re Vivendi 11 Universal, S.A. Securities Litigation, 765 F. Supp. 2d 512 (S.D.N.Y. 2011), to be the most 12 relevant and helpful. The Court will paraphrase that discussion. 13 The fraud-on-the-market theory can give rise to a presumption of reliance. Id. 14 at 583. The theory applies to well-developed securities markets and assumes that the 15 market price of a stock reflects all available public information, including material mis- 16 representations and omissions, and that investors in an efficient securities market 17 reasonably rely on the integrity of the market price. Therefore, parties who purchase 18 securities in an efficient market need not prove that they directly relied on or even knew 19 about the alleged misrepresentations; reliance is assumed once the materiality of a 20 misrepresentation or omission is established. Id. 21 The presumption of reliance that arises from the fraud-on-the-market theory may be 22 rebutted. As the Supreme Court stated in Basic, “[a]ny showing that severs the link 23 between the alleged misrepresentation and either the price received (or paid) by the 24 plaintiff, or his decision to trade at a fair market price, will be sufficient to rebut the 25 presumption of reliance.” 485 U.S. at 248. The Supreme Court identified several ways in 26 which a defendant could rebut the presumption: 27 For example, if petitioners could show that the “market makers” were privy 28 to the truth . . . and thus that the market price would not have been affected by their misrepresentations, the causal connection could be broken: the basis 1 for finding that the fraud had been transmitted through market price would be gone. Similarly, if, despite petitioners’ allegedly fraudulent attempt to 2 manipulate market price, news [of the allegedly concealed information] 3 credibly entered the market and dissipated the effects of the misstatements, those who traded Basic shares after the corrective statements would have no 4 direct or indirect connection with the fraud. Petitioners also could rebut the 5 presumption of reliance as to plaintiffs who would have divested themselves of their Basic shares without relying on the integrity of the market. For 6 example, a plaintiff who believed that Basic’s statements were false . . . and 7 who consequently believed that Basic stock was artificially underpriced, but sold his shares nevertheless because of other unrelated concerns, e.g., 8 potential antitrust problems, or political pressures to divest from shares of 9 certain businesses, could not be said to have relied on the integrity of a price he knew had been manipulated. 10 11 Id. at 248-49. 12 This excerpt suggests that some of the means of rebutting the presumption of 13 reliance can be proven on a class-wide basis, and some necessarily require individualized 14 inquiry. For example, a party may rebut the presumption of reliance by showing that the 15 market already knew the truth that was allegedly omitted from a company’s statements, 16 such that any omissions could not have been material. Or a defendant may show that the 17 market is not efficient and therefore cannot be assumed to reflect information known about 18 a security. These rebuttals are properly attempted on a class-wide basis because they 19 concern market matters common to all class members. Vivendi, 765 F. Supp. 2d at 584. 20 On the other hand, certain means of rebutting the presumption of reliance require 21 an individualized inquiry into the buying and selling decisions of particular class members. 22 For example, the Supreme Court stated in Basic that the presumption of reliance would be 23 rebutted if the defendant could show that a particular investor would have purchased a 24 company’s stock even if she had known of the fraud. 485 U.S. at 248. Alternatively, if a 25 particular investor relied on information not generally available to the public, it may be 26 argued that the investor did not rely on the integrity of the market. Logically, any attempt 27 to rebut the presumption of reliance on such grounds would call for separate inquiries into 28 the individual circumstances of particular class members. Vivendi, 765 F. Supp. 2d at 584. 1 “For this reason, courts in securities fraud actions have consistently recognized that issues 2 of individual reliance can and should be addressed after a class-wide trial, through separate 3 jury trials if necessary.” Id. at 584-85 (citing six cases). 4 Defendants seek “to introduce evidence that Lead Plaintiffs traded ‘without relying 5 on the integrity of the market.’” Doc. 610 at 2 (quoting Basic, 485 U.S. at 249). This is a 6 Plaintiff-specific defense to the fraud-on-the-market presumption of reliance – an attempt 7 to show that these particular Plaintiffs cannot rely on the presumption. As Vivendi rightly 8 concludes, this is an individualized issue, not a class issue, and should be addressed after a 9 class-wide trial. 10 Defendants acknowledge that “[i]ssues of individual reliance for absent class 11 members . . . naturally must follow trial.” Id. at 2 n.2. Yet if Defendants’ were permitted 12 to present evidence that Lead Plaintiffs did not rely on the market and the jury were to 13 agree and enter a defense verdict, then what? Because individual reliance by absent class 14 members would not have been adjudicated, and those members would still be entitled to 15 the presumption of the fraud-on-the-market theory if Defendants could not rebut it in their 16 cases, judgment against them would not be appropriate. The case would need to be tried 17 again on a class-wide basis, or would proceed class-member-by-class-member contrary to 18 the Court’s class certification. The purpose of this trial is to resolve class-wide issues. 19 Individual issues, such as Lead Plaintiffs possible individual lack of reliance on the market, 20 must be addressed after the class trial. 21 Defendants also argue that Lead Plaintiffs’ testimony is relevant to materiality. 22 Defendants acknowledge that materiality looks to a hypothetical reasonable investor, but 23 quote Branch-Hess Vending Services Employees’ Pension Trust v. Guebert, 751 F. Supp. 24 1333, 1340 (C.D. Ill. 1990), for the proposition that an actual plaintiff’s testimony can be 25 relevant. Branch-Hess, however, was not a class action or a fraud-on-the-market case. It 26 concerned the sale of securities to four pension funds by the financial advisor who created 27 the pension funds. The specific representations he made to the funds, and facts surrounding 28 1 the securities transactions, were thus more relevant to the issue of materiality than are 2 individual investors’ reactions to alleged market-wide manipulation of stock price.5 3 The Court grants the MIL. 4 Plaintiffs’ MIL 17 (Doc. 507). Plaintiffs seek to preclude Defendants from 5 presenting evidence, argument, or testimony relating to purported “good acts” of any 6 defendant, such as any charitable donations, membership or affiliation with community or 7 non-profit organizations, civic or military service, or the Company’s mission to provide 8 clean energy. Plaintiffs contend that such evidence is irrelevant, unfairly prejudicial under 9 Rule 403, and improper character evidence under Rules 404 and 608. 10 These are matters that must be decided at trial. The Court agrees that it would be 11 inappropriate to present evidence simply for the purpose of showing that Defendants are 12 good people. That is not an issue in this case and such evidence could run afoul of 13 Rules 403 and 404. But evidence of Defendants’ actions may be relevant for other 14 purposes, such as showing why Defendants took particular actions on particular days or 15 responding to attacks on a Defendant’s character for truthfulness. Fed. R. Evid. 608. And 16 the Court cannot conclude at this point that First Solar’s mission to provide clean energy 17 is irrelevant. The MIL is denied. The Court will consider objections made during trial. 18 Plaintiffs’ MIL 18 (Docs. 483 (lodged), 508 (public)). Plaintiffs seek to preclude 19 Defendants from offering evidence or argument concerning the social, economic, or 20 environmental value of solar energy, or Defendants’ commitment to the promotion of 21 renewable energy sources. Plaintiffs contend that such evidence is irrelevant and unfairly 22 prejudicial. The Court reaches the same conclusion as in the previous motion. These are 23 matters that must be decided at trial. The Court agrees that it would be inappropriate to 24 present evidence simply for the purpose of showing that First Solar is a good company or 25 5 Defendants’ other case, U.S. S.E.C. v. Pirate Investor LLC, 580 F.3d 233, 241 (4th 26 Cir. 2009), was an SEC enforcement action, not a class action or a fraud-on-the-market case. The court of appeals held that the district court did not commit clear error in finding 27 that the defendant’s misrepresentations were material, and simply noted in passing that some victims of the misrepresentation testified that they relied on it. The case does not 28 hold that a lead plaintiff’s actions in a class action are relevant to the objective inquiry of materiality. 1 Defendants are good people, but evidence of First Solar’s business objectives may be 2 relevant for other purposes. The Court cannot draw fine lines outside the context of trial. 3 The MIL is denied. 4 Plaintiffs’ MIL 19 (Doc. 509). Plaintiffs seek to preclude Defendants from 5 introducing evidence or comment disparaging plaintiffs’ counsel, class action lawsuits 6 generally, Plaintiffs’ contingency fee arrangement with counsel, or Plaintiffs’ perceived 7 motivations in bringing this litigation. Defendants largely agree that such evidence or 8 comment would be inappropriate, but suggest that there is nothing yet for the Court to rule 9 on, although Defendants do argue that motive may be relevant to credibility. Doc. 616. 10 The Court grants the MIL. Attacks on counsel are always inappropriate, and attacks 11 on class action lawsuits generally or on contingency fee arrangements are also irrelevant 12 and inadmissible. If Defendants believe evidence covered by this MIL becomes relevant, 13 they may raise the issue with the Court outside the hearing of the jury. 14 Plaintiffs’ MIL 20 (Docs. 484 (lodged), 510 (public)). Plaintiffs seek to preclude 15 Defendants from offering evidence or argument concerning the personal lives, 16 socioeconomic or political views, or arrest records of Plaintiffs’ expert witnesses. The 17 Court can see no situation in which an expert’s arrest record would be relevant or 18 admissible, and grants the MIL with respect to such evidence. Otherwise, the MIL is 19 imprecise and will be denied. The Court instructs counsel on both sides, however, that any 20 evidence or argument related to a witness’s personal life or socioeconomic or political 21 views should be raised with the Court before being presented to the jury. 22 Defendants’ MIL 1 (Docs. 512 (lodged), 513 (public)). Defendants seek to 23 preclude Plaintiffs from presenting evidence or argument suggesting that a relationship 24 exists between First Solar’s cost-per-watt metric (CpW) and any alleged fraud, including 25 any connection with the LPM and heat degradation issues. Plaintiffs’ first amended 26 complaint alleged that “defendants artificially lowered their manufacturing costs, which in 27 turn caused First Solar’s cost-per-watt metric to be understated.” Doc. 93, ¶ 27. This 28 allegation appeared in the section of the complaint describing Defendants’ alleged 1 “fraudulent scheme.” Id. ¶ 20. In their motion for summary judgment, Defendants 2 identified 62 alleged misstatements in Plaintiffs’ first amended complaint relating to CpW 3 (Doc. 327-1 at 215-30), and asserted that Plaintiffs had no evidence that CpW had been 4 misrepresented or that any Defendant had knowledge of misstatements about CpW. 5 Doc. 311 at 54. After full briefing, the Court agreed, and held that Plaintiffs failed to 6 produce evidence concerning the effects on CpW of the LPM and hot climate issues: 7 Plaintiffs have failed to provide evidence from which a reasonable jury could 8 conclude that CpW should have contained costs related to the LPM or hot climate defects. There is no evidence that First Solar ever included prior or 9 future costs in CpW. Although the two defects were occurring 10 simultaneously with new manufacturing, there is no evidence that new modules were being manufactured with less efficiency due to defects in 11 previously-manufactured modules. 12 * * * It is undisputed that CpW was an important metric, but Plaintiffs do not 13 connect any wrongdoing to the Individual Defendants. . . . The record is devoid of evidence from which a reasonable jury could find that Defendants 14 improperly manipulated CpW with the intent to mislead investors. 15 16 Doc. 401 at 45. 17 Plaintiffs’ response to the MIL argues that evidence regarding CpW is necessary to 18 show materiality at trial: 19 [T]hroughout the Class Period defendants excluded LPM-related costs from the CpW calculation. Moreover, defendants did not disclose the effect of hot 20 climate de-rating on CpW. Again, given the importance that market 21 observers placed on CpW, it is axiomatic that the incorporation of LPM costs into that metric “would have negatively impacted analysts’ views on First 22 Solar’s ability to lower its cost position, its ability to drive lower cost per 23 watt, and its ability to gain market share.” 24 * * * 25 The “importance of CpW to investors” and the “effect that LPM or heat degradation had on CpW”, by their very nature, have a tendency to prove 26 whether or not a reasonable investor would consider the LPM and heat 27 degradation issues to be important – i.e., materiality. 28 Doc. 560 at 3. 1 In other words, Plaintiffs want to present evidence that the LPM and hot climate 2 problems, if included in CpW, would have affected market investors, and that Defendants 3 failed to include them. These are the very allegations eliminated by summary judgment. 4 The Court does not agree that they can be brought back into the case to prove the materiality 5 of the LPM and hot climate issues. Defendants MIL is granted. Plaintiffs shall not present 6 evidence or argument suggesting that a relationship exists between CpW and any alleged 7 fraud, including any connection with the LPM and heat degradation issues. 8 Defendants’ MIL 2 (Docs. 514 (lodged), 515 (public)). Defendants seek to 9 preclude Plaintiffs from presenting (1) evidence or argument that former CEO Rob 10 Gillette left First Solar because of alleged fraud, and (2) unfairly prejudicial evidence or 11 argument related to the reasons for Mr. Gillette’s departure, including exhibits bearing 12 Bates numbers DIRS00000011, DIRS00003700, DIRS00004274, FEINSTEIN0204496, 13 FEINSTEIN0204621, FSLR-02356140, and FSLR02356415. 14 The Court granted summary judgment on Plaintiffs’ claim that Gillette’s departure 15 was related to the alleged fraud and that the 25% decline in First Solar’s stock price on the 16 day of his departure was therefore caused by the fraud. Doc. 401 at 27. The Court 17 explained: “Plaintiffs have presented no evidence that he left First Solar because of 18 Defendants’ alleged fraud. . . . The Court rejects Plaintiffs’ argument that a jury could 19 simply infer a connection between Gillette’s departure and the alleged fraud.” Id. 20 Plaintiffs assert that the evidence addressed in the MIL is relevant because “Gillette 21 promptly learned of the [LPM] debacle and, as a result, held a gun to First Solar’s head by 22 demanding a new compensation package amidst First Solar’s meltdown.” Doc. 561 at 1 23 (brackets and quotation marks omitted). Plaintiffs further argue that Gillette knew his stock 24 was worthless, refrained from selling it for this reason, understood his compensation would 25 increase in value if the price of First Solar’s stock increased, and was motivated to inflate 26 First Solar’s stock price in order to boost his own compensation package.” Id. at 2. In 27 other words, Plaintiff’s assert that Gillette’s departure was related to the fraud – the precise 28 point on which the Court granted summary judgment. The Court grants the MIL. 1 Plaintiffs assert that Defendants will argue at trial that Gillette’s purchase and 2 retention of First Solar stock negates any inference of scienter, and will argue that 3 Plaintiffs’ theory of fraud is implausible because then-CEO Michael Ahearn and four other 4 senior executives would not have turned the reins of the Company over to a new and 5 unknown CEO if they had fraudulent intentions. If Plaintiffs believe that Defendants’ 6 evidence and argument before the jury make relevant any of the evidence or arguments 7 subject to this MIL, they may raise the issue with the Court outside the presence of the jury 8 and the Court will consider whether trial developments have made the evidence relevant 9 and admissible. 10 Defendants’ MIL 3 (Docs. 516 (lodged), 517 (public)). Defendants seek to 11 preclude Plaintiffs from presenting evidence or argument that all Defendants, collectively, 12 are responsible for all allegations of fraud in this case, in particular with respect to alleged 13 fraud before April 4, 2011 for Mark Widmar. Plaintiffs do not dispute that Defendants 14 Mark Widmar, Bruce Sohn, Jens Meyerhoff, and Robert Gillette either joined or left First 15 Solar during the Class Period, or that the Court found that Widmar could not be held liable 16 for concealing LPM because he joined First Solar after the existence of the defect had been 17 publicly disclosed. Plaintiffs assert that “[a]ll of these facts will be made plain at trial and 18 clearly represented in the evidence produced to the jury.” Doc. 573 at 2. Plaintiffs further 19 state that they “have no intention of implying that ‘some Defendants are liable for conduct 20 they could not have committed,’ as defendants suggest.” Id. at 3. 21 The Court denies the MIL. The Court will not attempt to script when Plaintiffs may 22 use the word “Defendants.” During trial, Defendants may object if they believe Plaintiffs 23 are unfairly lumping Defendants together in arguments and evidence they present to the 24 jury. The Court will rule when objections are made. 25 Defendants’ MIL 4 (Docs. 518 (lodged), 519 (public)). Defendants seek to 26 preclude Plaintiffs from presenting evidence or argument that any decline in First Solar’s 27 stock price is related to fraud, except as to the five alleged corrective disclosure events that 28 survived Defendants’ motion for summary judgment. Plaintiffs respond that they “will 1 only seek damages arising from the fraud-related declines on the dates that survived 2 summary judgment: July 30, 2010, February 25, 2011, May 4, 2011, December 14, 2011, 3 February 29, 2012, and March 1, 2012.” Doc. 562 at 1. “Plaintiffs are not seeking damages 4 for any other stock price declines on any other dates.” Id. 5 Defendants express concern that Plaintiffs’ expert may opine that the alleged fraud 6 likely affected stock prices on other dates and that his damages estimate is therefore 7 conservative. But such testimony would not constitute an attempt to collect damages for 8 those other dates in violation of the Court’s summary judgment ruling, and the Court cannot 9 at this stage conclude that such testimony by the expert would be unfounded or 10 inadmissible. The MIL is denied. 11 Defendants’ MIL 5 (Doc. 520). Defendants seek an order that the parties may not 12 use with their experts any exhibits, including demonstrative exhibits, that were not included 13 with those experts’ disclosures served in 2018. As Plaintiffs note, however, the parties 14 submitted a stipulation to the Court which provided that the “[c]urrent version of Federal 15 Rules of Civil Procedure shall apply to expert discovery, except as stipulated below.” 16 Doc. 141, ¶ 1 (emphasis added). The stipulation then stated: “In addition to the written 17 expert report setting forth the expert’s opinion in accordance with Fed. R. Civ. P. 26(a)(2), 18 the parties shall produce, for each testifying expert, only the following: . . .” Id., ¶ 4 19 (emphasis added). The list that follows does not include exhibits or demonstrative exhibits. 20 Id. The Court adopted the stipulation in an order. Doc. 142. As Plaintiffs note, Rule 29(b) 21 provides that “procedures governing or limiting discovery” may be modified by stipulation. 22 Defendants cite an exchange with the Court during the August 2, 2018 status 23 conference, in which the Court stated its general view that Rule 26 requires experts to 24 include demonstrative exhibits with their expert reports. Doc. 520 at 2, 8. At the time, 25 however, the Court did not recall the parties’ stipulation and counsel did not mention it. 26 The Court did not intend to override the stipulation. The MIL is denied. 27 Defendants’ MIL 6 (Docs. 521 (lodged), 522 (public)). Defendants seek to 28 preclude Plaintiffs from presenting evidence or argument concerning any alleged 1 misstatements that were not identified by Plaintiffs before the Court’s summary judgment 2 decision, including new statements added to the list of 60 alleged misrepresentations served 3 by Plaintiffs on August 31, 2018. The parties have since agreed that statements 9, 14, 31, 4 and 36 are not at issue. Doc. 636. With respect to the remaining statements at issue, the 5 materials submitted by the parties are difficult to parse. Plaintiffs shall prepare and file, 6 by December 16, 2019, a table that shows the number of each statement at issue (17, 20, 7 22, 26, 38, 42, 46, 50, or 56), quotes the exact language of the statement, and quotes the 8 exact language of the complaint or other discovery response (before August 31, 2018) that 9 disclosed the statement to Defendants as an alleged misrepresentation or omission. The 10 Court will address this table with the parties at the final pretrial conference. 11 Defendants’ MIL 7 (Docs. 523 (lodged), 525 (public)). Defendants seek to 12 preclude Plaintiffs from using the terms “insider trading,” “insider,” “illegal trades,” or 13 substantially similar phrases to refer to the Individual Defendants’ transactions in First 14 Solar stock. This motion led to a discussion during a conference call with the parties last 15 week and to additional briefing on whether Plaintiffs have asserted a § 10(b) insider trading 16 claim in this case. See Doc. 626. The Court has reviewed the additional briefing 17 (Docs. 635, 637) and concludes that Plaintiffs have not asserted an insider trading claim. 18 The Ninth Circuit holds that § 10(b) and Rule 10b-5 “make it illegal in some 19 circumstances for those possessing inside information about a company to trade in that 20 company’s securities unless they first disclose the information.” Brody v. Transitional 21 Hosps. Corp., 280 F.3d 997, 1000 (9th Cir. 2002). “This type of prohibition is known as 22 an ‘abstain or disclose’ rule, because it requires insiders either to abstain from trading or 23 to disclose the inside information that they possess.” Id. The claim includes a 24 contemporaneous trading requirement: 25 In Neubronner v. Milken, 6 F.3d 666, 669 (9th Cir.1993), the Ninth Circuit 26 adopted a contemporaneous trading requirement for Section 10(b) and Rule 10b–5 actions [based on insider trading]. See also In re Worlds of Wonder 27 Sec. Litig., 35 F.3d 1407, 1427 (9th Cir. 1994). Neubronner explained that 28 two reasons animate this rule: First, “noncontemporaneous traders do not require the protection of the ‘disclose or abstain’ rule because they do not 1 suffer the disadvantage of trading with someone who has superior access to information.” 6 F.3d at 669-70 (quoting Wilson v. Comtech 2 Telecommunications Corp., 648 F.2d 88, 94 95 (2d Cir. 1981)). Second, the 3 contemporaneous trading requirement puts reasonable limits on Section 10(b) and Rule 10b-5’s reach; without such a limitation, an insider defendant 4 could be liable to a very large number of parties. Id. at 670. 5 6 Brody, 280 F.3d at 1001. 7 The Ninth Circuit has not established a precise time frame for contemporaneous 8 trading, but it has rejected the suggestion that trades within two months of the insider’s 9 sales can be considered contemporaneous. Id. at 1002 (“a contemporaneous trading period 10 of two months would gut the contemporaneous trading rule’s premise – that there is a need 11 to filter out plaintiffs who could not possibly have traded with the insider, given the manner 12 in which public trades are transacted”). 13 Plaintiffs allege in their first amended complaint that the Individual Defendants 14 engaged in insider trading and sold stock worth more than $400 million during the class 15 period. See Doc. 93, ¶¶ 211-16. But the complaint cites these trades as evidence of 16 scienter, alleging that the trading “raises a strong inference that defendants knew that they 17 were deceiving the public.” Id., ¶ 211. The complaint does not assert that the trading was 18 deceptive to those who engaged in contemporaneous transactions. Indeed, the complaint 19 never mentions contemporaneous transactions. 20 Plaintiffs cite other references to insider trading in discovery and summary 21 judgment briefing, but the Court cannot conclude that they have ever clearly asserted an 22 insider trading claim based on contemporaneous trades. The undersigned judge has 23 presided over this case for more than seven years, ruling on motions to dismiss, certifying 24 the class, ruling on summary judgment, certifying a question to the circuit, and resolving 25 numerous discovery disputes, and yet has never heard the suggestion that Plaintiffs were 26 asserting an insider trading claim based on contemporaneous trades until last week. 27 What is more, the class in this case was certified with no mention of an insider 28 trading claim and with no effort to tailor the class or a subclass to the contemporaneous 1 trading requirement of such a claim. The class is based on a § 10(b) misrepresentation 2 claim and includes all who purchased First Solar stock between April 30, 2008 and 3 February 28, 2012. Plaintiffs cannot plausibly suggest that all members of this four-year 4 class traded First Solar stock within less than two months of the Individual Defendants’ 5 trades. And the Court cannot accept Plaintiffs’ assertion that “contemporaneous” includes 6 the period of time from a misrepresentation and insider trade to the end of the class period, 7 particularly in light of the Ninth Circuit’s holding that two months is too far removed. Nor 8 can the Court accept Plaintiffs’ assertion that their damages expert, who bases his analysis 9 on misrepresentations and their effect on stock prices during the class period, can apply the 10 same damages analysis to a contemporaneous insider trading claim. 11 The Court holds, therefore, that there is no insider trading claim in this case. This 12 is a § 10(b) misrepresentation case, as alleged in the first amended complaint. Defendants’ 13 sales of First Solar stock will be relevant to the question of scienter and perhaps for other 14 purposes, but not to a separate insider trading claim. 15 Even with this ruling, however, the Court will not grant the MIL. The Court will 16 not limit Plaintiffs’ ability to refer to the Individual Defendants’ stock sales as insider sales 17 or insider trades. The jury will not be confused as there will be no insider trading claim in 18 argument or instructions. And the Court does not view the term “insider” as so pejorative 19 as to raise Rule 403 concerns. The MIL is denied. Defendants may, as always, object if 20 they believe improper evidence or argument is presented. 21 Defendants’ MIL 8 (Docs. 526 (lodged), 527 (public)). Defendants seek to 22 preclude Plaintiffs from referring to heat degradation or the hot climate issue as a “defect,” 23 or referring to LPM and heat degradation as the “two defects.” Defendants contend that 24 references to “defects” during trial would be unfairly prejudicial and should be precluded 25 under Rule 403. The MIL is denied. Defendants will have a full and fair opportunity at 26 trial to explain their view of the hot climate and LPM issues that arose in First Solar panels. 27 The Court cannot conclude that the word “defect” is either a factually inaccurate statement 28 of Plaintiffs’ allegations or an inflammatory word that is likely to draw an emotional 1 response from the jury under Rule 403. Nor does the Court find that use of the word will 2 lengthen the trial or confuse the jury. 3 Defendants’ MIL 9 (Docs. 529 (lodged), 530 (sealed)). Defendants seek to 4 preclude Plaintiffs from referring to the total proceeds of stock sales by Defendants as 5 “profits.” Defendants contend that references to “profits” during trial would be unfairly 6 prejudicial and should be precluded under Rule 403. The MIL is denied. Defendants will 7 have a full and fair opportunity at trial to explain their view of proceeds from Defendants’ 8 stock sales. The Court cannot conclude that the word “profits” is either a factually 9 inaccurate statement of Plaintiffs’ allegations or an inflammatory word that is likely to 10 draw an emotional response from the jury under Rule 403. Nor does the Court find that 11 use of the word will lengthen the trial or confuse the jury. 12 Defendants’ MIL 10 (Doc. 531). Defendants seek to preclude Plaintiffs from 13 presenting evidence or argument that compares the allegations in this case to alleged or 14 actual corporate wrongdoing at other companies. Plaintiffs respond that Defendants intend 15 to compare First Solar’s performance to less successful solar power companies and to extol 16 the virtues of the solar power industry generally, and that such evidence will open to door 17 to Plaintiffs showing the less favorable side of the industry. The Court cannot decide this 18 issue outside the context of trial and therefore denies the MIL. The Court notes, however, 19 that it intends to focus this trial on the relevant events and minimize references to 20 extraneous matters, and normally would be inclined to exclude evidence of other 21 companies’ wrongdoing. If Plaintiffs intend to present such evidence, they should raise it 22 with the Court outside the hearing of the jury. 23 Defendants’ MIL 11 (Docs. 533 (lodged), 534 (public)). Defendants seek the 24 following ruling: When presenting evidence or argument about Individual Defendants’ 25 stock sales, Plaintiffs may not present evidence or argument about an Individual 26 Defendant’s state of mind at the time of a stock sale made pursuant to a Rule 10b5-1 trading 27 plan, rather than state of mind at the time the Rule 10b5-1 plan was put in place. The Court 28 will not script Plaintiffs’ presentation as Defendants suggest. Scienter is a question of fact 1 for the jury. Plaintiffs may make factual arguments regarding the Rule 10b5-1 plans and 2 their effect, if any, on the claims in this case, and Defendants can argue that only 3 Defendants’ intent when the plans were created should be considered by the jury. The MIL 4 is denied. 5 Defendants’ MIL 12 (Docs. 535 (lodged), 536 (public)). Defendants seek to 6 preclude Plaintiffs from presenting evidence or argument about the SEC investigation into 7 selective disclosure of nonpublic information by former First Solar employee Larry 8 Polizzotto, except for the limited purpose of addressing issues of loss causation and 9 damages with respect to the decline in First Solar’s stock price on March 1, 2012, after 10 First Solar disclosed the investigation. Defendants intend to introduce the SEC action 11 themselves to show that the stock price drop on March 1, 2012 was not attributable to the 12 disclosure of information related to the LPM and hot climate issues. Defendants further 13 state: “Because it was an investigation by the SEC, jurors also need to know that it involved 14 a violation of Reg FD, not securities fraud (and that those are different); that First Solar 15 self-reported the Reg FD violation; that the SEC credited First Solar for its cooperation; 16 and that neither First Solar nor any Individual Defendants was sanctioned in any way.” 17 Doc. 535 at 2. If Defendants intend to present this evidence, the Court cannot conclude 18 that Plaintiffs should be limited to adopting Defendants’ narrative about the SEC action. 19 Cross-examination on the evidence Defendants elicit will be relevant, and the Court will 20 not at this time attempt to limit what Plaintiffs can ask or argue. The MIL is denied. 21 Defendants’ MIL 13 (Doc. 537). Defendants seek to preclude Plaintiffs from 22 presenting evidence or argument about the reasons for the departure from First Solar of 23 nonparty witnesses who are former First Solar employees. But why a witness left First 24 Solar could be relevant. For example, if a witness was terminated because she objected to 25 the nondisclosures at issue in this case, the termination clearly would be relevant. While 26 Plaintiffs have not identified any such witness, the Court cannot conclude that other reasons 27 for departing are not relevant to issues in the case, including witness credibility. The Court 28 1 will rule on objections during trial, when the context and relevancy of evidence is better 2 understood. The MIL is denied. 3 Defendants’ MIL 14 (Doc. 539). Defendants seek to preclude Plaintiffs from 4 presenting evidence or argument concerning the Defendants’ personal wealth. But 5 Plaintiffs allege that Defendants failed to disclose material information about the company 6 in order to maintain its stock price and sell their own shares for substantial sums. Plaintiffs 7 are entitled to present their theory to the jury, including the sums Defendants’ received 8 when they sold their shares. The Court will not preclude Plaintiffs from eliciting testimony 9 about amounts Defendants received when they sold their shares as alleged in the first 10 amended complaint; it is relevant to motive and scienter. The Court has difficulty seeing 11 the relevancy of other evidence of Defendants’ wealth, such as their net worth or lifestyle 12 independent of the stock sales alleged in the complaints, and thinks that such evidence 13 would present a risk of unfair prejudice that would outweigh its marginal relevance. The 14 Court therefore grants the MIL with respect to evidence of wealth independent of sums 15 Defendants received for the stock sales alleged in the complaint. If Plaintiffs believe such 16 excluded evidence becomes relevant during trial, they may raise the issue with the Court 17 outside the hearing of the jury. 18 Defendants’ MIL 15 (Doc. 540). Defendants seek to preclude Plaintiffs from 19 presenting video clips of stock analyst interviews, in particular a February 28, 2012 video 20 from the CNBC program “Fast Money” in which the hosts interview stock analyst Gordon 21 Johnson about First Solar. Defendants contend that the video is hearsay and unfairly 22 prejudicial under Rule 403. Plaintiffs respond that the evidence is not being offered to 23 prove the truth of the matter asserted and therefore does not fall within the hearsay rule. 24 Plaintiffs argue that the evidence is offered to prove the materiality of, and the market’s 25 reaction to, First Solar’s public disclosures, as well as loss causation. Doc. 585 at 3. The 26 Court agrees that the video clip, independent of the truth of what is said by the 27 commentators (or even reported about German problems), is relevant to show the market’s 28 reaction to the February 28, 2012 disclosures, their materiality, and loss causation. When 1 offered for these purposes and not for the truth of the matters asserted, the clip is not barred 2 by the hearsay rule. See Fed. R. Evid. 801(c)(2). At the parties’ request, the Court will 3 instruct the jury on the limited purpose for which the clip is offered. The Court also 4 concludes that the clip’s probative value is not substantially outweighed by the danger of 5 unfair prejudice. Fed. R. Evid. 403. The MIL is denied. 6 Defendants’ MIL 16 (Doc. 541). Defendants seek to preclude Plaintiffs from 7 presenting evidence or argument concerning the safety of First Solar’s thin-film solar 8 panels or the cadmium they contain, including references to them as toxic, dangerous, 9 unsafe, carcinogenic, or words to that effect. Plaintiffs respond, rather imprecisely, that 10 the risks presented to First Solar by the toxic nature of cadmium in the panels must be 11 explained to the jury to place the LPM and hot climate issues in context. Doc. 569 at 2. 12 The Court is not persuaded. This case is not about potential health effects of the solar 13 panels or how those health risks affected the market for First Solar stock. 14 The only specific relevancy identified by Plaintiffs concerns an October 2009 email 15 from Jens Meyerhoff. The Court is unable to review this email, however, because 16 Plaintiffs’ cite to the record is incorrect (Doc. 569 at 3, citing to Doc. 473, Ex. 11 at 54). 17 The Court grants the MIL. If Plaintiffs believe information about the health risks 18 of First Solar panels becomes relevant during trial to explain the email or counter other 19 evidence presented by Defendants, they may raise the issue with the Court outside the 20 hearing of the jury. 21 Defendants’ MIL 17 (Doc. 542). Defendants seek to preclude Plaintiffs from 22 presenting evidence or argument concerning other actions against Defendants involving 23 allegations similar to those alleged by Plaintiffs in this action, in particular, the federal 24 derivative action, the state derivative action and the Maverick action. This evidence is 25 irrelevant and barred by Rule 403. The MIL is granted. If Plaintiff believe Defendants 26 open the door to such evidence during trial, they may raise the issue with the Court outside 27 the hearing of the jury. 28 1 Defendants’ MIL 18 (Docs. 543 (lodged), 544 (public)). Defendants seek to || preclude Plaintiffs from presenting evidence or argument about Defendants’ interlocutory || appeal in this case, including the Ninth Circuit decision and the Supreme Court certiorari 4|| proceedings. This evidence is irrelevant. The MIL is granted. The Court will instruct the 5 || jury on the law. Witnesses should not testify regarding their understanding of the law from 6 || the Ninth Circuit’s decision in this case. If any party believes a clarifying instruction 1s needed during trial, they may request it. 8 Dated this 9th day of December, 2019. 9 10 . ul d gue 6, Cater phtl 12 David. Campbell 13 Senior United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 26 -