Opinion
18-cv-04865-EMC
01-17-2023
IN RE TESLA INC. SECURITIES LITIGATION
COURT'S PROPOSED VERDICT FORM DOCKET NOS. 520, 528
EDWARD M. CHEN UNITED STATES DISTRICT JUDGE
The Court's proposed verdict form is below. The Court explains each section of the proposed verdict form as follows.
First, as the Court has previously explained, it generally prefers to use a general verdict form where appropriate to do so for clarity and the sake of simplicity. Courts in other securities class actions-including this Court-have previously used general verdict forms to decide liability. See generally Docket No. 476 (providing examples of general verdict forms used in other securities cases). The Court has therefore adopted Plaintiff's proposed form of verdict for the Rule 10B-5 Claim Liability section.
Second, for the Rule 10B-5 Claim Damages section, the parties disagree about whether the verdict form should include either an empty table where the jury can write in their determinations of artificial inflation and implied volatilities, a prefilled table using the calculations of Plaintiff's expert, or both an empty table and a prefilled table. See Docket Nos. 528-1 (Defendants' Second Amended Proposed Verdict, or “Def. Verdict”) at 4-6, Docket No. 520-1 (Plaintiff's Second Amended Proposed Verdict, or “Pl. Verdict”) at 3-5. If the evidence at trial is sufficient for a reasonable juror to conclude that Tesla stock was artificially inflated by some but not all of the amount of inflation described by Professor Hartzmark in his report, then the Court will include a blank table instead of a table with prefilled numbers. The Court will not include two separate tables (one blank and one prefilled).
Defendants also seek to have the jury answer two questions that are not included in Plaintiff's proposed verdict form. See Def. Verdict at 4-5. Defendants contend that the jury must make a separate finding regarding the date in which the market price of Tesla stock returned to the level that it would have been trading at absent any material misrepresentations, and whether Plaintiff has proven what the implied volatilities for each Tesla stock option traded during each day of the Class Period would have been but for Mr. Musk's tweets. Id. Neither question is necessary because the jury will already be making these determinations by calculating the amount of artificial inflation and the “but for” implied volatility percentages proved by Plaintiff for each day of the Class Period. The Court has thus omitted these questions from the proposed verdict form.
Third, for the Section 20(A) Claim Liability section, the Court has incorporated Defendants' proposed section because it includes a question regarding the good faith defense.
Finally, there are two key differences in the last section of the verdict form regarding allocation of responsibility. First, the parties disagree about whether the PSLRA requires a statement-by-statement allocation of responsibility between the defendants. Second, the parties disagree about whether the jury should decide that the defendant made a “knowing violation” or acted with actual knowledge /deliberate recklessness.
As for the first point of dispute, the Court agrees with Plaintiff that no aspect of the statute requires the jury to determine responsibility between the defendants for each statement. The PSLRA requires the jury to “make findings . . . concerning . . . the percentage of responsibility of [defendants], measured as a percentage of the total fault of all persons who caused or contributed to the loss incurred by the plaintiff; and whether such person knowingly committed a violation of the securities laws.” 15 U.S.C. § 78u-4(f)(3)(A). Moreover, neither the Vivendi nor the Household verdict forms required a statement-by-statement allocation of responsibility. See Docket No. 593-3 at 69; Docket No. 593-2 at 42. The Court has thus incorporated Plaintiff's proposal because Defendants have not shown that the jury needs to decide whether each defendant acted with scienter for each false statement.
Second, as for the level of scienter required for the allocation of responsibility, the PSLRA requires the jury to decide whether a defendant “knowingly committed a violation of the securities laws.” 15 U.S.C. § 78u-4(f)(3)(A)(iii). This is because any defendant who knowingly violated securities laws is jointly and severally liable under 15 U.S.C. § 78u-4(f)(2)(A). The Court has adopted Plaintiff's proposed language regarding whether the relevant Defendants committed a knowing violation of the federal securities laws.
IT IS SO ORDERED.