Wayne v. Maxeon Solar Technologies, Ltd.

Background

This is a federal securities-fraud class action against Maxeon Solar Technologies, Ltd. and two company officers, William Mulligan and Kai Strohbecke. The proposed class consists of people and entities that purchased or otherwise acquired Maxeon securities between November 15, 2023, and May 29, 2024.

The operative complaint alleges that Maxeon made misleading statements about its business, operations, and prospects after its supply agreement with SunPower ended. According to the allegations, Maxeon depended on exclusive sales of certain products to SunPower, could not aggressively increase sales after the agreement ended, experienced a substantial revenue decline and a serious cash-flow crisis, and later disclosed a revenue decline of more than 41% year over year. The opinion does not decide whether these allegations are true.

Competing Motions

The Private Securities Litigation Reform Act requires the court to appoint as lead plaintiff the class member most capable of adequately representing the class. The statute creates a rebuttable presumption in favor of the applicant who has the largest financial interest and satisfies the requirements of Federal Rule of Civil Procedure 23, including typicality and adequacy.

The court considered motions by Jeyakumar VS Menon, Preston A. Ross, and Mark Regan. Menon had purchased 38,150 net shares and 69,950 total shares, spent $147,702 in net funds, and claimed losses of $124,434.32 using a last-in, first-out calculation. Ross claimed losses of approximately $37,460, and Regan claimed losses of approximately $32,358. The court found that Menon had the largest financial interest.

Typicality and Adequacy

The court found Menon’s claims typical because, like the other proposed class members, they arose from purchases of Maxeon securities at prices allegedly inflated by the defendants’ misconduct. The court also found Menon adequate to represent the class. It relied on his substantial financial interest, his stated commitment to monitoring the case, the lack of antagonism between his interests and those of the proposed class, and the Faruqi firm’s experience in securities litigation.

Ross and Regan argued that Menon was inadequate because two law firms had initially filed separate appointment motions for him, and Ross argued that the motions contained inconsistent information. Menon explained that he mistakenly thought using two firms could improve his chances of appointment. The first firm withdrew its motion less than a day after filing it, after Menon selected the Faruqi firm. The court held that this mistake did not show that Menon failed to understand the case or could not supervise counsel.

The court also found that the differences identified by Ross—such as small differences in transaction prices, the use of trade dates versus settlement dates, the number of accounts shown, and differing loss calculations—were immaterial or adequately explained. It therefore concluded that Menon satisfied Rule 23’s typicality and adequacy requirements.

Lead Counsel

Under the statute, the most adequate plaintiff selects counsel subject to court approval. The court approved Menon’s selection of the Faruqi firm because the firm had significant securities-litigation experience.

Disposition

The court granted Menon’s motion and denied the motions filed by Ross and Regan. It appointed Menon as lead plaintiff and approved the Faruqi firm as lead counsel. Menon was given three weeks from the decision’s date to file an amended complaint reflecting his appointment, with permission to add factual allegations or legal claims based on the same underlying facts. The parties were directed to meet and confer about a schedule for defendants to respond to that amended complaint. The order disposed of Docket Nos. 20, 26, and 30.