Jaar v. Northern Genesis Acquisition Corp.

Background

Jacques Jaar brought this proposed securities class action individually and on behalf of others similarly situated against Northern Genesis Acquisition Corp. (NGA), The Lion Electric Company, and individual defendants Ian Robertson, Paul Dalglish, Michael Hoffman, Ken Manget, Brad Sparkes, Robert Schaefer, Marc Bedard, and Nicholas Brunet. The complaint alleges violations of Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act.

According to the allegations described in the opinion, NGA was a special-purpose acquisition corporation incorporated in Delaware that later merged with Lion Electric, a Canadian electric-vehicle manufacturer. The plaintiffs allege that a joint proxy statement for the transaction contained materially misleading information about Lion Electric’s financial condition. They further allege that Lion Electric later disclosed supply-chain problems and poor financial prospects, causing its stock price to fall. The court did not decide the truth of these allegations in this order.

Lead Plaintiff

Alex Bouchard-A moved for appointment as lead plaintiff on June 10, 2024. Jaar and two other applicants, Jean Luc Volodarsky and Ian K. Duffy, also sought appointment but withdrew their motions after concluding that they did not have the largest financial interest in the relief sought by the proposed class.

The court applied the lead-plaintiff procedure under the Private Securities Litigation Reform Act. That law generally favors the applicant who timely seeks appointment, has the largest financial interest, and satisfies the relevant requirements of Federal Rule of Civil Procedure 23. Even though Bouchard-A’s motion was unopposed, the court independently reviewed those factors.

Bouchard-A stated that he held approximately 14,000 shares of Northern Genesis common stock as of March 18, 2021. Jaar reported owning 234 NGA shares before the merger closed and acquiring 15 net shares of Lion Electric afterward. Volodarsky and Duffy reported holding an aggregate 1,900 NGA shares as of March 18, 2021. The court concluded that Bouchard-A appeared to have the largest financial interest among the class members who timely applied.

The court also made the preliminary Rule 23 findings relevant to lead-plaintiff selection. It found that Bouchard-A’s claims were typical because, like the other proposed class members, he alleged that the defendants made false or misleading statements about the company’s business and that he voted for the merger and did not redeem his shares in reliance on those statements. The court found adequacy because Bouchard-A had a substantial interest in the case, no applicant identified a conflict or unique defense, and his proposed counsel had experience litigating securities class actions.

Lead Counsel

The Private Securities Litigation Reform Act permits the most adequate plaintiff, subject to court approval, to select class counsel. Bouchard-A selected The Rosen Law Firm, P.A. The court reviewed the firm’s experience and resume and found that it had ample experience in securities class actions and representing injured investors. The court therefore approved Bouchard-A’s choice of counsel.

Disposition and Effect

The court granted Bouchard-A’s unopposed motion. The order appointed him lead plaintiff and approved The Rosen Law Firm, P.A. as lead counsel. It also adjourned the initial pretrial conference scheduled for July 9, 2024 and directed the parties to submit, by July 15, 2024, a joint letter proposing a schedule for an amended complaint and briefing on any motion to dismiss. The order did not decide the underlying securities claims.