Lucid Group potentially dodged a bullet on Wednesday when a California judge dismissed a class action lawsuit against the electric automaker. Investors involved in the lawsuit claimed that Lucid defrauded them by overstating how many vehicles it expected to build in 2021.
Reuters reports that Judge Yvonne Gonzalez Rogers acknowledged there had been already been media speculation that the special-purpose acquisition company Churchill Capital Corp IV would merge with Lucid. But since nothing official had been announced, there wasn’t enough evidence of fraud to move the suit forward.
“The court cannot conceive of how plaintiffs could reasonably think a merger was likely when Lucid and CCIV had not even publicly acknowledged that a merger was being considered,” Judge Rogers wrote.
Investors were upset because, in early February, Rawlinson told CNBC that Lucid expected to build between 6,000 and 7,000 vehicles in 2021 and had a factory “already built.” But later that month, once the SPAC deal had been officially announced, Lucid said it planned to only build 577 electric Airs that year in part because the factory had not yet been completed. That news caused stock prices to fall by half, reducing the company’s value by $7.4 billion.
But here’s where the Reuters report gets interesting:
Rogers said the Churchill shareholders had standing to sue over statements made by a different company, Lucid, because they alleged a “discernible” loss from “specific alleged misconduct.”
But she said the pre-merger changes in Churchill’s stock price, including reaction to Rawlinson’s statements, reflected “the public’s perception of the likelihood of the merger, not its actual likelihood. The latter is what matters.”
So, angry Churchill investors won’t be able to go forward with their lawsuit against Lucid Group, but they could have gone after Lucid Motors before the SPAC deal. Except that’s hard to do since Lucid Motors no longer exists. The Lucid that sells Lucid vehicles now is no longer the Lucid that they had standing to sue. Isn’t business fun?