NextEra Secures Dismissal With Prejudice of Securities Class Action

Paul, Weiss achieved a significant victory for NextEra Energy, Inc., the world’s largest public utility company, and certain current and former executives, including former NextEra CEO James Robo and former Florida Power and Light Company (NextEra’s retail electric utility subsidiary) CEO Eric Silagy, when the U.S. District Court for the Southern District of Florida granted our motion to dismiss a putative securities class action with prejudice.

The plaintiffs brought securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 based on alleged misstatements about the alleged political activities of Florida Power and Light (FPL) and its former outside political consulting firm, Matrix, LLC. The plaintiffs alleged that FPL, through Matrix, used corporate funds to engage in improper political activity, including by providing funding to so-called “ghost candidates” in Florida state elections, extending a job offer to a Jacksonville city councilor, surveilling a reporter critical of FPL, and gaining control over a news website. Specifically, the plaintiffs alleged that, in the face of public reporting about the allegations, NextEra made false and misleading statements about its involvement in the alleged activities. The defendants moved to dismiss on falsity, scienter and loss causation grounds.

U.S. District Judge Aileen M. Cannon agreed with the defendants that the plaintiffs failed to plead loss causation, and therefore found it unnecessary to address the defendants’ falsity and scienter arguments. Judge Cannon found that the purported corrective disclosures—announcing the substantial completion of an internal investigation coupled with a standard risk disclosure that the media allegations could result in legal proceedings and reputational harm, that Silagy was retiring after 20 years at FPL, and that Silagy’s retirement agreement contained a claw-back provision—did not reveal any new information that NextEra had previously concealed or obscured. Specifically, Judge Cannon noted that “three months before the purported [] corrective disclosure, Defendants issued a Form 10-Q disclosing the very risks that Plaintiffs now say were first disclosed” on the day of the alleged corrective disclosure. Judge Cannon also found it important that the purported corrective disclosures did not reference the topics of the alleged misstatements and only disclosed a “potential future risk” caused by the political allegations. Regarding Silagy’s retirement announcement and the claw-back provision, Judge Cannon found that the retirement of a CEO, by itself, is insufficient to establish loss causation and the claw-back provision was not unusual. In dismissing the case, Judge Cannon found that leave to amend would be futile.

The Paul, Weiss team includes litigation partners Daniel Kramer, Audra Soloway, Joshua Hill and David Friedman.