Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. For two decades, our lawyers have guided global corporations and financial institutions through a series of “bet-the-company” securities-related crises, consistently reducing or eliminating their most damaging claims and negotiating favorable resolutions.
Nikola Defeats Lawsuits by Former CEO
- Client News
- July 24, 2024
Practices
Paul, Weiss secured a significant victory for Nikola Corp. and certain current and former officers and directors in litigation brought by Nikola’s founder and former CEO and Executive Chairman Trevor Milton. Milton voluntarily dismissed, with prejudice, two frivolous and harassing lawsuits after Paul, Weiss served motions for sanctions.
In September 2020, Milton resigned from Nikola in disgrace after a short seller released a scathing report detailing numerous false and misleading statements he had made prior to and shortly after Nikola went public. Milton, along with Nikola and certain other officers and directors, became subject to a slew of civil lawsuits, and he was charged with securities fraud by the SEC and indicted for securities and wire fraud by the DOJ. Milton was ultimately convicted, sentenced to four years in prison and ordered to pay a fine and restitution. Nikola then successfully secured an arbitration award against Milton for $165 million for the harm he caused the company.
Milton took to social media to publicly disparage the company and its officers and directors, with particular focus on harassing Nikola’s chief legal officer. He then filed two civil lawsuits: a federal action alleging that Nikola and certain officers and directors violated Section 10(b) of the Exchange Act and breached their fiduciary duties by making false statements to the DOJ that led to Milton’s conviction; and a state court action alleging that Nikola’s CLO committed legal malpractice by failing to stop Milton from making ambiguous statements. In addition to being legally frivolous and full of factual misrepresentations, the complaints were also untimely, barred by a mandatory arbitration provision, and, as to certain claims, had already been released pursuant to Milton’s separation agreement with Nikola.
After extensive calls with his counsel, Milton withdrew some of the frivolous claims. Paul, Weiss then briefed and served motions for sanctions under Rule 11 and a similar provision under Arizona state law. Milton voluntarily withdrew the complaints with prejudice.
The Paul, Weiss team included litigation partners Brad Karp, Susanna Buergel and Gregory Laufer and counsel Matthew Stachel.