Holland & Knight LLP
MONTH-IN-BRIEF (Jan 2023)
Lucid Motors: A Notable SPAC Litigation Win
In a January 11, 2023, opinion, the Northern District of California granted a motion to dismiss to Lucid Motors (Lucid), which went public via a combination with a special purpose acquisition company (SPAC) in 2021. The plaintiffs in the case claimed that Lucid and its CEO induced plaintiffs to buy the stock of Churchill Capital Corporation IV (Churchill), the SPAC, through misrepresentations and omissions about the value of Lucid. Additionally, they alleged that defendants used a scheme and fraud and violated Rule 10b-5 and Section 20(a) of the Securities Exchange Act. The securities class action allegations centered around a few statements that Lucid’s CEO made, prior to a merger announcement with Churchill, about Lucid’s future performance. The stock price of Churchill’s shares spiked after the statements were made but well before the merger was announced, presumably on rumors that Churchill and Lucid were approaching a deal. Defendants moved to dismiss the complaint based on plaintiffs’ lack of standing and failure to adequately allege actionable misrepresentations, materiality, and scienter.