Lawsuit Against Lordstown Motors Execs Dismissed
YOUNGSTOWN, Ohio – A federal judge has dismissed a class action lawsuit filed by investors last year that alleged former Lordstown Motors Corp. executives misled shareholders as a joint venture deal with Foxconn unraveled, just before the company filed bankruptcy.
Judge Benita Pearson of the U.S. District Court for the Northern District of Ohio ruled Monday that the plaintiffs failed to provide evidence in support of alleged securities fraud and insider trading. She also found that public statements made by the executives were not misleading regarding the nature of the deal with Foxconn.
CEO Edward Hightower, Adam Kroll, former chief financial officer, and Daniel Ninivaggi, former chairman, were sued in July 2023 by an investor group led by plaintiffs Andrew and Joshua Strickland.
The complaint represents investors who acquired shares of Lordstown Motors between Aug. 4, 2022, and June 26, 2023. The lawsuit alleged Lordstown executives knew during that time that Foxconn was acting in bad faith and failing to live up to its commercial and financial commitments to Lordstown Motors but omitted facts to investors.
Foxconn and Lordstown had entered a partnership in which Foxconn would produce the all-electric Endurance pickup truck. However, just a handful of these vehicles were produced for sale, and Lordstown stock plummeted.
It wasn’t until June 27, 2023, the day Lordstown Motors filed for Chapter 11 bankruptcy, that investors became aware that the partnership had been in jeopardy for a long period of time, and that “Foxconn’s conduct toward Lordstown had been anything but cooperative,” the lawsuit said.
Lordstown Motors, a defunct electric vehicle manufacturer that operated out of the former General Motors Lordstown plant, filed Chapter 11 in Delaware last year and filed suit against Foxconn for fraud, bad faith and repeated contractual breaches.
The assets of Lordstown Motors were sold to LAS Capital – operated by Steve Burns, Lordstown Motors’ former president and CEO – for $10 million. Burns has used the assets as the foundation for a new company, LandX.
Lordstown Motors emerged from bankruptcy as a reconstituted company with a new name, Nu Ride Inc., based in New York.
The company’s lawsuit against Foxconn is still pending as an adversary proceeding in U.S. Bankruptcy Court for the District of Delaware.
Copyright 2024 The Business Journal, Youngstown, Ohio.
