Class Action Suit Filed against Workhorse Group
YOUNGSTOWN, Ohio – A group of investors has filed a class action lawsuit against electric-vehicle manufacturer Workhorse Group, alleging the company presented false and misleading public statements related to its failed bid for a lucrative U.S. Postal Service contract.
The complaints, filed Monday in the U.S. District Court for Central California, alleges that Workhorse failed to disclose “adverse facts pertaining to the company’s business, operational, and financial results.”
The lawsuit alleges that two media interviews with Workhorse CEO Duane Hughes and chief financial officer Steve Schrader contained statements that were misleading.
According to court documents, Workhorse failed to disclose that the company was “merely hoping” that USPS was going to select an electric vehicle as its next generation delivery van and that there were no assurances from USPS. The lawsuit also alleges the company concealed the fact that electrifying the USPS fleet would be “impractical and astronomically expensive.”
On Feb. 23, the USPS announced it had selected Oshkosh Defense, a subsidiary of Wisconsin-based Oshkosh Corp., for the contract of building the agency’s next-generation delivery vehicle.
Workhorse, based near Cincinnati, was among four finalists for the 10-year contract, estimated at $6.3 billion. Workhorse’s share price collapsed after the announcement, falling more than 47% that day, damaging investors, the lawsuit claims.
The Rosen Law Firm, based in Los Angeles, filed the complaint Monday. Other law firms have announced they are also investigating claims against Workhorse.
Awarding the USPS contract to Oshkosh could have implications for the Mahoning Valley, prompting action by the state’s federal lawmakers.
Workhorse is also a 10% stakeholder in Lordstown Motors Corp., an electrical vehicle manufacturer based in Lordstown that is preparing to launch the all-electric Endurance pickup truck later this year. The company purchased the former Lordstown General Motors plant in 2019.
Lordstown Motors, whose chairman is the former CEO and founder of Workhorse, stood a strong chance of manufacturing at least a portion of the next generation delivery vans.
Seventeen Democrats in the U.S. House of Representatives on Monday introduced a bill that would require at least 75% of the USPS fleet be composed of zero-emission vehicles. Congress would provide $6 billion in funding for the program, according to a Reuters report. U.S. Rep. Jared Huffman, D-2, Calif., sponsored the bill.
Also on Monday, U.S. Rep. Tim Ryan, D-13 of Ohio, requested that the U.S. Securities and Exchange Commission investigate a $54 million stock purchase made just 20 hours before Postmaster general Louis DeJoy announced the Oshkosh contract.
“Given the gravity and serious implications of this contract, I am writing to request that the Securities and Exchange Commission look into this issue as soon as possible,” Ryan wrote to SEC acting chairwoman Allison Herren Lee.
Last week, Ryan and two other Ohio lawmakers urged President Joe Biden to halt the postal truck contract until a full review is conducted to determine whether inappropriate political influence was involved in the decision.
Ryan, U.S. Rep. Marcy Kaptur, D-9, and Democrat U.S. Sen. Sherrod Brown wrote a letter to President Biden saying that the award stands in contrast to the president’s recently signed executive order that calls for the transformation of the federal vehicular fleet to all-electric vehicles.
“This contract will have consequences for decades to come and, as such, we have serious concerns it could be a wasted opportunity to address the climate crisis and the reindustrialization of our manufacturing sector,” the lawmakers wrote.
Pictured: A rendering of Workhorse’s proposed next-generation electric vehicle for the U.S. Postal Service.
Copyright 2024 The Business Journal, Youngstown, Ohio.
