In re Tesla Inc. Securities Litigation
Filing
585
COURT'S PROPOSED VERDICT FORM. See Docket Nos. #520 , #528 . Signed by Judge Edward M. Chen on 1/17/2023. (emclc2, COURT STAFF) (Filed on 1/17/2023)Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 1 of 12
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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IN RE TESLA INC. SECURITIES
LITIGATION
Case No. 18-cv-04865-EMC
COURT’S PROPOSED VERDICT
FORM
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Docket Nos. 520, 528
United States District Court
Northern District of California
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The Court’s proposed verdict form is below. The Court explains each section of the
proposed verdict form as follows.
First, as the Court has previously explained, it generally prefers to use a general verdict
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form where appropriate to do so for clarity and the sake of simplicity. Courts in other securities
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class actions—including this Court—have previously used general verdict forms to decide
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liability. See generally Docket No. 476 (providing examples of general verdict forms used in
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other securities cases). The Court has therefore adopted Plaintiff’s proposed form of verdict for
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the Rule 10B-5 Claim Liability section.
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Second, for the Rule 10B-5 Claim Damages section, the parties disagree about whether the
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verdict form should include either an empty table where the jury can write in their determinations
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of artificial inflation and implied volatilities, a prefilled table using the calculations of Plaintiff’s
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expert, or both an empty table and a prefilled table. See Docket Nos. 528-1 (Defendants’ Second
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Amended Proposed Verdict, or “Def. Verdict”) at 4–6, Docket No. 520-1 (Plaintiff’s Second
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Amended Proposed Verdict, or “Pl. Verdict”) at 3–5. If the evidence at trial is sufficient for a
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reasonable juror to conclude that Tesla stock was artificially inflated by some but not all of the
United States District Court
Northern District of California
Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 2 of 12
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amount of inflation described by Professor Hartzmark in his report, then the Court will include a
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blank table instead of a table with prefilled numbers. The Court will not include two separate
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tables (one blank and one prefilled).
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Defendants also seek to have the jury answer two questions that are not included in
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Plaintiff’s proposed verdict form. See Def. Verdict at 4–5. Defendants contend that the jury must
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make a separate finding regarding the date in which the market price of Tesla stock returned to the
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level that it would have been trading at absent any material misrepresentations, and whether
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Plaintiff has proven what the implied volatilities for each Tesla stock option traded during each
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day of the Class Period would have been but for Mr. Musk’s tweets. Id. Neither question is
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necessary because the jury will already be making these determinations by calculating the amount
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of artificial inflation and the “but for” implied volatility percentages proved by Plaintiff for each
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day of the Class Period. The Court has thus omitted these questions from the proposed verdict
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form.
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Third, for the Section 20(A) Claim Liability section, the Court has incorporated
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Defendants’ proposed section because it includes a question regarding the good faith defense.
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Finally, there are two key differences in the last section of the verdict form regarding
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allocation of responsibility. First, the parties disagree about whether the PSLRA requires a
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statement-by-statement allocation of responsibility between the defendants. Second, the parties
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disagree about whether the jury should decide that the defendant made a “knowing violation” or
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acted with actual knowledge /deliberate recklessness.
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As for the first point of dispute, the Court agrees with Plaintiff that no aspect of the statute
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requires the jury to determine responsibility between the defendants for each statement. The
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PSLRA requires the jury to “make findings . . . concerning . . . the percentage of responsibility of
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[defendants], measured as a percentage of the total fault of all persons who caused or contributed
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to the loss incurred by the plaintiff; and whether such person knowingly committed a violation of
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the securities laws.” 15 U.S.C. § 78u-4(f)(3)(A). Moreover, neither the Vivendi nor the
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Household verdict forms required a statement-by-statement allocation of responsibility. See
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Docket No. 593-3 at 69; Docket No. 593-2 at 42. The Court has thus incorporated Plaintiff’s
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Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 3 of 12
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proposal because Defendants have not shown that the jury needs to decide whether each defendant
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acted with scienter for each false statement.
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Second, as for the level of scienter required for the allocation of responsibility, the PSLRA
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requires the jury to decide whether a defendant “knowingly committed a violation of the securities
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laws.” 15 U.S.C. § 78u-4(f)(3)(A)(iii). This is because any defendant who knowingly violated
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securities laws is jointly and severally liable under 15 U.S.C. § 78u-4(f)(2)(A). The Court has
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adopted Plaintiff’s proposed language regarding whether the relevant Defendants committed a
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knowing violation of the federal securities laws.
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IT IS SO ORDERED.
United States District Court
Northern District of California
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Dated: January 17, 2023
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______________________________________
EDWARD M. CHEN
United States District Judge
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Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 4 of 12
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A.
RULE 10B-5 CLAIM: LIABILITY
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Statement No. 1: “Am considering taking Tesla private at $420. Funding secured.”
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1.
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Has Plaintiff proved their Rule 10b-5 Claim against Elon Musk for Statement No. 1
identified above?
Yes: _____
No: _____
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2.
Has Plaintiff proved their Rule 10b-5 Claim against Tesla Inc. for Statement No. 1
identified above?
Yes: _____
No: _____
United States District Court
Northern District of California
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_______________________________________________________________________________
PLEASE PROCEED TO THE NEXT PAGE.
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Statement No. 2: “Investor support is confirmed. Only reason why this is not certain
is that it’s continent on a shareholder vote.”
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Has Plaintiff proved their Rule 10b-5 Claim against Elon Musk for Statement No. 2
identified above?
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Yes: _____
No: _____
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4.
Has Plaintiff proved their Rule 10b-5 Claim against Tesla Inc. for Statement No. 2
identified above?
Yes: _____
No: _____
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United States District Court
Northern District of California
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_______________________________________________________________________________
IF YOU CHECKED “YES” FOR ONE OR MORE QUESTIONS IN STATEMENT NOS.
1 OR 2, PLEASE PROCEED TO THE NEXT PAGE.
IF YOU CHECKED “NO” FOR EVERY QUESTION IN STATEMENT NOS. 1 AND 2,
PLEASE PROCEED TO SECTION E.
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Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 6 of 12
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B.
RULE 10B-5 CLAIM: DAMAGES
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1.
Determine the amount of artificial inflation per share of Tesla stock proved by
Plaintiff on each date during the Class Period and write it in the table below.
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07-
08-
09-
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13-
14-
15-
16-
17-
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Aug
Aug
Aug
Aug
Aug
Aug
Aug
Aug
Aug
$__.__
$__.__
$__.__
$__.__
$__.__
$__.__
$__.__
$__.__
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($/share) $__.__
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United States District Court
Northern District of California
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_______________________________________________________________________________
PLEASE PROCEED TO THE NEXT PAGE.
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Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 7 of 12
2.
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Determine the “but for” implied volatility percentages proved by Plaintiff for each
option contract maturity date during the Class Period and write it in the table
below.
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Day of Class Period at Close of Market
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07-Aug
08-Aug
09-Aug
10-Aug
13-Aug
14-Aug
15-Aug
16-Aug
Aug 10, 2018
____%
____%
____%
NA
NA
NA
NA
NA
Aug 17, 2018
____%
____%
____%
____%
____%
____%
____%
____%
Aug 24, 2018
____%
____%
____%
____%
____%
____%
____%
____%
Aug 31, 2018
____%
____%
____%
____%
____%
____%
____%
____%
Sep 7, 2018
____%
____%
____%
____%
____%
____%
____%
____%
Sep 14, 2018
____%
____%
____%
____%
____%
____%
____%
____%
Sep 21, 2018
____%
____%
____%
____%
____%
____%
____%
____%
Sep 28, 2018
NA
NA
____%
____%
____%
____%
____%
____%
Oct 19, 2018
____%
____%
____%
____%
____%
____%
____%
____%
Nov 16, 2018
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____%
____%
____%
____%
____%
____%
____%
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Dec 21, 2018
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____%
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____%
____%
____%
____%
____%
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Jan 18, 2019
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____%
____%
____%
____%
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____%
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Feb 15, 2019
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____%
____%
____%
____%
____%
____%
____%
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Mar 15, 2019
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____%
____%
____%
____%
____%
____%
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Jun 21, 2019
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____%
____%
____%
____%
____%
____%
____%
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Aug 16, 2019
____%
____%
____%
____%
____%
____%
____%
____%
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Jan 17, 2020
____%
____%
____%
____%
____%
____%
____%
____%
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Maturity Date
United States District Court
Northern District of California
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_______________________________________________________________________________
PLEASE PROCEED TO THE NEXT PAGE.
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Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 8 of 12
3.
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Determine the amount of artificial inflation per Tesla corporate bond proved by
Plaintiff on each date during the Class Period and write it in the table below.
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United States District Court
Northern District of California
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07-
08-
09-
10-
13-
14-
15-
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17-
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Aug
Aug
Aug
Aug
Aug
Aug
Aug
Aug
Aug
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2019
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Note
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2021
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Note
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2022
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Note
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_______________________________________________________________________________
PLEASE PROCEED TO THE NEXT PAGE.
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Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 9 of 12
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C.
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If you answered “Yes” to one or more questions in Section A, please answer the following
questions.
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SECTION 20(A) CLAIM: LIABLITY
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Has Plaintiff proved the Section 20(a) Claim as to any of the Tesla Director
Defendants (check all that apply):
United States District Court
Northern District of California
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Brad W. Buss:
Yes: _____
No: _____
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Robyn Denholm:
Yes: _____
No: _____
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Ira Ehrenpreis:
Yes: _____
No: _____
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Antonio J. Gracias:
Yes: _____
No: _____
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James Murdoch:
Yes: _____
No: _____
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Kimbal Musk:
Yes: _____
No: _____
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Linda Johnson Rice: Yes: _____
No: _____
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2.
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If you answered “Yes” in response to Question No. 1 as to any Defendant, have
Defendants proved a Good Faith Defense as to that Defendant (check all that
apply):
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Brad W. Buss:
Yes: _____
No: _____
Robyn Denholm:
Yes: _____
No: _____
Ira Ehrenpreis:
Yes: _____
No: _____
Antonio J. Gracias:
Yes: _____
No: _____
James Murdoch:
Yes: _____
No: _____
Kimbal Musk:
Yes: _____
No: _____
Linda Johnson Rice: Yes: _____
No: _____
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_______________________________________________________________________________
PLEASE PROCEED TO THE NEXT PAGE.
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Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 10 of 12
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D.
ALLOCATION OF RESPONSIBILITY
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For any Defendant whom you found liable, did that Defendant commit a knowing
violation of the federal securities laws? Only answer this question as to the
Defendants against whom you found that Plaintiff proved a claim.
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United States District Court
Northern District of California
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Elon Musk:
Yes: _____
No: _____
Tesla:
Yes: _____
No: _____
Brad W. Buss:
Yes: _____
No: _____
Robyn Denholm:
Yes: _____
No: _____
Ira Ehrenpreis:
Yes: _____
No: _____
Antonio J. Gracias:
Yes: _____
No: _____
James Murdoch:
Yes: _____
No: _____
Kimbal Musk:
Yes: _____
No: _____
Linda Johnson Rice: Yes: _____
No: _____
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_______________________________________________________________________________
PLEASE PROCEED TO THE NEXT PAGE.
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Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 11 of 12
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2.
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Please decide each Defendant’s share of responsibility for Plaintiff’s losses. Only
assign a percentage of responsibility to those Defendants whom you found liable,
including those who acted recklessly. The total must add up to 100%.
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United States District Court
Northern District of California
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Elon Musk:
_____%
Tesla:
_____%
Brad W. Buss:
_____%
Robyn Denholm:
_____%
Ira Ehrenpreis:
_____%
Antonio J. Gracias:
_____%
James Murdoch:
_____%
Kimbal Musk:
_____%
Linda Johnson Rice: _____%
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PLEASE PROCEED TO THE NEXT PAGE.
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Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 12 of 12
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E.
RETURN OF VERDICT
Once the form is completed, the foreperson for the jury must sign and date it below.
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Dated: ________________________
Signed_________________________
Jury Foreperson
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Northern District of California
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