Isaacs v. Musk et al

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)

Download PDF
Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 1 of 12 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 8 IN RE TESLA INC. SECURITIES LITIGATION Case No. 18-cv-04865-EMC COURT’S PROPOSED VERDICT FORM 9 10 Docket Nos. 520, 528 United States District Court Northern District of California 11 12 13 14 15 16 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 17 form where appropriate to do so for clarity and the sake of simplicity. Courts in other securities 18 class actions—including this Court—have previously used general verdict forms to decide 19 liability. See generally Docket No. 476 (providing examples of general verdict forms used in 20 other securities cases). The Court has therefore adopted Plaintiff’s proposed form of verdict for 21 the Rule 10B-5 Claim Liability section. 22 Second, for the Rule 10B-5 Claim Damages section, the parties disagree about whether the 23 verdict form should include either an empty table where the jury can write in their determinations 24 of artificial inflation and implied volatilities, a prefilled table using the calculations of Plaintiff’s 25 expert, or both an empty table and a prefilled table. See Docket Nos. 528-1 (Defendants’ Second 26 Amended Proposed Verdict, or “Def. Verdict”) at 4–6, Docket No. 520-1 (Plaintiff’s Second 27 Amended Proposed Verdict, or “Pl. Verdict”) at 3–5. If the evidence at trial is sufficient for a 28 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 1 amount of inflation described by Professor Hartzmark in his report, then the Court will include a 2 blank table instead of a table with prefilled numbers. The Court will not include two separate 3 tables (one blank and one prefilled). 4 Defendants also seek to have the jury answer two questions that are not included in 5 Plaintiff’s proposed verdict form. See Def. Verdict at 4–5. Defendants contend that the jury must 6 make a separate finding regarding the date in which the market price of Tesla stock returned to the 7 level that it would have been trading at absent any material misrepresentations, and whether 8 Plaintiff has proven what the implied volatilities for each Tesla stock option traded during each 9 day of the Class Period would have been but for Mr. Musk’s tweets. Id. Neither question is 10 necessary because the jury will already be making these determinations by calculating the amount 11 of artificial inflation and the “but for” implied volatility percentages proved by Plaintiff for each 12 day of the Class Period. The Court has thus omitted these questions from the proposed verdict 13 form. 14 Third, for the Section 20(A) Claim Liability section, the Court has incorporated 15 Defendants’ proposed section because it includes a question regarding the good faith defense. 16 Finally, there are two key differences in the last section of the verdict form regarding 17 allocation of responsibility. First, the parties disagree about whether the PSLRA requires a 18 statement-by-statement allocation of responsibility between the defendants. Second, the parties 19 disagree about whether the jury should decide that the defendant made a “knowing violation” or 20 acted with actual knowledge /deliberate recklessness. 21 As for the first point of dispute, the Court agrees with Plaintiff that no aspect of the statute 22 requires the jury to determine responsibility between the defendants for each statement. The 23 PSLRA requires the jury to “make findings . . . concerning . . . the percentage of responsibility of 24 [defendants], measured as a percentage of the total fault of all persons who caused or contributed 25 to the loss incurred by the plaintiff; and whether such person knowingly committed a violation of 26 the securities laws.” 15 U.S.C. § 78u-4(f)(3)(A). Moreover, neither the Vivendi nor the 27 Household verdict forms required a statement-by-statement allocation of responsibility. See 28 Docket No. 593-3 at 69; Docket No. 593-2 at 42. The Court has thus incorporated Plaintiff’s 2 Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 3 of 12 1 proposal because Defendants have not shown that the jury needs to decide whether each defendant 2 acted with scienter for each false statement. 3 Second, as for the level of scienter required for the allocation of responsibility, the PSLRA 4 requires the jury to decide whether a defendant “knowingly committed a violation of the securities 5 laws.” 15 U.S.C. § 78u-4(f)(3)(A)(iii). This is because any defendant who knowingly violated 6 securities laws is jointly and severally liable under 15 U.S.C. § 78u-4(f)(2)(A). The Court has 7 adopted Plaintiff’s proposed language regarding whether the relevant Defendants committed a 8 knowing violation of the federal securities laws. 9 10 IT IS SO ORDERED. United States District Court Northern District of California 11 12 Dated: January 17, 2023 13 14 15 ______________________________________ EDWARD M. CHEN United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 3 Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 4 of 12 1 A. RULE 10B-5 CLAIM: LIABILITY 2 3 Statement No. 1: “Am considering taking Tesla private at $420. Funding secured.” 4 5 1. 6 Has Plaintiff proved their Rule 10b-5 Claim against Elon Musk for Statement No. 1 identified above? Yes: _____ No: _____ 7 8 9 10 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 11 12 13 _______________________________________________________________________________ PLEASE PROCEED TO THE NEXT PAGE. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 5 of 12 1 Statement No. 2: “Investor support is confirmed. Only reason why this is not certain is that it’s continent on a shareholder vote.” 2 3 3. Has Plaintiff proved their Rule 10b-5 Claim against Elon Musk for Statement No. 2 identified above? 4 Yes: _____ No: _____ 5 6 7 8 4. Has Plaintiff proved their Rule 10b-5 Claim against Tesla Inc. for Statement No. 2 identified above? Yes: _____ No: _____ 9 10 United States District Court Northern District of California 11 12 13 _______________________________________________________________________________ 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. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 6 of 12 1 B. RULE 10B-5 CLAIM: DAMAGES 2 3 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. 4 5 6 07- 08- 09- 10- 13- 14- 15- 16- 17- 7 Aug Aug Aug Aug Aug Aug Aug Aug Aug $__.__ $__.__ $__.__ $__.__ $__.__ $__.__ $__.__ $__.__ 8 ($/share) $__.__ 9 10 United States District Court Northern District of California 11 _______________________________________________________________________________ PLEASE PROCEED TO THE NEXT PAGE. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 7 of 12 2. 1 2 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. 3 Day of Class Period at Close of Market 4 5 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 ____% ____% ____% ____% ____% ____% ____% ____% 17 Dec 21, 2018 ____% ____% ____% ____% ____% ____% ____% ____% 18 Jan 18, 2019 ____% ____% ____% ____% ____% ____% ____% ____% 19 Feb 15, 2019 ____% ____% ____% ____% ____% ____% ____% ____% 20 Mar 15, 2019 ____% ____% ____% ____% ____% ____% ____% ____% 21 Jun 21, 2019 ____% ____% ____% ____% ____% ____% ____% ____% 22 Aug 16, 2019 ____% ____% ____% ____% ____% ____% ____% ____% 23 Jan 17, 2020 ____% ____% ____% ____% ____% ____% ____% ____% 6 7 8 9 10 12 13 14 15 16 Maturity Date United States District Court Northern District of California 11 24 25 26 _______________________________________________________________________________ PLEASE PROCEED TO THE NEXT PAGE. 27 28 7 Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 8 of 12 3. 1 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. 2 United States District Court Northern District of California 3 4 07- 08- 09- 10- 13- 14- 15- 16- 17- 5 Aug Aug Aug Aug Aug Aug Aug Aug Aug 6 2019 7 Note 8 2021 9 Note 10 2022 11 Note 12 13 14 _______________________________________________________________________________ PLEASE PROCEED TO THE NEXT PAGE. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 9 of 12 1 C. 2 If you answered “Yes” to one or more questions in Section A, please answer the following questions. 3 4 SECTION 20(A) CLAIM: LIABLITY 1. 5 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 6 7 Brad W. Buss: Yes: _____ No: _____ 8 Robyn Denholm: Yes: _____ No: _____ 9 Ira Ehrenpreis: Yes: _____ No: _____ 10 Antonio J. Gracias: Yes: _____ No: _____ 11 James Murdoch: Yes: _____ No: _____ 12 Kimbal Musk: Yes: _____ No: _____ 13 Linda Johnson Rice: Yes: _____ No: _____ 14 2. 15 16 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): 17 18 19 20 21 22 23 24 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: _____ 25 26 27 _______________________________________________________________________________ PLEASE PROCEED TO THE NEXT PAGE. 28 9 Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 10 of 12 1 D. ALLOCATION OF RESPONSIBILITY 2 3 1. 4 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. 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 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: _____ 15 16 17 _______________________________________________________________________________ PLEASE PROCEED TO THE NEXT PAGE. 18 19 20 21 22 23 24 25 26 27 28 10 Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 11 of 12 1 2. 2 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%. 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 Elon Musk: _____% Tesla: _____% Brad W. Buss: _____% Robyn Denholm: _____% Ira Ehrenpreis: _____% Antonio J. Gracias: _____% James Murdoch: _____% Kimbal Musk: _____% Linda Johnson Rice: _____% 13 14 15 16 _______________________________________________________________________________ PLEASE PROCEED TO THE NEXT PAGE. 17 18 19 20 21 22 23 24 25 26 27 28 11 Case 3:18-cv-04865-EMC Document 585 Filed 01/17/23 Page 12 of 12 1 2 E. RETURN OF VERDICT Once the form is completed, the foreperson for the jury must sign and date it below. 3 4 Dated: ________________________ Signed_________________________ Jury Foreperson 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?