- within Wealth Management, Environment and Consumer Protection topic(s)
On November 26, 2025, the United States Court of Appeals for the
Eleventh Circuit reinstated a putative class action asserting
claims under the Securities Exchange Act of 1934 against an
electric utility company, its parent company, and certain of their
executives. Jastram v. NextEra Energy, LLC., No. 24-13372
(11th Cir. Nov. 26, 2025), ECF No. 51-1. Plaintiffs alleged that
defendants falsely denied claims in the media that they used
corporate funds to influence state and local elections, targeted
elected officials who opposed their initiative, employed a news
outlet to support their efforts against these officials, and
intimidated journalists. The district court dismissed the action
with prejudice for failure to allege a corrective disclosure as a
prerequisite to pleading loss causation. We covered that decision
previously, here. The Eleventh Circuit reversed and
reinstated the claims, holding that the district court had erred in
assessing whether the alleged corrective disclosures were
sufficiently connected to the underlying allegations of
misrepresentations.
Plaintiffs identified two January 25, 2023, statements they alleged
revealed defendants' denials to be false: (1) the parent's
risk disclosure in a Form 8-K,warning that allegations, including
in media articles, that defendants had violated federal and state
election law could affect the companies and result in future
liability; and (2) the parent's announcement of its CEO's
retirement and the related disclosure the severance agreement
contained a claw back provision. Plaintiffs also pointed to
contemporaneous analyst commentary linking these disclosures to the
political-misconduct allegations. Plaintiffs alleged that the day
these statements were made was one of the parent's five worst
days of trading in 25 years.
The district court held neither statement constituted a corrective
disclosure because they did not directly reveal the falsity of the
specific misstatements on which plaintiffs based their claims. The
district court dismissed for failure to plead loss causation and
declined to reach the other elements of the Exchange Act claims,
including falsity and scienter.
The Eleventh Circuit disagreed. It held the district court erred
by: (1) searching for "a singular corrective disclosure,"
rather than assessing the alleged mix of information that reached
the market; (2) faulting the alleged corrective disclosures for not
"explicitly" mentioning the alleged prior misstatements;
and (3) failing to credit well-pleaded allegations that market
participants actually connected the January 25 disclosures to the
alleged fraud. The Court also clarified that loss causation need
only meet Rule 8's plausibility standard; it is not subject to
the PSLRA's or Rule 9(b)'s heightened particularity
requirements, which apply to falsity and scienter.
Considering the allegations in toto, the Court held plaintiffs
plausibly pleaded corrective disclosure through "three pieces
of information that changed the market's perception" of
defendants' prior denials. First, the Court held the
Form 8-K risk disclosure's timing and reference to potential
legal violations and reputational harm "necessarily revealed
something" about earlier misconduct. Second, the
Court found plaintiffs alleged a sufficient link between the
CEO's retirement and the alleged scandal, including that
investors "weren't buying" the proffered non-scandal
reasons for his departure. Third, the Court concluded
plaintiffs adequately alleged the severance claw back was atypical
under company policies and was understood by market observers as
acknowledging potential misconduct. Taken together, the Court
determined these allegations sufficed to plead a corrective
disclosure.
The Court also held plaintiffs plausibly alleged that the January
25 stock-price decline was not primarily caused by other factors.
It found it to be significant that financial results released that
day were in line or positive and that "an abundance of
statements' from analysts and market observers linked the
selloff to the political-misconduct disclosures and leadership
change.
The Court remanded for the district court to address the remaining
elements, including whether plaintiffs adequately pleaded falsity
and scienter.
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