On May 21, 2025, Judge Karin J. Immergut of the United States District Court for the District of Oregon granted a motion to dismiss a proposed securities fraud class action against a nuclear energy company (the "Company") and certain of its officers (the "Individual Defendants") asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act (the "Exchange Act") and Rule 10b-5. Sigman v. NuScale Power Corp., et al., Nos. 3:23-cv-01689-IM, 3:23-cv-1956-IM (D. Ore. May 21, 2025). Plaintiffs alleged that defendants misrepresented the status and profitability of two major nuclear projects and the existence and materiality of an SEC inquiry. The Court held plaintiffs failed to plead falsity and dismissed the complaint with leave to amend.
Plaintiffs alleged defendants made overly optimistic statements on investor calls about the likelihood of the success for its flagship Carbon Free Power Project ("CFPP") while omitting alleged adverse facts such as the rising projected price per megawatt-hour of electricity produced by the CFPP and subscriber withdrawals that ultimately led to the termination of the project. Plaintiffs further alleged the Company announced a second project to provide energy to data centers without disclosing risks about the project's financial viability. Finally, plaintiffs claimed that the Company's SEC filings failed to disclose loss contingencies related to the CFPP and misled investors about the existence of an SEC "voluntary request" for information about the Company's employment practices.
The Court first held that most of the alleged misstatements regarding the two projects fell within the PSLRA's safe harbor provision or constituted inactionable puffery and opinion. Specifically, the Court found that alleged misstatements regarding (1) the likelihood of meeting subscription targets, (2) optimism regarding ongoing negotiations, and (3) predictions about future success were classic examples of forward-looking statements. In reaching this conclusion, the Court rejected plaintiffs' argument that the statements omitted then-present facts about the projects, holding that plaintiffs were required but failed to plead facts about which defendants were aware and thus gave investors a misleading impression. The Court further held that the alleged misstatements were accompanied by sufficiently specific cautionary language warning that the projects might be terminated. The Court also held that statements the Company made about its progress—e.g., describing projects as "going well" or saying that the Company was "excited"—were puffery and/or statements of opinion.
With respect to the omissions claims, the Court held that the complaint did not include sufficient allegations showing that defendants knew at the time of the alleged misstatements either that the subscription target of the CFPP was out of reach or that the second project was not reasonably feasible and that statements the Company made about its progress—e.g., describing projects as "going well" or saying that the Company was "excited"— were puffery and/or statements of opinion. Regarding loss contingencies, the Court held that plaintiffs failed to aver facts showing fraud rather than the Company's reasonable discretionary accounting judgments under GAAP.
With respect to the SEC inquiry, the Court held plaintiffs failed to allege why the voluntary request was material or how the Company's risk disclosures about potential regulatory investigation were false or misleading. The Court found it significant that the voluntary inquiry concerned the Company's employment practices and had nothing to do with allegations about the CFPP.
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