Another Look Sought in FPL Securities Case

Article reposted with permission from The News Service of Florida.

Florida Power & Light and its parent company want a federal appeals court to take another look at a securities-fraud lawsuit that alleges the energy giants made misleading statements about issues such as funding “ghost” candidates to influence elections.

Attorneys for FPL and NextEra Energy on Wednesday filed a petition asking the full 11th U.S. Circuit Court to hear arguments in the potential class-action lawsuit filed by investors. The request came after a three-judge panel of the Atlanta-based court in November overturned a decision by U.S. District Judge Aileen Cannon that would have dismissed the case.

The stock price of NextEra Energy, FPL’s parent, plunged in January 2023 after the company included information in U.S. Securities and Exchange Commission filings about issues such as legal risks related to allegations of political misconduct. Also, NextEra disclosed at the time that FPL Chief Executive Officer Eric Silagy was stepping down.

The plaintiffs contend that NextEra and FPL had earlier made misleading statements about the issues.

But in Wednesday’s petition seeking rehearing by the full appeals court, attorneys for the companies disputed the allegations and argued the three-judge panel erred in a decision about what is known as “loss causation” — whether investors’ losses were caused by alleged misstatements.

“As this court has long recognized, the loss-causation requirement is crucial in preventing the federal securities laws from becoming a form of ‘investor insurance’ against ‘any decline in the value of their investments,’” the companies’ petition said, partially quoting a legal precedent. “But the panel’s decision relaxes the loss-causation standard so drastically that claims will proceed past the pleading stage whenever market speculation and a decrease in stock price coincide, regardless of whether there was any revelation that any facts actually were misstated.”

The lawsuit is rooted in a series of issues, including allegations that FPL funneled money through a political-consulting firm, Matrix LLC, and other organizations to improperly influence elections. Also, the issues involve such things as a failed attempt by FPL to acquire the city-owned utility in Jacksonville.

Perhaps the most high-profile example involved allegations that FPL helped back a “ghost” candidate — someone on the ballot but not an active candidate — who siphoned votes from then-state Sen. Jose Javier Rodriguez, D-Miami, in a 2020 election. Rodriguez ultimately lost by 32 votes to now-Sen. Ileana Garcia, R-Miami, with the third candidate, Alex Rodriguez, receiving 6,382 votes.

The lawsuit, whose lead plaintiffs are the City of Hollywood Police Officers Retirement System and the Pembroke Pines Firefighters & Police Officers Pension Fund, was filed in May 2023.

The three-judge panel said in its November opinion that after reporters had started looking into potential election wrongdoing, NextEra and FPL officials “denied all direct and indirect involvement to the press and asserted the allegations had ‘no basis.’ NextEra relayed that same message to investors on an earnings call.”

“But after some time, leadership began to backpedal,” the opinion said. “On January 25, 2023, FPL abruptly parted with its CEO and NextEra (and) filed unscheduled disclosures about potential legal and reputational risk stemming from the allegations. That very day, NextEra’s stock plunged 8.7 percent, wiping out more than $14 billion in market capitalization.”

But in the petition Wednesday, the companies disputed that the January 2023 filings included information that revealed earlier statements were misleading. The petition said the panel incorrectly “held that a plaintiff can adequately plead a corrective disclosure merely by alleging that new public information invited the market to ‘second-guess’ the company’s earlier statements. The problem with that approach is that investors may ‘second-guess’ the truth of earlier statements even absent new factual disclosures correcting those statements.”

The panel opinion, written by Judge Gerald Tjoflat and joined by Judges Elizabeth Branch and Embry Kidd, would send the case back to district court.

In a statement issued after the panel opinion, Matthew Wessler, an attorney for the plaintiffs, said it reaffirmed that “investors are entitled to transparency. As the allegations in this case detail, NextEra, one of the largest power and utility companies in the country, misled the market about its role in a Florida election-interference scheme involving political corruption, off-the-books operations, surveillance of journalists, ghost candidates, and efforts to influence independent media.”