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First Solar Agrees to Settle 2012 Class Action Shareholder Lawsuit

Suit stemmed from defective solar panels which caused hundreds of millions of dollars in warranty claims

Posted by Craig Randall

June 3, 2020

Warranty Informer

Kyros Law of Hingham, Massachusetts is is filing potential claims on behalf of shareholders of First Solar Inc (NASDAQ: FSLR) , stemming from a recent settlement of a shareholder lawsuit against the company.

First Solar finally agreed to pay out $350 million to settle the claims of a class action lawsuit from 2012. The company decided to settle the claims in a bid to avoid going to court and dragging the case further.

In 2012, a shareholder lawsuit filed against the company alleged US securities law violations committed by First Solar Inc. management that led to significant losses to investors. These allegations stemmed from defective panels manufactured by the company that caused First Solar Inc. to pay out hundreds of millions of dollars in warranty claims on these defective panels.

Even as the Arizona-based solar manufacturer decided to settle the claims, it still did not accept liability. The company was sued for misleading shareholders on the degree of financial damages caused by manufacturing hiccups.

Before the suit, the solar manufacturer announced the discovery of a defect that affected about four percent of all solar panels they produced between June 2008 and June 2009. After the announcement, the company made a promise to replace the defective panels. The cost of replacing these panels went into tens of millions, as the company recorded in its books.

After the company replaced the panels, the cost of warranty-related expenses shot up to $164 million in the fourth quarter of 2011. This affected the share price, which went down by 11 percent. The drop in share prices continued going down up to almost 90 percent by winter 2012. The 2012 class action suit by shareholders allege that First Solar did not provide a clear breakdown of warranty-related expenses. The suit came at a time that many solar manufacturers around the world declared bankruptcy and closed shop.

First Solar did not accept liability and disputed the case which was to go to court on Jan 2020. By agreeing to settle the claims, First Solar was able to avoid the negative publicity that comes with going to court. However, the settlement is not an admission of liability. The share price continues to go down, and by the start of the year, the shares stood at $55.80.

According to First Solar’s CEO, Mark Widmar, ending the class action suit was a way to focus on revitalizing the company. However, Mark declined to answer how the company plans to cover the cost of the settlement, or how it might affect its business in 2020 and beyond.

In 2019, the company saw its worst year. In the first and second quarters of the year, the company suffered increased operation costs and so many other costs that affected the bottom line. In the second quarter, the company improved its production and shipping. In the third quarter, the company announced plans to move to the EPC partner model before releasing its profit for the first quarter of 2019.

Even after settling the lawsuit, the company still noted they have other pending lawsuits. One of the lawsuits concerns “false and misleading information” on manufacturing issues and incorrect financial filings. With the settlement, the pending lawsuits, and the challenges the company is facing, shareholders still do not know the future of the company.

Read more at Kyros Law

Source: https://classactionlawsuitcenter.com

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