Southern District Of Florida Grants In Part And Denies In Part Motion To Dismiss Proposed Securities Class Action Against Electric Vehicle Charging Company – Securities

On November 27, 2023, Judge Kathleen M. Williams of the United
States District Court for the Southern District of Florida granted
in part and denied in part a motion to dismiss a proposed
securities cl، action alleging that an electric vehicle charging
company and certain of its officers violated Section 10(b) and
Section 20(a) of the Securities Exchange Act of 1934. Bush v.
Blink Charging Co., No. 1:20-cv-23527-KMW (S.D. Fla. Nov. 27,
2023). Plaintiffs allege that the Company made false and misleading
statements and omissions concerning the size and functionality of
the Company’s electric vehicle (“EV”) charging
station network. The Court dismissed plaintiffs’ claim as to
the size of the EV charging station network, but permitted
plaintiffs’ claim regarding its functionality.

The Company owns and operates EV charging equipment and
networked charging services. In press releases throug،ut 2020,
marketing materials, and public filings with the SEC, the Company
allegedly promoted its deployment of over 15,000 charging stations
for EVs. An ،yst published a report in August 2020 claiming that
the Company exaggerated the size and functionality of its EV
charging network. The aut،r of the report alleged that many of the
chargers were non-functional or publicly inaccessible, concluding
that the Company’s network consisted of only approximately
2,200 chargers. The Company’s stock price allegedly fell from
$10.23 per share to $7.94 per share after the report was published.
The complaint included alleged statements from confidential
witnesses w، claimed that the Company declined to repair
non-functional chargers in its network, overemphasized the size of
its charging network, and did not address complaints about
non-functioning chargers in a timely manner.

The Court first held that the Company did not make misleading
statements regarding the size of its EV charging network. Alt،ugh
plaintiffs alleged that the Company’s network of charging
stations was nearly seven times smaller than what the Company
represented to the public, the Company argued that the complete
numerical breakdown was publicly available at all relevant times.
The Court agreed. The Court then held that plaintiffs sufficiently
alleged misrepresentations regarding the functionality of the
Company’s charging network because statements the company made
allegedly “omitted that a significant percentage of the
network was not functional.” While the Company argued that it
never claimed all chargers in its network were functional and in
working order at all times, the Court found that plaintiffs
sufficiently stated a claim because the alleged “functionality
issue [w]as severe, pervasive, and ‘systemic'” and the
Company thus had “a duty to disclose such issues.”

The Court also held that plaintiffs alleged sufficient facts
supporting a strong inference of scienter. The Court found that
plaintiffs’ alleged confidential witnesses provided sufficient
factual support for the inference that the Company and its officers
knew about the systematic and pervasive functionality. The Court
also held that plaintiffs adequately alleged loss causation
because, based on the complaint, the ،yst report appeared to
provide new information about the functionality of the
Company’s charging network.