Case Title: First Solar, Inc. v. National Union First Insurance Company of Pittsburgh, PA

Citation: 

Docket Number: 217, 2021

State: delaware

Court: Delaware Supreme Court

Date: 2022-03-16T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
FIRST SOLAR, INC., 
  
                    Plaintiff Below, 
Appellant, 
 
          v. 
 
NATIONAL UNION FIRE 
INSURANCE COMPANY OF 
PITTSBURGH, PA and XL 
SPECIALTY INSURANCE 
COMPANY, 
 
Defendants Below, 
Appellees. 
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   No. 217, 2021 
 
   Court Below: Superior Court  
   of the State of Delaware 
 
 
   C.A. No. N20C-10-156 (CCLD) 
 
 
Submitted: January 19, 2022 
Decided: 
March 16, 2022 
Revised: 
March 22, 2022 
 
Before SEITZ, Chief Justice; VALIHURA, VAUGHN, TRAYNOR, and 
MONTGOMERY-REEVES, Justices, constituting the Court en Banc. 
 
Upon appeal from the Superior Court.  AFFIRMED. 
 
Jennifer C. Wasson, Esquire, Carla M. Jones, Esquire, POTTER ANDERSON & 
CORROON LLP, Wilmington, Delaware, Adam S. Ziffer, Esquire (argued), and 
Meredith Elkins, COHEN ZIFFER FRENCHMAN & MCKENNA LLP, New York, 
New York, Attorneys for Appellant First Solar, Inc. 
 
Kurt M. Heyman, Esquire (argued), Aaron M. Nelson, Esquire, HEYMAN ENERIO 
GATTUSO & HIRZEL LLP, Wilmington, Delaware, Scott B. Schreiber, Esquire, 
Arthur Luk, Esquire, Omomah Abebe, Esquire, and Kolya D. Glick, Esquire, 
ARNOLD & PORTER KAYE SCHOLER LLP, Washington, D.C., Attorneys for 
Appellee National Union Fire Insurance Company of Pittsburgh, PA. 
2 
 
 
John C. Phillips, Jr., Esquire, David A. Bilson, Esquire, PHILLIPS MCLAUGHLIN 
& HALL, P.A., Wilmington, Delaware, Charles C. Lemley, Esquire (argued), Kim 
Melvin, Esquire, and Anna Schaffner, Esquire, WILEY REIN LLP, Washington, 
D.C., Attorneys for Appellee XL Specialty Insurance Company. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 
 
SEITZ, Chief Justice: 
 
In this appeal we review whether a securities class action and a later follow-
on action were related actions, such that the follow-on action was excluded from 
insurance coverage under later-issued policies.  The Superior Court found that the 
follow-on action was “fundamentally identical” to the first-filed action and therefore 
excluded from coverage under the later-issued policies.  Even though the court 
applied an incorrect standard to assess the relatedness of the two actions, we affirm 
nonetheless because under either the erroneous “fundamentally identical” standard 
or the correct relatedness standard defined by the policies, the later-issued insurance 
policies did not cover the follow-on action. 
I. 
A. 
According to the allegations of the complaint, First Solar, Inc. (“First Solar”) 
manufactures solar panels and sells photovoltaic (“PV”) power plants.1  First Solar 
competes in the renewable energy space and has installed PV facilities throughout 
the world.  In March 2012, First Solar stockholders filed a class action lawsuit 
against the company alleging that it violated federal securities laws by making false 
 
1 Unless otherwise stated, the facts are drawn from the Superior Court’s June 23, 2021 opinion, 
First Solar, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA and XL Speciality 
[sic] Insurance Company., C.A. No. N20C-10-156, 2021 WL 2563023 (Del. Super. Jun. 23, 2021). 
4 
 
or misleading public disclosures.2  The parties refer to the original suit as the 
Smilovits Action.  The Smilovits plaintiffs alleged that from April 30, 2008, to 
February 28, 2012, First Solar: 
(1) misrepresented that it “had a winning formula for reducing 
manufacturing costs so rapidly and dramatically as to make solar power 
competitive with fossil fuels”; (2) “perpetuated [its] fraudulent self-
portrayal by concealing and misrepresenting the nature and extent of 
major manufacturing and design defects in [its] solar modules”; (3) 
misrepresented its financials; (4) artificially inflated its stock prices; (5) 
allowed individuals to engage in insider trading; (6) manipulated the 
cost-per-watt metrics; and (7) understated its expenses in violation of 
General Accepted Accounting Principles (“GAAP”).3   
National Union Fire Insurance Company of Pittsburgh, PA (“National 
Union”) provided insurance coverage for the Smilovits Action under a 2011–12 $10 
million “claims made” directors and officers insurance policy.   
B. 
On June 23, 2015, while the Smilovits Action was pending, First Solar 
stockholders who opted out of the Smilovits Action filed what has been referred to 
as the Maverick Action.  The Maverick Action alleged violations of the same federal 
securities laws as the Smilovits Action, as well as violations of Arizona statutes and 
claims for fraud and negligent misrepresentation.  As summarized by the Superior 
 
2 Specifically, they alleged violations of Section 10(b) and Section 20(a) of the Federal Securities 
Exchange Act of 1934, the former enforced under SEC Rule 10b-5. 
3 First Solar, 2021 WL 2563023, at *1 (citing Smilovits Compl.).  
5 
 
Court, the plaintiffs in the Maverick Action alleged that from May 2011 to December 
2011, First Solar: 
(1) misrepresented how close it was to achieving grid parity—“the 
point at which solar electricity became cost competitive with 
conventional methods of producing electricity without government 
subsidies”; (2) concealed defects in First Solar’s panels and 
manufacturing process; (3) concealed problems with First Solar’s 
modules that resulting [sic] in increased costs; (4) manipulated the cost-
per-watt metrics; (5) misrepresented the value of a pipeline project; (6) 
falsely represented that it was on track to meet its financial targets; (7) 
refused to adjust its targets in light of an influx of panels globally; (8) 
issued false financials that violated GAAP; and (9) artificially inflated 
its stock price.4   
When the plaintiffs filed the Maverick Action in 2015, First Solar had a $10 
million “claims made” policy with National Union for 2014–15 (the “Primary 
Policy”) and a $10 million layer of excess coverage with XL Specialty Insurance 
Company (“XL Specialty” and the “XL Specialty Policy”).5  The 2014–15 Primary 
Policy excluded coverage for “Related Claims.”  A Related Claim is “a Claim 
alleging, arising out of, based upon or attributable to any facts or Wrongful Acts that 
are the same as or related to those that were . . . alleged in a Claim made against an 
 
4 First Solar, 2021 WL 2563023, at *1. 
5 Given that the XL Specialty Policy follows form with the Primary Policy, we will rely on the 
Primary Policy’s language, as the Superior Court did below.  Id. at *3 (quoting XL Specialty 
Policy, § I).  A “claims made” policy bars coverage for claims made after the inception date of the 
policy.  United Westlabs, Inc. v. Greenwich Ins. Co., 2011 WL 2623932, at *3 (Del. Super. June 
13, 2011), aff’d, 38 A.3d 1255 (Del. 2012). 
6 
 
Insured.”6  And a Related Claim is deemed first made at the time of the previously 
made claim under the following conditions: 
(b) Relation Back to the First Reported Claim or Pre-Claim Inquiry:  
Solely for the purpose of establishing whether any subsequent Related 
Claim was first made . . . during the Policy Period or Discovery Period 
(if applicable), if during any such period: 
(1) A Claim was first made and reported in accordance with Clause 7(a) 
above, then any Related Claim that is subsequently made against an 
Insured and that is reported to the Insurer shall be deemed to have been 
first made at the time that such previously reported Claim was first 
made. . . . Claims actually first made or deemed first made prior to the 
inception date of this policy . . . are not covered under this policy[.]7 
 
Applied here, the Related Claim Exclusion bars coverage under the 2014–15 
policies if the Maverick Action is a Related Claim to the Smilovits Action. 
C. 
At first, First Solar obtained defense coverage for the Maverick Action under 
its 2011–12 policies.  In 2015, First Solar exhausted all coverage under the 2011–12 
National Union policy.  Chubb, an excess insurer next in line after the 2011–12 
National Union policy, accepted coverage of the Maverick Action because “the new 
Maverick litigation is based on the same facts and circumstances of the previously 
 
6 App. to Opening Br. at A067 (Primary Policy § 13).  A “Wrongful Act,” as relevant here, means 
“any actual or alleged breach of duty, neglect, error, misstatement, misleading statement, omission 
or act by such Organization, but solely in regard to a Securities Claim.”  Id. at A069 (Primary 
Policy § 13).  
7 Id. at A050 (Primary Policy § 7).  The Primary Policy as amended is at A129–131 but does not 
change the relevant language. 
7 
 
noticed Smilovits class action complaint,” and as such, “[Chubb] treats this matter 
as a related claim.”8   
Chubb provided coverage for the Maverick Action as the litigation progressed.  
In the Smilovits Action, First Solar filed a “Motion to Transfer Related Case” to 
litigate both Actions before the same judge.  It argued that “[t]he substantial overlap 
in legal and factual issues and the substantial overlap in parties weigh in favor of 
transferring the Maverick [] Action to this Court.”9  The court granted the motion.10 
After years of litigation and after incurring over $80 million in defense costs, 
First Solar settled the Smilovits Action on January 5, 2020 for $350 million.11  All 
primary and excess insurers under the 2011–12 policies paid their policy limits.  
Having settled the Smilovits Action and exhausted all coverage under the 2011–12 
policies, First Solar began to arbitrate a settlement of the Maverick Action.  It sought 
coverage under the 2014–15 Primary Policy and the XL Specialty Policy (the 
“Policies”) for the Maverick Action.  First Solar eventually settled the Maverick 
Action for $19 million without a coverage commitment from National Union or XL 
Specialty (collectively, the “Insurers”).  After the Insurers denied coverage under 
 
8 J.A. to Answering Brs. at B414.  The insurer was then known as Federal but has since changed 
its name. 
9 Id. at B078.  First Solar later moved to dismiss on the grounds that Maverick was the “latest in a 
series of securities fraud actions” making “nearly identical allegations[,]” but did point out 
differences similar to the those identified here.  Id. at B141–43. 
10 Id. at B080. 
11 App. to Opening Br. at A397 (Memorandum in Support of First Solar’s Motion for Partial 
Summary Judgment on Relatedness (Trans ID 66293000), filed January 28, 2021). 
8 
 
the Policies, First Solar filed suit in the Superior Court for breach of contract and 
declaratory relief that the Insurers were obligated to provide coverage under the 
Policies. 
D. 
The Superior Court litigation focused on the relatedness of the Smilovits and 
Maverick Actions and whether the Maverick Action fell within the Primary Policy 
exclusion for Related Claims.  First Solar argued that the Smilovits Action and the 
Maverick Action were not sufficiently related because they involved different 
operative facts—different plaintiffs, conduct, causes of action, and time periods.12  
The Insurers responded that the Maverick Action arose out of the Smilovits Action 
and raised the same claims against the same parties in all material respects.  As they 
argued, because the Policies did not cover claims deemed first made before the 
Primary Policy’s inception date, the Maverick Action was not covered.13   
Relying on Pfizer Inc. v. Arch Insurance Co., the Superior Court held that a 
complaint is “related to” or “aris[es] out of” a previous complaint if the claims are 
“fundamentally identical.”14  Fundamentally identical lawsuits, according to the 
 
12 First Solar, 2021 WL 2563023, at *3. 
13 Id.  The Insurers also argued coverage was excluded because “(1) the Special Matter Exclusion 
[which excludes the Smilovits Action] applies to the Maverick Action; (2) First Solar violated the 
policies’ notice provisions by failing to provide notice to Defendants about the Maverick Action; 
and (3) First Solar violated the policies’ consent-to-settle provisions by failing to obtain consent 
before settling the Maverick Action.”  Id. 
14 Id. at *4–5 (citing Pfizer Inc. v. Arch Ins. Co., 2019 WL 3306043, at *9 (Del. Super. July 23, 
2019)). 
9 
 
court, require the “same subject” and “common facts, circumstances, transactions, 
events, and decisions.”15  The Superior Court previously held that there must be more 
than “thematic similarities” for complaints to be sufficiently related under similar 
policy language.16  This is because the words “arising out of” imply a causal 
connection.17   
The Superior Court then found the Actions had “substantial similarities,”18 
and were “fundamentally identical.”19  Among other aspects, the lawsuits stemmed 
from the same original suit, were against “identical defendants,” overlapped in time, 
contained allegations of the same securities law violations, and relied on the same 
specific disclosures.20  Also, the court found that the underlying wrongful conduct—
allegedly inflating First Solar’s stock price by misrepresenting cost-per-watt metrics 
and falsifying financial reports—was the same.  While there were some differences, 
including the theory of damages claimed by the Maverick plaintiffs, the court held 
that the differences did not outweigh the similarities.  It concluded that the Maverick 
 
15 Id. at *5 (quoting United Westlabs, 2011 WL 2623932, at *11). 
16 Pfizer, 2019 WL 3306043, at *10. 
17 First Solar, 2021 WL 2563023, at *5 (quoting Fimbres v. Fireman’s Fund Ins. Co., 708 P.2d 
756, 758 (Ariz. Ct. App. 1985); Northrop Grumman Innovation Sys., Inc. v. Zurich Am. Ins. Co., 
2021 WL 347015, at *11 (Del. Super. Feb. 2, 2021), 2021 WL 772312 (Del. Super. Mar. 1, 2021) 
(certification of interlocutory appeal denied)). 
18 Id. at *5. 
19 Id. at *6. 
20 Id. at *5. 
10 
 
Action was fundamentally identical to the Smilovits Action and was excluded as a 
Related Claim under the Policies. 
II. 
On appeal, First Solar argues that the Superior Court ruled incorrectly that the 
Smilovits Action and the Maverick Action were fundamentally identical.  It claims 
that the Maverick Action focused on grid parity and the company’s “Systems 
Business,” as shown by the Action’s damage claims and reliance on First Solar’s 
“objective to achieve grid parity with respect to utility-scale solar power plant 
facilities in the future.”21  By contrast, the Smilovits Action focused on 
“misrepresentations regarding the historical cost of individual solar modules[,]” a 
temporally and categorically distinct part of the company’s business.22  First Solar 
contends that the Actions merely share “thematic similarities[,]” not “fundamental 
identity.”23  Finally, it argues that, even if the claims overlap, parts of the Maverick 
Action seek to recover for separate Wrongful Acts (specific statements and 
misrepresentations) that are not excluded by the Primary Policy.24 
The Insurers counter that the Maverick Action meets the “fundamentally 
identical” standard because it is directed to the same Wrongful Act and fraudulent 
 
21 Opening Br. at 27–28. 
22 Id.   
23 Id. at 34. 
24 Id. at 37–38. 
11 
 
scheme as the Smilovits Action.  They argue further that the fundamentally identical 
standard has been taken out of context and misapplied by the Superior Court.25  
According to the Insurers, the meaning of “related to” should come from the 
language of the insurance policy.  The Insurers also contend that any non-
overlapping claims would only be distinct, non-excluded causes of action if the 
underlying wrongful conduct was different, whereas here the complaints are directed 
to the same fraudulent scheme.26  And finally, National Union argues that even if the 
Maverick Action is not barred by relation back, the Specific Matter Exclusion in the 
Primary Policy independently precludes coverage.27 
In response to the Insurers’ argument directed to the “fundamentally 
identical” relatedness standard, First Solar contends that stare decisis and policy 
considerations should control but does not dispute that Delaware decisions have 
substituted a “fundamentally identical” standard for the language of the insurance 
policies.28  Instead, it argues that the plain language of the Primary Policy’s 
relatedness standard would render coverage illusory.29   
 
25 National Union Answering Br. at 36–39; XL Specialty Answering Br. at 19–20. 
26 National Union Answering Br. at 34–26; XL Specialty Answering Br. at 32–35. 
27 National Union Answering Br. at 44–48.  Given the basis for our affirmance, we do not reach 
this question. 
28 Reply Br. at 1–2; id. at 5–8.  
29 Id. at 5–7.  First Solar also argues in its Reply Brief that the policy provision at issue was merely 
intended to “bring[] future claims into the Policies’ coverage[.]”  Id. at 21–22.  First Solar did not 
make this argument before the Superior Court or in its Opening Brief, so it is waived.  Supr. Ct. 
R. 8.   
12 
 
On appeal, we review “the Superior Court’s grant of a motion to dismiss” de 
novo.30  “We also review the Superior Court’s interpretation of an insurance [policy] 
de novo.”31 
A. 
As an initial matter, we agree with the Insurers that the Superior Court’s use 
of the “fundamentally identical” standard to assess the relatedness of the Smilovits 
and Maverick Actions disregards the plain language of the insurance policy.  The 
error can be traced to a misunderstanding of a Superior Court decision that addressed 
the meaning of “arising out of” or “related to” for coverage of “related” complaints 
and claims.   
In United Westlabs, Inc. v. Greenwich Insurance Co., United Westlabs had an 
ongoing conflict with a third-party, Seacoast, regarding access to a billing system 
owned and run by Seacoast.32  United Westlabs contracted with Seacoast to use the 
system, but Seacoast considered the software a trade secret, and maintained control 
through remote virtual private network (“VPN”) access.33  After a payment dispute, 
United Westlabs cut off Seacoast’s VPN access to the database.34  The parties 
 
30 Difebo v. Bd. Of Adjustment of New Castle Cnty., 132 A.3d 1154, 1156 (Del. 2016) (citing King 
Constr., Inc. v. Plaza Four Realty, LLC, 976 A.2d 145, 151 (Del. 2009)). 
31 ConAgra Foods, Inc. v. Lexington Ins. Co., 21 A.3d 62, 68 (Del. 2011) (citing Pac. Ins. Co. v. 
Liberty Mut. Ins. Co., 956 A.2d 1246, 1254 (Del. 2008)). 
32 United Westlabs, 2011 WL 2623932, at *1. 
33 Id. 
34 Id. 
13 
 
arbitrated the dispute, and United Westlabs later filed for a declaratory judgment that 
it had not committed copyright infringement and sought to enjoin Seacoast from 
filing civil claims.35  The parties settled in 2007, and the claims were dismissed 
without prejudice.  United Westlabs then obtained two insurance policies without 
disclosing the Seacoast dispute.36  The “relationship continued to deteriorate” and 
United Westlabs again terminated Seacoast’s VPN access and brought a new claim 
along the same lines as before, but added a new claim for breach of the 2007 
settlement agreement.37  Seacoast counterclaimed, and United Westlabs sought 
coverage from its insurers.38  They denied coverage under policy provisions barring 
claims “first made” before the inception date of the policies.  United Westlabs sued 
in Delaware Superior Court, seeking damages for the insurers’ breach of duty to pay 
defense costs.39  The policy language provided that:  
All Wrongful Acts that: (1) take place between the Retroactive Date 
and the end of the Policy Period of the last Insurance Policy issued by 
the Company to the Insured; and (2) involve the same or related subject, 
person, class of person or have common facts or circumstances or 
involve common transactions, events or decisions, regardless of the 
number of repetitions, alterations, actions or forms of communication; 
will be treated under this Policy as one Wrongful Act.40 
 
35 Id. at *2. 
36 Id. at *2–5. 
37 Id. at *2, *5. 
38 Id. at *5–6.  
39 Id. 
40 Id. at *10. 
14 
 
The Superior Court reasoned that the first and second claims involved “the 
same subject and common facts, circumstances, transactions, events, and 
decisions[.]”41  Although United Westlabs argued that the separate lawsuits were 
“‘based on separate injuries and events, the [2008 Wrongful Acts] being predicated 
on discrete instances of unprecedented conduct following a span of two years after 
the [2006–07 Wrongful Acts,]’” the court found that the complaints covered the 
same event, and any allegations added in the later claim were merely part of “a 
continuous series of related acts[.]”42  Thus, according to the court, the claims were 
“fundamentally identical[.]”43  The court ruled that the claims arose from the same 
Wrongful Act under the policy and the later claim was excluded from coverage.44   
After the United Westlabs decision, later cases picked up the court’s 
“fundamentally identical” observation about the claims in that case and converted it 
into a standard to assess relatedness under an insurance policy’s related claims 
provision.45  But as a recent Superior Court decision observed about the error, 
 
41 Id. at *11. 
42 Id. at *10–11 (alterations in original). 
43 Id. at *11 (“UWL’s 2006–07 Wrongful Acts and UWL’s 2008 Wrongful Acts are fundamentally 
identical.”). 
44 Id. at *10–11, 14. 
45 Med. Depot, Inc. v. RSUI Indem. Co., 2016 WL 5539879, at *14 (Del. Super. Sept. 29, 2016) 
(“The two actions are not fundamentally identical.  Mr. Mezzadri’s claim does not relate back to 
the Swisher action.”); Pfizer, 2019 WL 3306043, at *7 (“Conversely, under Delaware law, similar 
‘relatedness’ or ‘arising out of’ policy language is interpreted as precluding coverage only where 
two underlying actions are ‘fundamentally identical.’” (citing Med. Depot, 2016 WL 5539879, at 
*14; United Westlabs, 2011 WL 2623932, at *11–12)). 
15 
 
“neither the Delaware Supreme Court nor any other jurisdiction has adopted 
‘fundamental identity’ as the standard governing all relatedness inquiries, regardless 
of the contractual language at issue.”46  With all insurance policies, “[t]he scope of 
an insurance policy’s coverage . . . is prescribed by the language of the policy.”47  
And absent “ambiguity, Delaware courts interpret contract terms according to their 
plain, ordinary meaning.”48  Whether a claim relates back to an earlier claim is 
decided by the language of the policy, not a generic “fundamentally identical” 
standard.49  
B. 
The Primary Policy’s Related Claim provision is broad.  A Related Claim is 
a “Claim alleging, arising out of, based upon or attributable to any facts or Wrongful 
Acts that are the same as or related to those that were . . . alleged in a Claim made 
against an Insured.”50  Thus, the question on appeal is whether the Maverick Action 
 
46 Sycamore Partners Mgmt, L.P. v. Endurance Am. Ins. Co., 2021 WL 4130631, at *11 (Del. 
Super. Sept. 10, 2021). 
47 Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 742, 745 (Del. 1997) (citing Rhone-
Poulenc Basic Chems. Co. v. American Motorists Ins. Co., 616 A.2d 1192, 1195–96 (Del. 1992)). 
48 Alta Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012). 
49 See, e.g., OptiNose AS v. Currax Pharm., LLC, 264 A.3d 629 (Del. 2021) (determining what it 
means for a filing to “relate to or characterize” intellectual property); Liggett Grp. Inc. v. Affiliated 
FM Ins. Co., 2001 WL 1456871, at *6 (Del. Super. Sept. 12, 2001), aff’d sub nom. Liggett Grp., 
Inc. v. Ace Prop. & Cas. Ins. Co., 798 A.2d 1024 (Del. 2002) (holding that symptoms or 
consequences causally linked to smoking are “related to” smoking even if not directly caused by 
the act of smoking); Eon Labs Mfg., Inc. v. Reliance Ins. Co., 756 A.2d 889, 892 (Del. 2000) 
(affirming a Superior Court judgment that all the allegations against the plaintiff “‘come within 
the scope of the arising out of language,’ including ‘claims related to the use of [plaintiff’s drug].’” 
(citations omitted)). 
50 App. to Opening Br. at A067 (Primary Policy § 13). 
16 
 
raises Claims that “aris[e] out of, [are] based upon or attributable to any facts or 
Wrongful Acts that are the same as or related to” the Smilovits Action.51   
 
The Maverick Action is a Related Claim under the Primary Policy.  Both 
Actions are based on the same alleged misconduct—First Solar’s misrepresentations 
about the cost-per-watt of its solar power.  A side-by-side comparison of the two 
complaints makes the point: 
Category 
Smilovits Action 
Maverick Action 
Defendants: 
First Solar, Inc.; Michael J. 
Ahearn; Robert J. Gillette; 
Mark 
R. 
Widmar; 
Jens 
Meyerhoff; James Zhu; Bruce 
Sohn; and David Eaglesham. 
(App. to Opening Br. at A422) 
Same. (A176) 
Time period: 
April 2008 to February 2012. 
(A425) 
May 2011 to December 2011. 
(A214) 
Overall theory: 
“Defendants’ 
fraudulent 
scheme . . . artificially 
inflated the price of First Solar 
publicly traded securities[.]” 
(A428) 
“Defendants’ 
fraudulent 
scheme to fraudulently inflate 
the price of First Solar 
Stock[.]” (A242) 
Sampling of relevant 
statements/evidence: 
February 24 conference call. 
(A484, A525) 
February 24 conference call. 
(A220–22) 
 
May 3 conference call. (A487) May 
3 
conference 
call. 
(A225–26) 
 
Pacific Crest Conference on 
August 8, 2011. (A526) 
Pacific Crest Conference on 
August 8, 2011. (A232) 
 
Cost issues and overruns at 
PV plant Copper Mountain. 
(A480) 
Cost issues and overruns at 
PV plant Copper Mountain. 
(A202, A217) 
 
51 National Union cites cases where “arising out of” has been interpreted to mean “some 
meaningful linkage between the two conditions imposed in the contract[,]” Pac. Ins. Co. v. Liberty 
Mut. Ins. Co., 956 A.2d 1246, 1257 (Del. 2008), and “‘originating from,’ ‘having its origin in,’ 
‘growing out of,’ [] ‘flowing from[,]’” or “‘incident to, or having connection with[,]’” Goggin v. 
Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 2018 WL 6266195, at *4 (Del. Super. Nov. 30, 2018) 
(citations omitted).  National Union Answering Br. at 21.  But it does not ask us to adopt 
“meaningful linkage” as the standard for the provision at issue. 
17 
 
 
GAAP 
violations. 
(A431, 
A497–A528) 
GAAP violations. (A210–11, 
A220) 
 
Understating “manufacturing 
excursion” (significant issues 
in manufacturing PV panels). 
(A425, 
A431–34, 
A440, 
A449–51) 
Understating “manufacturing 
excursion” (significant issues 
in manufacturing PV panels). 
(A185–91, A211) 
 
Degradation effects. (A434–
35, A442–48) 
Degradation effects. (A191–
98) 
 
Grid parity. (A529,52 A534–
35) 
Grid parity. (passim) 
Claimed damages: 
Violations of §10(b) and 
§20(a) 
of 
the 
Securities 
Exchange Act of 1934 and 
SEC Rule 10(b)(5). (A556-7) 
Violations of §10(b) and 
§20(a) 
of 
the 
Securities 
Exchange Act of 1934 and 
SEC Rule 10(b)(5); common 
law fraud; A.R.S. § 44-
1999(B); 
A.R.S. 
§ 
44-
1991(A)(2)-(3);53 
negligent 
misrepresentation. (A250-58) 
 
First Solar argues that the Smilovits Action focused on cost-per-watt 
representations while the Maverick Action focused on grid parity, which was 
understood to be a future objective.  It also draws a distinction between the 
“Components Business” alleged in the Smilovits Action (individual PV cells or solar 
modules) and the “Systems Business” alleged in the Maverick Action (the PV 
facilities built by First Solar).54  These distinctions, according to First Solar, show 
 
52 In addition, as we have discussed, the Smilovits Action’s emphasis on cost-per-watt is simply 
another way of looking at the issue of grid parity: “Because First Solar’s cost-per-watt was far 
from the level necessary to compete with conventional sources of electricity without the benefit of 
subsidies, defendants and analysts were keenly aware of the need for First Solar to maintain a 
constant and rapid trend toward reducing their cost-per-watt.”  App. to the Opening Br. at A529 
(Smilovits Complaint at ¶ 198). 
53 As we discuss below, the Arizona law counts are substantially similar to the sections of the 
federal Securities Exchange Act of 1934. 
54 Opening Br. at 2–3; id. at 25–28.  National Union and XL Specialty contend that this is an 
argument raised for the first time on appeal and should be considered waived.  National Union 
18 
 
that the Smilovits Action centered on “historical performance” representations while 
the Maverick Action dealt with predictions of grid parity, or “forward-looking 
statements.”55   
These differences are not, however, meaningful to the relatedness inquiry.  
While there might be minor differences—like the disparity between a certain cost-
per-watt level and grid parity—the Actions focus on First Solar’s misrepresentations 
about the cost of solar power.56  Both Actions allege violations of the same federal 
securities laws from this wrongful conduct.57  In both cases, plaintiffs allege that 
First Solar made material misrepresentations regarding its solar power capabilities 
as part of a fraudulent scheme to increase stock prices.  As the Superior Court found: 
With respect to the allegedly wrongful conduct in the underlying 
actions, both cases involve the same fraudulent scheme—artificially 
raising stock prices by misrepresenting First Solar’s ability to produce 
solar electricity at costs comparable to the costs of conventional energy 
production.  In other words, both actions allege that First Solar 
misrepresented its ability to achieve grid parity.  Both actions allege 
that First Solar concealed defects in the design and manufacturing of 
modules and panels.  Both actions allege that First Solar manipulated 
 
Answering Br. at 27; XL Specialty Answering Br. at 27.  In our view, it is more like a reframing 
of an argument First Solar already made (namely, that the complaints are fundamentally different), 
and we include it in our analysis. 
55 Opening Br. at 3; see also id. at 26–27. 
56 Cost-per-watt and grid parity are both ways of describing how much a source of power costs.  
Cost-per-watt can be any number of price levels, while grid parity is a specific price level.  And 
the Maverick Action expressly links those two concepts.  See, e.g., App. to Opening Br. at A229–
30 (Maverick Complaint ¶ 204) (“Further, with respect to cost per watt, Gillette misleadingly 
stated: ‘So what it means for our [grid parity] roadmap, is we’re committed to delivering on the 
roadmap as we planned and still have that same target range in 2014 to get to that $0.52 to $0.63 
range.’”). 
57 Id. at A250, A556. 
19 
 
its costs, including cost-per-watt metrics.  Both actions allege that First 
Solar issued false financial reports in violation of GAAP.  Both actions 
allege that First Solar’s deceptions came to light on February 28, 
2012.58 
First Solar also argues that categorical differences between the two Actions 
show that they are not fundamentally identical, nor sufficiently related.  It cites the 
Pfizer decision as an example of a case where the Superior Court found two 
complaints were not sufficiently related.  According to First Solar, Pfizer “involv[ed] 
the same drug” but “one claimed alleged false representations regarding the 
cardiovascular risks associated with Celebrex and the other alleged false and 
misleading statements regarding the gastrointestinal health risks of Celebrex.”59  
Similarly, First Solar points to the Superior Court’s finding in Medical Depot, Inc. 
v. RSUI Indemnity Co. that two actions based on the same product but with entirely 
different fact patterns and causes of action were unrelated.60    
Although the Actions are not identical in their claims or evidence, absolute 
identity is not required.  In Pfizer, the court addressed two claims about different 
side effects, with different omissions and misrepresentations.61  The claims 
 
58 First Solar, 2021 WL 2563023, at *6. 
59 Opening Br. at 33 (citing Pfizer, 2019 WL 3306043). 
60 Id. (citing Med. Depot, 2016 WL 5539879). 
61 Pfizer, 2019 WL 3306043, at *10 (“The Garber Action was brought by Pharmacia’s 
shareholders seeking redress for fraudulent and misleading statements Pharmacia and its co-
marketer Pfizer made regarding the gastrointestinal health risks of Celebrex . . . The Morabito 
plaintiffs, on the other hand, brought suit against Pfizer and some of its executives for false 
representations and omissions regarding the cardiovascular risks associated with Celebrex and 
another drug, Bextra . . . In short, while there may be some thematic similarities, the Underlying 
Actions are truly, in all relevant respects, different.”). 
20 
 
overlapped in that they involved the same drug.  But the Wrongful Acts in that 
case—the misrepresentations made about gastrointestinal and cardiovascular health 
risks, respectively—were substantially different, relying on different concepts, 
pharmaceutical trials, and statements.62  The same is true for Medical Depot.  In that 
case, the product and defendants in both actions were the same, but the actions did 
not share any other operative facts, legal theories, or similarities.63  Here, as in United 
Westlabs, the Actions involve “the same subject, as well as common facts, 
circumstances, transactions, events, and decisions[.]”64  They are substantially 
similar and fundamentally identical.   
The Superior Court noted that “[t]he most apparent striking difference 
between the underlying actions is the type of damages sought by the Maverick 
plaintiffs, with the apparent intent of garnering greater recovery.”65  The damages 
 
62 Id. (“the Garber plaintiffs alleged that Pharmacia and Pfizer publically [sic] misrepresented the 
results of its CLASS Study to create the impression that Celebrex users ‘had fewer upper-GI toxic 
effects than those who took other traditional NSAIDs[ ]’ . . . [while] the alleged market harm in 
the Morabito Action stemmed specifically from the defendants ‘repeatedly touting internal safety 
data which they claimed demonstrated cardiovascular safety’ while they ‘were in possession of 
completed drug safety studies and other data and information which documented the serious 
cardiovascular risks of Celebrex and/or Bextra.’”). 
63 Med. Depot, 2016 WL 5539879, at *14 (“The Swisher action and the Mezzadri action are 
different.  The Swisher action was a wrongful death and products liability action.  Swisher sought 
redress for the sling’s causing a death.  The Initial Complaint and Amended Complaint are a class 
action lawsuit alleging violations of California’s Business & Professions Code sections 17200 and 
17500, and Civil Code 1750, et seq.  Mr. Mezzadri is seeking redress for buying the sling.  Mr. 
Mezzadri never claimed that the sling caused him physical harm.”). 
64 United Westlabs, 2011 WL 2623932, at *11. 
65 First Solar, 2021 WL 2563023, at *6.  As noted above, the theories of recovery are also slightly 
different.  The Maverick Action, besides the federal securities claims, alleges violations of Arizona 
securities laws—which map to the federal claims—and common law causes of action (fraud and 
21 
 
are slightly different.  The Smilovits plaintiffs sought “actual damages and attorneys’ 
fees” while the Maverick plaintiffs sought “[r]escission or rescissionary damages; 
actual damages; punitive damages for common law fraud; pre- and postjudgment 
interest and attorneys’ fees.”66  But the thrust of the Wrongful Acts alleged in the 
two Actions is the same regardless of how damages are claimed. 
Finally, if there is any remaining doubt about relatedness under the Primary 
Policy language, we can rely on what First Solar said about the two Actions when 
insurance coverage was not at issue.  First Solar agreed in another matter that the 
Actions were nearly identical.  In addition to seeking and receiving coverage for the 
Maverick Action as an action related to the Smilovits Action under its 2011–2012 
policies, First Solar filed a “Motion to Transfer Related Case” to litigate the two 
Actions before the same judge.  It argued that “[t]he substantial overlap in legal and 
factual issues and the substantial overlap in parties weigh in favor of transferring the 
Maverick [] Action to this Court.”67  In its filings, First Solar claimed that the 
Maverick Action made “nearly identical allegations” to other actions “asserting that 
 
negligent misrepresentation), based on the same misrepresentations.  Compare A.R.S. § 44-
1999(B) (controlling persons liability) with Section 20(a) of the Exchange Act (controlling persons 
liability), and A.R.S. § 44-1991(A)(2)-(3) (prohibiting untrue statements of material fact relating 
to securities) with 17 CFR § 240.10b-5 (prohibiting untrue statements of material fact relating to 
securities).  App. to Opening Br. at A255, A256 (Maverick Complaint ¶¶ 300, 308). But the state 
claims largely map to the federal securities laws.   
66 Opening Br. at 27. 
67 Id. at B078.   
22 
 
First Solar’s stock price decline was somehow caused by a fraudulent scheme to 
conceal the existence and costs of various manufacturing deviations.”68  
C. 
First Solar also claims that even if the Actions are Related Claims, the Actions 
have “distinct wrongful acts” such that non-excluded separate claims exist.69  First 
Solar asks us to look at the individual misrepresentations—for instance, the specific 
statements made in conference calls and SEC filings—as separate Wrongful Acts 
under the Primary Policy.70  It contends that all “non-overlapping alleged 
misrepresentations and corrective disclosures are independent claims” that do not 
relate back and must be covered under the Primary Policy.71 
But as the Superior Court ruled, the Wrongful Act is the fraudulent scheme to 
inflate the price of First Solar’s stock by making misrepresentations about its solar 
power cost and efficiency.72  The Smilovits Action and the Maverick Action include 
different misrepresentations and evidence to support their claims—not different 
Wrongful Acts.  It is analogous to United Westlabs, where the Superior Court held 
that United Westlabs had “engaged in a continuous series of related acts, constituting 
 
68 Id. at B141–43. 
69 Opening Br. at 37. 
70 See Reply Br. at 16–18. 
71 Id. 
72 First Solar, 2021 WL 2563023, at *6. 
23 
 
a single wrongful act as defined by the” policy at issue, even though the complaints 
spanned different time periods and included different allegations.73  
D. 
Finally, First Solar claims in a footnote that the Superior Court incorrectly 
applied the Relation Back Provision of the Primary Policy instead of the Specific 
Matter Exclusion.74  This argument was not sufficiently briefed and is waived.75  But 
even so, the Primary Policy’s Relation Back Provision applies when two claims are 
related.  Under the Policy, “any Related Claim that is subsequently made against an 
Insured . . . shall be deemed to have been first made at the time that such previously 
reported Claim was first made.”76  Claims first made before the inception date of the 
Primary Policy “are not covered under this policy.”77  The Superior Court correctly 
applied the Primary Policy language, because if the Maverick Action relates back to 
the Smilovits Action, it is deemed “first made” at the time of the Smilovits Action 
and thus “not covered under this policy.”78   
 
73 United Westlabs, 2011 WL 2623932, at *11.  First Solar also relies on AT&T Corp. v. Faraday 
Capital Ltd. to argue that individual causes of action can be different Wrongful Acts.  Opening Br. 
at 37–38 (citing 918 A.2d 1104, 1108–09 (Del. 2007)).  But we held in AT&T Corp. that new 
Wrongful Acts could exist when causes of action did not “arise out of the same underlying 
wrongful conduct[.]” 918 A.2d. at 1109.  Here, the causes of action were based on the same 
underlying wrongful conduct—a fraudulent scheme to raise First Solar’s stock price by 
misrepresenting its PV capabilities. 
74 Opening Br. at 20 n.8. 
75 Supr. Ct. R. 8. 
76 App. to Opening Br. at A050 (Primary Policy § 7(b)). 
77 Id. 
78 Id. at A050. 
24 
 
Using the Primary Policy’s Related Claim definition, the Maverick Action 
raised claims “alleging, arising out of, based upon or attributable to any facts or 
Wrongful Acts that are the same as or related to those” raised in the Smilovits Action.  
Thus, the Maverick Action Claim is deemed first made at the time of the Smilovits 
Action and is excluded from coverage under the Related Claim Exclusion of the 
Policies.   
III. 
The judgment of the Superior Court is affirmed.