Court Opinion

ID: 6323820
Source: CourtListenerOpinion
Date Created: 2022-03-16 16:02:51.936266+00
Date Added: 2024-06-11T09:21:44.207243
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF DELAWARE

FIRST SOLAR, INC.,                     §
                                       §   No. 217, 2021
           Plaintiff Below,            §
           Appellant,                  §   Court Below: Superior Court
                                       §   of the State of Delaware
           v.                          §
                                       §
NATIONAL UNION FIRST                   §   C.A. No. N20C-10-156 (CCLD)
INSURANCE COMPANY OF                   §
PITTSBURGH, PA and XL                  §
SPECIALTY INSURANCE                    §
COMPANY,                               §
                                       §
           Defendants Below,           §
           Appellees.                  §
                                       §
                                       §
                                       §

                       Submitted: January 19, 2022
                       Decided:   March 16, 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.
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.

                                     2
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).
                                              3
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.).
                                                 4
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).
                                                5
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.
                                                6
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).
                                                7
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)).
                                                 8
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.
                                              9
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.
                                          10
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.
                                                 11
       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.
                                               12
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.
                                          13
       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)).
                                               14
“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).
                                                  15
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.       Same. (A176)
                                 Ahearn; Robert J. Gillette;
                                 Mark R. Widmar; Jens
                                 Meyerhoff; James Zhu; Bruce
                                 Sohn; and David Eaglesham.
                                 (App. to Opening Br. at A422)
         Time period:            April 2008 to February 2012.        May 2011 to December 2011.
                                 (A425)                              (A214)
        Overall theory:          “Defendants’          fraudulent    “Defendants’         fraudulent
                                 scheme . . . artificially           scheme to fraudulently inflate
                                 inflated the price of First Solar   the price of First Solar
                                 publicly traded securities[.]”      Stock[.]” (A242)
                                 (A428)
     Sampling of relevant        February 24 conference call.February 24 conference call.
     statements/evidence:        (A484, A525)                (A220–22)
                                 May 3 conference call. (A487)
                                                             May 3 conference call.
                                                             (A225–26)
                                 Pacific Crest Conference on Pacific Crest Conference on
                                 August 8, 2011. (A526)      August 8, 2011. (A232)
                                 Cost issues and overruns at Cost issues and overruns at
                                 PV plant Copper Mountain. PV plant Copper Mountain.
                                 (A480)                      (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.
                                               16
                                  GAAP violations. (A431,          GAAP violations. (A210–11,
                                  A497–A528)                       A220)
                                  Understating “manufacturing      Understating “manufacturing
                                  excursion” (significant issues   excursion” (significant issues
                                  in manufacturing PV panels).     in manufacturing PV panels).
                                  (A425, A431–34, A440,            (A185–91, A211)
                                  A449–51)
                                  Degradation effects. (A434–      Degradation effects. (A191–
                                  35, A442–48)                     98)
                                  Grid parity. (A529,52 A534–      Grid parity. (passim)
                                  35)
       Claimed damages:           Violations of §10(b) and         Violations of §10(b) and
                                  §20(a) of the Securities         §20(a) of the Securities
                                  Exchange Act of 1934 and         Exchange Act of 1934 and
                                  SEC Rule 10(b)(5). (A556-7)      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
                                                17
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.
                                               18
       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.”).
                                               19
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
                                                20
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.
                                                21
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.
                                            22
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.
                                               23
      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.

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