On July 11, 2022, Cohen Milstein and co-counsel, on behalf of current and former stockholders of Pivotal Investment Corporation II filed a verified second amended consolidated class action complaint asserting breach of fiduciary claims stemming from Pivotal’s merger with XL Hybrids, Inc. against members of Pivotal’s board of directors, Pivotal Investment Holdings II LLC, and Pivotal controlling stockholders, for, among other things, aiding and abetting breaches of fiduciary duty of Thomas J. Hynes III , the founder of Legacy XL, and Dimitri N. Kazarinoff, former CEO of XL Fleet; unjust enrichment of the aforementioned defendants; and breach of contract against XL Fleet.
On November 29, 2021 Cohen Milstein was appointed Co-Lead Class Counsel in this litigation.
Case Background
This class action arises from the Merger between Legacy XL, a provider of electrification solutions for commercial vehicles in North America founded in 2009, and Pivotal II (Pivotal; NYSE: PIC), now renamed XL Fleet, a Delaware corporation formed as a special purpose acquisition company (“SPAC”), which went public in 2019.
Plaintiffs claim that Defendants used Pivotal II to enrich themselves by using funds held in trust for the benefit of the public stockholders to consummate a value-destroying merger with Legacy XL without disclosing information that was material to the stockholders’ decision to allow their funds to be invested in the Merger. As a result of Defendants’ actions in pursuing the merger without disclosing material facts to stockholders, the stockholders sustained substantial financial losses.
The merger closed on December 21, 2020. Just ten weeks later, Muddy Waters Research issued a report, revealing that the Proxy contained false and misleading information, while also omitting material information about XL Fleet’s value. That news caused the company’s stock’s price to begin a steep downward decline from trading at nearly $17 per share to less than $2 per share a year later, when XL Fleet disclosed that it was under investigation by the Securities and Exchange Commission.
As a result of the stock price decline, Pivotal II’s public stockholders have lost nearly all the value of their investment. The stockholders’ losses were the result of Defendants causing Pivotal II to enter into a value-decreasing merger without giving its stockholders information they needed to avoid that fate by exercising a redemption right provided for in Pivotal II’s certificate to protect them from just such a situation.
Case name: In re XL Fleet (Pivotal) Stockholder Litigation, No. 2021-0808-KSJM, Court of Chancery of the State of Delaware