Current Cases

In re XL Fleet (Pivotal) Stockholder Litigation

Status Current Case

Practice area Securities Litigation & Investor Protection

Court Court of Chancery, State of Delaware

Case number 2021-0808-KSJM


On June 9, 2023, Chancellor Kathaleen St. J. McCormick for the Delaware Court of Chancery largely denied Defendant’s motion to dismiss and ruled most claims in the multi-count class action against XL Fleet Holdings and its board of directors and other principals could move forward.

The consolidated class action asserts breaches of fiduciary duties and unjust enrichment by board members and other executives, as well as XL Fleet’s issuing a false and misleading Proxy statement related to a more than $1 billion take-public transaction that merged special purpose acquisition company (SPAC) Pivotal Investment Holdings II LLC and XL Hybrids, forming XL Fleet Corp.

In issuing her ruling, the Chancellor stated, “I find that the plaintiff adequately pleaded that the proxy was materially deficient. By sending the stockholder on scavenger hunts, the disclosures obfuscated information” that was available and should have been shared with stockholders. She further referred to these information “scavenger hunts” as a “type of game of Clue that we don’t countenance” in disclosures.

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, including Pivotal’s board of directors, Pivotal Investment Holdings II LLC, and Pivotal controlling stockholders, 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.