TALLAHASSEE — A federal appeals court Wednesday revived a securities-fraud lawsuit that alleges Florida Power & Light and its parent company made misleading statements about issues such as funding “ghost” candidates to influence elections.
A three-judge panel of the 11th U.S. Circuit Court of Appeals overturned a decision by U.S. District Judge Aileen Cannon that dismissed the potential class-action lawsuit filed by investors.
The stock price of NextEra Energy, FPL’s parent, plunged in January 2023 after the company made disclosures in U.S. Securities and Exchange Commission filings about issues such as legal risks related to allegations of political misconduct. Also, NextEra disclosed at the time that FPL Chief Executive Officer Eric Silagy was stepping down.
The plaintiffs contend that NextEra and FPL had earlier made misleading statements about the issues.
Wednesday’s appeals-court opinion said that after reporters had started looking into potential election wrongdoing, NextEra and FPL officials “denied all direct and indirect involvement to the press and asserted the allegations had ‘no basis.’ NextEra relayed that same message to investors on an earnings call.”
“But after some time, leadership began to backpedal,” the opinion said. “On January 25, 2023, FPL abruptly parted with its CEO and NextEra filed unscheduled disclosures about potential legal and reputational risk stemming from the allegations. That very day, NextEra’s stock plunged 8.7 percent, wiping out more than $14 billion in market capitalization.”
The 38-page opinion, written by Judge Gerald Tjoflat and joined by Judges Elizabeth Branch and Embry Kidd, sent the case back to district court.
The lawsuit is rooted in a series of issues, including allegations that FPL funneled money through a political-consulting firm, Matrix LLC, and other organizations to improperly influence elections. Also, the issues involve such things as a failed attempt by FPL to acquire the city-owned utility in Jacksonville.
Perhaps the most high-profile example involved allegations that FPL helped back a “ghost” candidate — someone on the ballot but not an active candidate — who siphoned votes from then-state Sen. Jose Javier Rodriguez, D-Miami, in a 2020 election. Rodriguez ultimately lost by 32 votes to now-Sen. Ileana Garcia, R-Miami, with the third candidate, Alex Rodriguez, receiving 6,382 votes.
Wednesday’s opinion said the allegations also involved other ghost candidates, such as a candidate who helped lead to the 2018 defeat of Democrat Kayser Enneking in a Gainesville-area state Senate race.
The lawsuit, whose lead plaintiffs are the City of Hollywood Police Officers Retirement System and the Pembroke Pines Firefighters & Police Officers Pension Fund, was filed in May 2023. A key issue is what is known as “loss causation” — whether losses were caused by alleged misstatements.
In her decision last year to dismiss the case, Cannon cited a November 2022 filing with the Securities and Exchange Commission in which NextEra acknowledged that allegations against FPL executives exposed the company to legal and “reputational” risks. The November 2022 filing also disclosed that a complaint had been filed alleging violations of a federal campaign law.
Cannon concluded that the January 2023 filing about risks to NextEra did not reveal new information.
“The statements in the November 3, 2022 disclosure are substantially similar to the statements in the January 25, 2023 purported corrective disclosure,” Cannon wrote. “The statements both reference the existence of campaign-finance allegations against defendants; they both reference the same complaint filed in federal court alleging such violations; and they both unequivocally state that such allegations may result in investigations that could have an adverse impact on NEE (NextEra Energy) or FPL. Indeed, the January 25, 2023, disclosure expressly references the prior revelations on November 3, 2022.”
But the appeals-court panel said Wednesday that while “earlier SEC filings also touched on potential risks, the new disclosure was more comprehensive and warned investors of ‘material fines’ and a potential ‘material adverse impact on the reputation’ of NextEra and FPL. It specifically referenced allegations of election misconduct and the FEC (Federal Elections Commission) complaint.”
“Without overanalyzing the textual Venn diagram, it is sufficient to state that the new disclosure was broader and more comprehensive,” Tjoflat wrote.