Dismissal of Securities Fraud Class Action Against Atlantic Power Corporation

Cleary Gottlieb won dismissal of a putative class action in Massachusetts federal court asserting securities fraud and unjust enrichment claims against Atlantic Power Corporation and certain of its current and former officers and directors. Atlantic Power owns and operates various power generation assets. The lead plaintiff, an investor in the company’s common stock, alleged that defendants made fraudulent statements about the company’s debt and the sustainability of its dividend over a two-year period. The company also faces a lawsuit in Canada asserting similar claims under the Ontario and Quebec securities laws.

U.S. District Judge Indira Talwani held in a ruling issued on March 13 that the lead plaintiff failed to plead sufficient facts to establish a strong inference of scienter. In particular, the Court concluded that “Defendants’ ultimately full and accurate disclosures of Atlantic Power’s financial data cuts against a strong inference that they were attempting to hide or mislead the public as to the company’s financial health,” and the lead plaintiff failed to identify any unusual facts establishing that defendants possessed a motive to commit fraud.

The Court also dismissed the lead plaintiff’s unjust enrichment claim, concluding that the claim was derivative in nature and that the lead plaintiff failed to satisfy the requirements for pursuing such a claim. The Court likewise denied the lead plaintiff’s motion to amend, holding that the proposed amendment was futile because it also did not give rise to a strong inference of scienter.