# Maniraj Ashirwad Gnanaraj v. Lilium N.V.

> District Court, S.D. Florida · August 23, 2024

URL: https://www.frixlaw.com/law-library/cases/10643846

## Case

- **Court:** District Court, S.D. Florida
- **Decided:** August 23, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

CASE NO. 23-CV-80232-RLR

MANIRAJ ASHIRWAD GNANARAJ,
Individually and on behalf of all others
similarly situated,

Plaintiffs,

v.

LILIUM N.V.; BARRY ENGLE; DANIEL
WIEGAND; GEOFFREY RICHARDSON;
YVES YEMSI; ALASTIR McINTOSH; and
QELL ACQUISITION CORP.,

Defendants.
______________________________________/

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

THIS MATTER is before the Court on Defendants’ Second Motion to Dismiss [DE 114]
Plaintiff’s Second Amended Complaint (“SAC”) [DE 110]. For the reasons discussed below, the
Second Motion to Dismiss is GRANTED without leave to amend. The Clerk is ordered to
CLOSE the case.
I. PROCEDURAL BACKGROUND
Lead Plaintiff1 (“Plaintiff”) filed this class action lawsuit against Defendants Lilium N.V.
(“Lilium”) and its predecessor Qell Acquisition Corporation (“Qell”). See SAC ¶¶ 12, 15. Plaintiff
also named five individual Defendants: Barry Engle, the former CEO of Qell and current member

1 At the start of this litigation, the Lead Plaintiff was Maniraj Ashirwad Gnanaraj. See DE 1 at 1.
On June 17, 2022, Jonathan Coon filed a motion seeking to replace Gnanaraj as Lead Plaintiff. See
DE 29. The Court granted that motion on February 15, 2023. See DE 55.
of Lilium’s board of directors; Daniel Wiegand, Lilium’s former CEO (through August 1, 2022)
and current Chief Engineer; Geoffrey Richardson, Lilium’s former CFO (through January 16,
2023); Yves Yemsi, Lilium’s Chief Program Officer; and Alastair McIntosh, Lilium’s Chief
Technology Officer (collectively, the “Individual Defendants,” and together with Qell and Lilium,

“Defendants”). See SAC ¶¶ 17–21. Plaintiff brought this action on behalf of himself and a putative
class of others who purchased Lilium’s securities between March 30, 2021, and March 14, 2022
(the “Class Period”) or held Qell securities as of July 16, 2021 (the “Record Date”). Id. ¶ 2.
Plaintiff filed the First Amended Complaint on March 10, 2023. See DE 74. Defendants
filed a Motion to Dismiss (the “First MTD”) challenging the First Amended Complaint on both
substantive and procedural grounds. See DE 89. The presiding Magistrate Judge issued a Report
& Recommendation (“R&R”) that recommended dismissing the First Amended Complaint
because it was an improper shotgun pleading. See DE 105 at 14–16. The Court adopted the R&R,
dismissed the First Amended Complaint, and granted Plaintiff leave to amend. See DE 107.
Plaintiff filed the Second Amended Complaint (“SAC”) [DE 110] on January 24, 2024, and

Defendants filed a Second Motion to Dismiss (“Second MTD”) [DE 114]. Defendants’ Second
MTD raises the same substantive arguments, and many of the same procedural arguments, as the
First MTD.2

2 Defendants’ Second MTD incorporates their First MTD by reference. See DE 114 at 1. The
Court agrees with Plaintiff that Defendants are effectively bypassing Local Rule 7(c)(1)’s page
limit by incorporating and heavily citing their prior briefing. See DE 115 at 4–5. Defendants use
their Second MTD as a supplemental brief, and they admit that their new motion merely
“summarize[s] the salient points” from the First MTD and “provide[s] updated legal authorities.”
DE 114 at 1. Defendants’ approach is understandable since Plaintiff admits that the Second
Amended Complaint is substantively the same as the First Amended Complaint. See DE 115 at 3
n.3. Plaintiff says he had “no reason to believe edits to the merits were necessary” because the
Court dismissed the First Amended Complaint because of procedural defects (improper shotgun
pleading). Id. Because the parties agree that the underlying factual allegations were largely
unaltered—and to spare the parties and this Court the burden of a third round of briefing—the
2
The Second Amended Complaint states eleven counts: Counts I through IV allege
securities fraud under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange
Act”) for violations of SEC Rule 10b-5(a)–(c); Counts VII and IX allege misrepresentations and
omissions in Lilium’s registration statement in violation of §§ 11 and 15 of the Securities Act of

1933 (the “Securities Act”); Counts VIII and X allege misrepresentations and omissions in
Lilium’s prospectuses in violation of §§ 12(a) and 15 of the Securities Act; and Count XI alleges
misrepresentations and omissions in Lilium’s proxy materials in violation of § 14(a) of the
Exchange Act. See SAC ¶¶ 307–81. This Court has subject-matter jurisdiction pursuant to 28
U.S.C. § 1331, Section 27 of the Exchange Act, 15 U.S.C. §78aa, and Section 22 of the Securities
Act, 15 U.S.C. § 77v.
II. FACTUAL BACKGROUND3
1. The Lilium Jet
Over the past decade, several companies began developing small electric planes (called
“eVTOLs”) as an alternative form of local and regional transportation. See SAC ¶¶ 25, 30.
Proponents of eVTOLs say they offer the convenience of helicopters with less noise and

Court will construe Defendants’ incorporation of their First MTD as a motion to exceed the page
limit and grant that motion nunc pro tunc. The Court has reviewed all briefing on the First and
Second MTDs, and will consider the parties’ arguments on the First MTD to the extent they apply
equally to the Second Amended Complaint.
3 In analyzing a motion to dismiss in a securities fraud case, the Court may consider the full text
of documents incorporated by reference into the complaint and other documents as to which the
Court may take judicial notice. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322
(2007). In particular, the Court may consider the full text of securities filings that allegedly contain
misstatements. Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1276–81 (11th Cir. 1999) (noticing
SEC filings). Documents incorporated by reference may be considered if they are central to
plaintiff’s claim and undisputed. Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005); see also
Harris v. Ivax Corp., 182 F.3d 799, 802 n.2 (11th Cir. 1999). Here, the Court considers the full
contents of Qell and Lilium’s securities filings, press releases, and other items referenced in the
Second Amended Complaint.
3
greenhouse gas emissions. Id. ¶ 25. In 2015, Defendant Wiegand founded Lilium with a plan to
design and commercialize a unique style of eVOTL (the “Lilium Jet” or “Jet”). Id. ¶ 26. Initially,
Lilium aimed to certify and commercialize an eVOTL that could transport five passengers at a
time. Id. ¶ 50. In May 2019, Lilium began unmanned test flights on a 4-seater prototype called the

Phoenix. Id. ¶¶ 32–33. That prototype was destroyed in a battery fire in February 2020 after
completing around 20 test flights. Id. ¶ 34. Lilium then built a second prototype, the Phoenix 2,
and began test flights with that prototype in July 2021. Id. ¶ 35. Neither of these prototypes
matched the specs of the jet that Lilium ultimately planned to certify and commercialize. Id. ¶ 36.
Prior to March 2021, Lilium’s public statements said it planned to launch commercial operations
of the 5-seater Lilium Jet in 2025. Id. ¶ 50. Around that same time, Lilium’s leading competitor
Joby Aviation (“Joby”), was planning to commercially launch its 5-seater eVOTL a year earlier in
2024.4 Id. ¶¶ 34, 39, 50, 114.
Like other commercial aircrafts, the Lilium Jet must go through a certification process
through the U.S. Federal Aviation Agency (“FAA”) and the European Union Aviation Safety

Agency (“EASA”). Id. ¶ 117. However, because eVOTLs use technology unlike other commercial
aircrafts (including passenger jets and helicopters), the agencies had to develop new certification
criteria. Id. ¶ 124. These new certification requirements were “still evolving” as of spring 2022.5
Id. Until the agencies issued final certification requirements, Lilium could not finalize the design

4 Based on the pleadings and filings, it appears none of these companies have successfully taken
an eVOTL to market. See DE 114 at 2.
5 The Second Amended Complaint does not clearly state when the EASA and the FAA issued final
regulations for eVOTLs. Although certain allegations, like the one cited here, suggest the
regulations were still in flux in 2022, Plaintiff also acknowledges that Lilium’s design for a 7-
seater jet was approved by the EASA in 2020 and had moved on to the test flight stage (although
no working prototype existed at that time, so test flights had not yet begun). See SAC ¶¶ 26, 123–
24.
4
for the Lilium Jet. Id. ¶ 125. Once a company designs an eVOTL that (on paper) complies with
the regulations, the eVOTL begins the “longest phase” of the certification process—involving test
flights of a regulatory compliant prototype. Id. ¶ 122. By the fall of 2021, Lilium had not begun
this phase of the certification process. Id. ¶ 121.

2. Merger & SPAC IPO
On March 30, 2021, Qell and Lilium announced a merger agreement. Id. ¶¶ 48–49. Qell
was a special purpose acquisition company (“SPAC”), and its shares were publicly traded on the
NASDAQ. Id. ¶ 15. Lilium was a private company at the time. See id. ¶ 37. The merger was a
“SPAC IPO,” meaning the purpose of the deal was to take Lilium public (and raise capital) by
merging it with a company that was already publicly traded. Id. ¶¶ 3, 38, 41–43. On September
15, 2021, after a shareholder vote, Qell merged with Lilium. Id. ¶¶ 11, 14–16, 70. Lilium raised
approximately $584 million in capital through this SPAC IPO. Id. ¶ 3.
Plaintiff alleges that Lilium needed this cash infusion to continue operations, id. ¶ 259, and
therefore “Defendants were motivated to misrepresent that their Jet was closer to realization than
it actually was to convince investors to invest in the SPAC transaction that Lilium desperately

needed,” id. ¶ 261. Most of the Individual Defendants stood to benefit from the SPAC IPO, either
through substantial voting powers or financial benefits. Id. ¶¶ 263, 266.
3. Public Statements & SEC Filings
This litigation revolves around Lilium’s statements6 about the Lilium Jet in the lead up to
the SPAC IPO. After Qell and Lilium announced the merger on March 30, 2021, the companies

6 For ease of reference, the Court generally attributes each statement to Lilium. However, the
Second Amended Complaint identifies whether each statement appeared in Qell or Lilium’s SEC
filings, and, if applicable, identifies the Individual Defendant who made each statement. E.g., SAC
¶ 307 (identifying which Defendant “made” each statement). The parties do not dispute that the
statements can be attributed to Lilium. See DE 89 at 3 n.1 (explaining that Qell and Lilium became
5
issued several press releases and published blog posts, research papers, and investor and analyst
presentations. Plaintiff alleges that many of these statements were false or misleading and/or
omitted material information. Plaintiff challenges Lilium’s statements about: (1) the battery
technology it planned to use in the Lilium Jet; (2) the amount of time the Jet spent hovering during

takeoff and landing; (3) the Jet’s projected range; and (4) the timeline to certification and
commercialization. The alleged misrepresentations appear in multiple SEC filings between March
30, 2021, and September 15, 2021.
Merger Announcement. Qell and Lilium announced the merger agreement in a Form 8-K
on March 30, 2021. SAC ¶ 49. The same day, both companies filed a slew of documents with the
SEC. Those documents included a Fact Sheet,7 Investor Day Slides,8 Investor Day Transcript,9
and a research paper about the viability of the Lilium Jet (the “White Paper”).10 See SAC ¶ 172.
The Fact Sheet listed bullet points about “Lilium’s 7-seater Jet” and stated “[r]ange of 155+ miles,”
“[t]argeting commercial launch in 2024 and operating in multiple regions in 2025.” SAC ¶¶ 171,

one after the merger such that the only proper entity Defendant is the post-merger Lilium).
Because this nuance does not impact the Court’s analysis, the Court will generally refer to Lilium’s
statements.
7 Available at https://www.sec.gov/Archives/edgar/data/1821171/000110465921043703/tm2111
158d8_425.htm. Plaintiff did not attach these documents to the Second Amended Complaint.
Defendants selectively attached some, but not all, as exhibits to their Opposition to the First MTD.
See DEs 90-1 to 90-13. Plaintiff then attached a few more to his Reply brief. See DEs 98-1 to 98-
6. When available, the Court refers to the Docket Entry citation. If the document was not filed on
the docket, the Court refers to the publicly available SEC filings accessed through the EDGAR
database. The Court includes a link to those filings when citing each document for the first time.
8 DE 90-7. Also available at https://www.sec.gov/Archives/edgar/data/1821171/0001104659210
43701/tm2111158d3_425.htm.
9 DE 98-4. Also available at https://www.sec.gov/Archives/edgar/data/1821171/0001104659210
43735/tm2111158d10_425.htm.
10 DE 90-11. Also available at https://www.sec.gov/Archives/edgar/data/1821171/000110465921
043700/tm2111158d7_425.htm.
6
193, 202, 222. The Fact Sheet included a disclaimer about forward-looking statements and listed
several risk factors. The Investor Day Slides included the following slide about the Lilium Jet’s
battery technology and range:
Case 9:23-cv-80232-RLR Document 90-7 Entered on FLSD Docket 05/12/2023 Page 27 of 54
Advanced battery cell technology
secured with exclusivity for the
As battery cells continue to improve,
eVTO LL ma rket our range will grow accordingly
Strategy Projected physical
* Evaluated >50 battery technology companies range in miles -123 “155 193 ~262
+ Energy requirements: high energy and power density (Service rangel {-98) [-130) [-163) win
* Operating requirements: long cycle life, low cost and fast charge
Chosen call chemistry measurements
* Silicon-anede lithium-ion pouch battery cells
+ 3330 Wivkg
» Fast charge: 15 minutes to 80%, 30 minutes to 100%
+ Chemistry measured beyond 800 cycles
Energy density
- . in Whykg
ndustrialisation / 2960 | 330350. 400 £500.
* Battery cell manufacturing on standard production lines with pre-lithiation
+ Intend to leverage established partners for mass manufacturing Iepaet torent

DE 90-7 at 27; see also SAC § 175. The Investor Day Slides included disclaimers for “forward-
looking statements” and listed several risk factors including “the [Lilium Jet] not performing as
expected, delays in producing the [Lilium Jet] or delays in seeking full certification of all aspects
of the [Lilium Jet]” and the risk that “the technology necessary to successfully operate the [Lilium
Jet]... is delayed, unavailable, not available at commercially anticipated prices, not sufficiently
tested, not certified for passenger use or otherwise unavailable.” DE 90-7 at 3. The accompanying
Investor Day Transcript stated: “We have secured a battery technology that allows us to achieve
our launch range of 150 miles.” DE 98-4 at 6; see also SAC §.176. It further stated that Lilium’s
“7-seater electric ... has been in development over several years,” and it “comes with 155 miles
range at launch.” DE 98-4 at 4; see also SAC J 191.
The White Paper—authored by a Lilium engineer and purportedly reviewed by five
independent experts—concluded that Liltum’s 7-seater Jet would have a range of 155 miles

“assuming a battery energy density of 320Wh/kg.” DE 90-11 at 3; see also SAC ¥ 192. The White
Paper disclosed that the highest density battery that was commercially available at that time was
250Wh/kg, but it cited to other studies suggesting that higher densities were possible. See DE 90-
10 at 25. The White Paper then calculated projected ranges assuming a higher battery density than
what was commercially available. See id. Many of the March 30, 2021, filings said Lilium planned
to launch commercial operations in 2024. See SAC 4¥ 202-03; DE 98-4 at 9 (2024 is when we
target our launch of flight operations.”); DE 90-7 at 8 (“Planned service launch 2024”).
Analyst Day. Lilium held an Analyst Day on June 16, 2021, and it filed the Slide Deck"!
and Transcript!” with the SEC. See SAC § 172. The Analyst Day Slides included the following
statements about hover time, range, and certification timeline:

Lillum mission is regional transport — not to hover

“000m : —> . Lilium ~2X
Climb | : Descent higher power
segment! Segment consumption
= } o> in hover than
i i open propeller
I | ~30 minutes cruise segment | a configuration
Hover 10s 2 Dover 200 (60s Hover is only
for reserve) ~30 seconds,
Fansition 20s ¢ Retrar 8 on 70s so energy use
lover power... i ‘6 a more
oorearpton | Cruise power approximately 10% of hower power : | propeller per

90-8. Also available at https://www.sec.gov/Archives/edgar/data/1821171/0001104659210
81279/tm2111158d24 425 htm.
DE 90-9. Also available at https://www.sec.gov/Archives/edgar/data/1821171/0001104659210
82044/tm2111158d27_ 425 htm.

Case 9:23-cv-80232-RLR Document $0-8 Entered an FLSD Docket 05/12/2023 Page 27 of 52
We are progressing well in the concurrent type certification processes
2016 | 2016 | 2017 | 208 | 2019 | 2020 | 2024 | 2022 | 2023 | 2024
Today |
Aircraft Concept Start G 2 | Global Market
— a oe => □

eae Certification . Low-volume Type Certificate
(Ga) BBEASA applications wo Pe □□□ and Entry into
eg smaacmenes accepted publication Conforming Aircraft service
© Next step:
FAA G01
Issue Paper

Case 9:23-cv-80232-RLR Document 90-8 Entered on FLSD Docket 05/12/2023 Page 30 of 52
Battery strategy
Battery requirements Lillum progress
Safety > Full thermal runaway containment in a module of demonstrator
Cell technology Silicon-anode lithium-ion pouch technology secured exclusively:
— High energy density — >330 Wh/kg, enabling ~155rmi range
— High power density for take-off and landing > — Power levels of 2.8 kWikg
— Fast charging — 15 minutes to 80%, 30 minutes to 100%
— Long lifetime — > 800 standard charge discharge cycles
Industrialisation: Mass production > Leverage standard battery cell production lines

DE 90-8 at 23, 27, 30; see also SAC 4¥ 181, 194, 209, 223. The Analyst Day Slides included the
same disclaimers for “forward-looking statements” and listed many of the same risk factors as the
Investor Day Slides. See DE 90-8 at 3. The Analyst Day Transcript, which accompanied these
slides, stated that “when we look at a typical mission, ... we spend very little time in a hover
phase.” DE 90-9 at 6; SAC § 194. It also stated that “[i]nitially, [the Lilium Jet] will have a range
of around 150 miles.” DE 90-9 at 3; SAC § 194.

Press Releases & Blog Posts. After the merger announcement, Lilium issued several other
statements discussing the Jet’s hover time, range, battery technology, and commercialization
timeline. On June 11, 2021, Lilium published a blog post13 stating: “We are aiming to achieve
Entry Into Service . . . in 2024, which is a fairly ambitious goal.” SAC ¶ 206. The blog post said

that while this “timeline may appear challenging,” Lilium was “confident in [its] program
timelines.” Id. On August 4, 2021, the Chief Technology Officer (Defendant McIntosh) posted on
Lilium’s Technology Blog. See DE 90-12; SAC ¶ 177. The post discussed Lilium’s battery
technology, and it said that “today cells are available with energy densities of >300Wh/kg.” DE
90-12 at 17; SAC ¶ 177. According to the blog post, with this battery technology, Lilium “will be
able to expand the range of the Lilium jet to approximately 250km [155 miles] at entry of service
in 2024.” DE 90-12 at 18; SAC ¶ 177. It also stated that the Lilium Jet has “an overall total hover
time (on a typical mission) of <60 seconds.” DE 90-12 at 8; SAC ¶ 184.
Registration Statement. Lilium’s August 5, 2021, Registration Statement included many
similar statements about battery technology, range, hover time, and timeline for certification and

commercialization. See SAC ¶ 228 (“commercial operations are planned to launch in 2024”); id.
¶ 235 (“the [battery] pouch cells have yielded nominal energy density levels of 330 watt-hour per
kilogram, which is projected to enable a physical aircraft range of 155 miles”); id. ¶ 241 (“we aim
for less than 60 seconds per mission in the pure hover phase”); see also DE 90-3 at 41, 204–05.
The Registration Statement included 37 pages of risk factors, including that:
No eVTOL aircraft have passed certification by EASA or the FAA
for commercial operations . . ., and there is no assurance that our
current serial prototype for the Lilium Jet will receive government

13 Available at https://www.sec.gov/Archives/edgar/data/1821171/000110465921079990/tm2111
158d23_425.htm.
10
certification in a way that is market-viable or commercially
successful, in a timely manner or at all. . . . [and]
Our Lilium Jets require complex software, battery technology and
other technology systems that remain in development and need to
be commercialized in coordination with our vendors and suppliers
to complete serial production.
DE 90-3 at 77, 84.
4. The Iceberg Reports & Confidential Witness
Plaintiff relies heavily on three sources in support of his allegations that the statements
described above were false or misleading. First, Plaintiff alleges that “the market learned the true
material facts . . . through a research report published by Iceberg Research on March 14, 2022.”
SAC ¶ 4.14 Iceberg published another report about the Lilium Jet on August 31, 2022. SAC ¶¶ 69,
94.15 Plaintiff claims that these Iceberg Reports made five significant revelations: (1) the batteries
needed to achieve a 155+ mile range on the Lilium Jet were “still years away from being
commercially available”; (2) Lilium was “unlikely to meet its timeline . . . for commercialization
by 2024”; (3) the White Paper made unreasonable assumptions, was not properly reviewed, and
failed to account for variables like battery aging; (4) Lilium’s battery supplier may have been16

14 Plaintiff did not attach a copy of the March 14, 2022, Iceberg Report, however, by relying
heavily on that document, Plaintiff has incorporated it by reference. See supra n.3. The full report
is available at https://iceberg-research.com/2022/03/14/stronglilium-nv-the-losing-horse-in-the-
evtol-racenbsp-strong/ (“Mar. 14, 2022, Iceberg Report”).
15 Available at https://iceberg-research.com/2022/08/31/liliums-misrepresentations-over-its-
technology-keep-mounting/ (“Aug. 31, 2022, Iceberg Report”).
16 While the Court accepts all allegations in the Second Amended Complaint as true, Plaintiff often
misrepresents the Iceberg Report’s conclusions. Compare SAC ¶ 75 (claiming that Iceberg Report
“reveal[ed] that the mysterious battery technology Lilium was planning to rely on was a product
of Zenlabs” (emphasis added)) and SAC ¶ 179 (“The Iceberg Report later revealed the source of
Lilium’s battery technology was Zenlabs.” (emphasis added)), with Mar. 14, 2022, Iceberg Report
(noting that Lilium’s White Paper cited a study by Zenlabs and inferring that “Lilium’s mysterious
battery cell supplier may be Zenlabs, although Lilium does not clarify the source of its battery
technology” (emphasis added)). Because Plaintiff incorporated the Iceberg Reports by reference,
11
Zenlabs, the CEO of which previously founded “another battery company that went defunct after
being accused of misrepresenting the capabilities of its batteries to General Motors”; and (5)
Lilium’s statements about the Jet’s 30 to 60-second hover time “assumed perfect conditions,” but
other experts “believed regulators would require Lilium to reserve enough power for at least 2-3

minutes of hover time.” SAC ¶¶ 5, 75, 186, 198; see also Mar. 14, 2022, Iceberg Report; Aug. 31,
2022, Iceberg Report. The Iceberg Reports contained numerous disclaimers at the end, including
that the reports “express[ed] [Iceberg’s] opinions, which [were] based upon generally available
public information” and that readers “should assume that . . . Iceberg may have a short position in
the securities . . . covered herein, and therefore may stand to realize gains in the event that the price
of the covered securities declines.” Mar. 14, 2022, Iceberg Report; Aug. 31, 2022, Iceberg Report.
Plaintiff claims that the March 14, 2022, Iceberg Report caused Lilium’s stock price to plummet
because the report disclosed information “previously concealed by Defendants’ scheme and
misrepresentations.” SAC ¶ 4.
Second, Plaintiff relies on information from a Confidential Witness to bolster the

allegations in the Second Amended Complaint. Id. ¶¶ 55–68. The Confidential Witness was an
engineer at Lilium from March to December of 2020. Id. ¶ 55. He believed the projected range of
155+ miles was “far-fetched.” Id. ¶ 65. Based on a decade of experience at Boeing, the
Confidential Witness “did not believe [Lilium] could achieve certification for its aircraft within a
‘reasonable timeline.’” Id. ¶ 56. He thought the timeline was too tight because the certification
requirements from the EASA and the FAA were still changing, the Lilium Jet had features that
made the certification process lengthier, and progress on the regulatory-compliant prototype was

the Court uses the Second Amended Complaint as a starting point, but it refers to the reports
directly when describing the contents and conclusions therein.
12
delayed after the Phoenix’s battery fire. Id. ¶¶ 57–63. He expressed concerns about the
certification timeline to Defendant Yemsi, “but Yemsi disregarded these concerns,” id. ¶ 66, and
Yemsi told the Confidential Witness that he “did not ‘understand the full situation,’” id. ¶ 84.
According to Plaintiff, this shows “that Defendants knew their timeline was overly ambitious from

the start.” Id. ¶ 76. The Confidential Witness ultimately left Lilium because he did not believe the
certification timeline was feasible. Id. ¶ 56.
Finally, Plaintiff relies on Lilium’s post-merger statements and SEC filings. See id. ¶¶ 274–
79. For example, on February 28, 2022—after the merger but before the first Iceberg Report—
Lilium announced that it was going back to a 5-seater Jet design rather than the 7-seater described
in the 2021 SEC filings and statements. Id. ¶ 275. On March 30, 2022—after the first Iceberg
Report—Lilium pushed back its projected certification and commercial launch timeline to 2025.
Id. ¶ 276. Plaintiff alleges that, by changing the projected timeline, Defendants “confirmed” that
the “2024 target was never possible.” Id. ¶ 76; see also id. ¶¶ 159–67. On May 31, 2022, Lilium
disclosed that it had been working with Zenlabs for the past two years to develop high density

battery technology, but that the technology had only been tested for two charging cycles. Id. ¶ 278.
Finally, in June 2022 Lilium announced that it was adding a landing gear to its design, which
allegedly “confirmed that [Lilium] had been overstating the amount of hover required for landing.”
Id. ¶ 187.
The Iceberg Reports and the Confidential Witness were not the first to voice doubts about
eVOTLs or Lilium’s go-to-market timeline for its Jet. Id. ¶¶ 80–81. German newspapers published
pieces in late 2019 and early 2020 “criticizing the Lilium Jet concept, citing scientists and
aeronautical engineers who all agreed that the range, speed, and weight capacity . . . could not be
achieved with . . . the battery technology that existed at the time.” Id. ¶ 80. On February 10, 2021,

13
Forbes published an article questioning Lilium’s certification timeline. Id. ¶ 81. That article relied
on three former Lilium employees as sources. Id. According to one former employee, Yemsi
admitted Lilium’s certification timeline “would be extremely difficult.” Id. These articles came
out before Lilium announced the merger with Qell, see id. ¶¶ 48–49, 80–81, meaning these

critiques were generally known before Lilium’s alleged misrepresentations and before the start of
the Class Period.
III. LEGAL STANDARD
Under Rule 12(b)(6), the Court accepts Plaintiff’s factual allegations as true and draws
inferences from the Second Amended Complaint in the light most favorable to Plaintiff. Ashcroft
v. Iqbal, 556 U.S. 662, 696 (2009). However, “conclusory allegations, unwarranted deductions of
facts or legal conclusions masquerading as facts will not prevent dismissal.” Oxford Asset Mgmt.,
Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002) (citing S. Fla. Water Mgmt. Dist. v. Montalvo,
84 F.3d 402, 406 (11th Cir. 1996)).
For claims sounding in fraud, the plaintiff must satisfy the heightened pleading standards

under Federal Rule of Civil Procedure 9(b). See Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307,
1318 (11th Cir. 2019). A plaintiff alleging fraud must state “with particularity the circumstances
constituting the fraud.” Fed. R. Civ. P. 9(b). When a complaint alleges misrepresentations or
omissions in violation of securities laws, the Eleventh Circuit has held that the complaint must say
“(1) precisely what statements or omissions were made in which documents or oral
representations; (2) the time and place of each such statement and the person responsible for
making (or, in the case of omissions, not making) them; (3) the content of such statements and the
manner in which they misled the plaintiff; and (4) what the defendant obtained as a consequence

14
of the fraud.” FindWhat Investor Grp. v. FindWhat.com, 658 F.3d 1282, 1296 (11th Cir. 2011)
(citing Garfield v. NDC Health Corp., 466 F.3d 1255, 1262 (11th Cir. 2006)).
The Private Securities Litigation Reform Act (“PSLRA”) imposes even higher pleading
requirements for securities class action claims brought under the Exchange Act. See 15 U.S.C.

§ 78u-4(a)(1); Carvelli, 934 F.3d at 1317–18. First, where the plaintiff alleges either an untrue
statement of material fact or the omission of a material fact, the complaint must set forth with
particularity “each statement alleged to have been misleading, the reason or reasons why the
statement is misleading, and, if an allegation regarding the statement or omission is made on
information and belief, the complaint shall state with particularity all facts on which that belief is
formed.” 15 U.S.C. § 78u–4(b)(1). Second, the plaintiff must allege “with particularity facts giving
rise to a strong inference that the defendant acted with the required state of mind [i.e., scienter].”
Id. § 78u–4(b)(2)(A). The complaint must allege facts supporting a strong inference of scienter
“for each defendant with respect to each violation.” Mizzaro v. Home Depot, Inc., 544 F.3d 1230,
1238 (11th Cir. 2008) (quoting Phillips v. Scientific–Atlanta, Inc., 374 F.3d 1015, 1016 (11th Cir.

2004)). Finally, the plaintiff must plead that the defendant’s misrepresentation or omission
“caused the loss for which the plaintiff seeks to recover damages.” 15 U.S.C. § 78u-4(b)(4).
Because Rule 9(b) and the PSLRA’s heightened pleading standards are claim-specific, the Court
will address the applicable standards on a claim-by-claim basis below.
IV. ANALYSIS
As a threshold matter, Defendants argue that the Second Amended Complaint suffers the
same shotgun pleading defects as the First Amended Complaint. See DE 114 at 6–9. The R&R
concluded that the First Amended Complaint failed to separate each cause of action into different
counts, and failed to specifically identify which alleged misstatements and/or omissions supported

15
each claim. See DE 105 at 14–15; see also Weiland v. Palm Beach Cnty. Sheriff’s Off., 792 F.3d
1313, 1322–23 (11th Cir. 2015). The Second Amended Complaint cured these deficiencies by
adding citations to specific misrepresentations and omissions in support of each cause of action,
and by adding separate counts for violations of different rules (i.e., there are now three causes of

action under § 10(b), each one relying on a different subsection of Rule 10b-5). See SAC ¶¶ 307–
32. The Court therefore turns to the merits.
1. Section 10(b) of the Exchange Act
Plaintiff brings three claims under § 10(b) of the Exchange Act. See SAC ¶¶ 307–32.
Section 10(b) prohibits “any manipulative or deceptive device” in violation of SEC rules or
regulations. 15 U.S.C. § 78j(b). Plaintiff claims that Defendants violated SEC Rule 10b-5. See
SAC ¶¶ 308, 317, 326. That Rule has three subsections, each of which prohibits a different kind
of manipulative or deceptive conduct. However, there is considerable overlap between the
subsections. See Lorenzo v. SEC, 587 U.S. 71, 80 (2019). Subsection (a) “makes it unlawful to
‘employ any device, scheme, or artifice to defraud.’” Id. at 77 (quoting 17 C.F.R. § 240.10b-5(a)).
“Subsection (b) makes it unlawful to ‘make any untrue statement of a material fact.’” Id. (quoting

17 C.F.R. § 240.10b-5(b)). “And subsection (c) makes it unlawful to ‘engage in any act, practice,
or course of business’ that ‘operates . . . as a fraud or deceit.’” Id. (quoting 17 C.F.R. § 240.10b-
5(c)). Subsections (a) and (c) are often jointly called “scheme liability” claims, while subsection
(b) is a “misrepresentations” claim. See IBEW Loc. 595 Pension & Money Purchase Pension Plans
v. ADT Corp., 660 F. App’x 850, 858 (11th Cir. 2016). Regardless of the type of violation (scheme
or misrepresentation), a plaintiff must plead scienter and loss causation to state a claim under
§ 10(b). Carvelli, 934 F.3d at 1317 (quoting Mizzaro, 544 F.3d at 1236–37). Plaintiff’s § 10(b)
claims are subject to Rule 9(b) and the PSLRA’s heightened pleading standards. See id. at 1317–

16
18; supra Part III. The Court will address Rule 10b-5(b) misrepresentations before turning to the
alleged scheme under Rule 10b-5(a) and (c).
a) Rule 10b-5(b): Material Misrepresentations & Omissions
A plaintiff alleging securities fraud in violation of Rule 10b-5(b) must plead “a material

misrepresentation or omission.” Carvelli, 934 F.3d at 1317 (quoting Mizzaro, 544 F.3d at 1236–
37). Rule 9(b) and the PSLRA’s heightened pleading standards apply, including the heightened
pleading standard for alleged misrepresentations. Id. Therefore, Plaintiff must identify each
materially false statement and/or misleading omission and identify how it was false or misleading.
Id. “A statement is misleading if ‘in the light of the facts existing at the time of the [statement] . . .
[a] reasonable investor, in the exercise of due care, would have been misled by it.’” FindWhat, 658
F.3d at 1305 (quoting SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 863 (2d Cir. 1968)). A
misrepresentation is material if there is a substantial likelihood that a reasonable investor “would
have viewed a misrepresentation or omission as ‘significantly alter[ing] the “total mix” of
information made available.’” Carvelli, 934 F.3d at 1317 (quoting SEC v. Morgan Keegan & Co.,

678 F.3d 1233, 1245 (11th Cir. 2012)). “When it comes to omissions specifically, the Supreme
Court has clarified that ‘[s]ilence, absent a duty to disclose, is not misleading under Rule 10b–5.’”
Id. (quoting Basic Inc. v. Levinson, 485 U.S. 224, 239 n.17 (1988)). “[A]bsent a duty, material
information needn’t be disclosed unless its omission would render misleading other information
that an issuer has disclosed.” Id. (citing Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 44
(2011)) (emphasis in original).
Several doctrines limit the scope of actionable misrepresentations and omissions under
Rule 10b-5(b). As relevant here, Rule 10b-5(b) generally does not impose liability for statements
of opinion or forward-looking statements. See id. at 1322, 1324. First, opinion statements usually

17
do not violate Rule 10b-5(b). See id. at 1322 (citing Omnicare, Inc. v. Laborers Dist. Council
Constr. Indus. Pension Fund, 575 U.S. 175, 182 (2015)). In Omnicare, the Supreme Court held
“that statements of opinion are generally nonactionable because liability attaches only in the case
of an ‘untrue statement of a material fact.’” Carvelli, 934 F.3d at 1322 (quoting Omnicare, 575
U.S. at 182) (emphasis in original).17 A statement of opinion (often including language like “I

think” or “I believe”) is only actionable if (1) the speaker does not actually hold the opinion he or
she is espousing, or (2) the statement of opinion “contain[s] an embedded statement of fact” that
is false. Id. (citing Omnicare, 575 U.S. at 183–86). Second, the PSLRA includes a safe harbor
provision “that immunizes certain ‘forward-looking’ statements from liability.” Id. at 1324. “A
forward-looking statement is what it sounds like—a prediction, projection, or plan.” Id. The safe
harbor inoculates a forward-looking statement under three circumstances: (1) the statement is
identified as forward-looking and accompanied by “meaningful cautionary language”; (2) the
statement is immaterial; or (3) the speaker lacked “actual knowledge . . . that the statement was
false or misleading.” 15 U.S.C. § 78u-5(c)(1). The safe harbor is “disjunctive—it provides three

independent, alternative means of inoculating forward-looking statements.” Carvelli, 934 F.3d at
1326.
Plaintiff’s Second Amended Complaint identifies dozens of alleged misstatements and a
handful of misleading omissions. The statements fall into four categories: (1) Lilium’s battery
technology; (2) the Lilium Jet’s hover time; (3) the Lilium Jet’s range; (4) Lilium’s timeline for

17 Although Omnicare involved a claim under § 11 of the Securities Act, the Eleventh Circuit has
applied the analysis to claims alleging violations of Rule 10b-5(b) like these. See Carvelli, 934
F.3d at 1322 n.7.
18
certification and commercialization.18 See SAC ¶¶ 175–77, 181–82, 184, 191–95, 202–211, 213–
14, 221–24, 228, 233, 235–36, 243; DE 115 at 7–9. After carefully considering each of these
statements, the Court concludes that none rise to the level of actionable misrepresentations or
omissions.

Batteries. Plaintiff argues that Lilium made material misrepresentations and omissions
about its battery technology. The Second Amended Complaint alleges that Lilium’s Investor and
Analyst Day Slides falsely stated that Lilium had “secured” “[a]dvanced battery cell technology”
capable of providing “>330 Wh/kg.” SAC ¶¶ 175–76. A Lilium blog post similarly represented
that “today [battery] cells are available with energy densities of >300Wh/kg.” Id. ¶ 177. Citing to
the Iceberg Reports, Plaintiff states that “commercially available batteries” were far less powerful
(with energy densities of only 260 Wh/kg), making Lilium’s projections of a ~155-mile range
based on high-density batteries impossible at the time. Id. ¶¶ 94, 178, 189. According to Plaintiff,
these statements were false or misleading because a “reasonable investor could read th[ese]
statement[s] to mean these batteries were unconditionally secured, and capable of use in

commercial application, at the time the statement was made.” DE 115 at 8.
Plaintiff’s logic unravels when considering the statements as part of the “total mix of
[available] information.” Carvelli, 934 F.3d at 1320 (quoting Hoxworth v. Blinder, Robinson &
Co., 903 F.2d 186, 200–01 (3d Cir. 1990)); see also Einhorn v. Axogen, Inc., 42 F.4th 1218, 1223

18 In the Second Amended Complaint, Plaintiff also identified certain statements about Lilium’s
business dealings with tech giant Palantir and Brazilian airline Azul. See SAC ¶¶ 244–50. Plaintiff
does not address these statements in response to Defendants’ Second MTD. See generally DE 115.
The Court agrees with Defendants that Plaintiff has waived any § 10(b) claims based on
misrepresentations about Lilium’s relationships with Palantir and Azul. See DE 114 at 5; see also
Carter v. BPCL Mgmt., No. 19-CV-60887, 2021 WL 7502562, at *1 (S.D. Fla. Sept. 22, 2021)
(failure to refute opposing arguments “operates as a waiver of those arguments and is akin to a
failure to respond”); Local Rule 7.1(c) (permitting a court to grant a motion by default when a
respondent fails to respond).
19
(11th Cir. 2022) (relying “on the context in which the statement appears” when analyzing
allegations of false or misleading statements). Lilium never said it was using “commercially
available” batteries. See DE 90-7 at 27 (Investor Day Transcript stating that Lilium had
“exclusively” secured battery technology through a “[t]hird party battery supplier”); see also DE

115 at 9; SAC ¶ 176. Lilium’s statements suggest the exact opposite—that it was aiming to
develop proprietary battery technology precisely because higher density batteries were not yet
commercially available. The White Paper—issued the same day as the Investor Day Slides—
acknowledged that the highest density battery that was commercially available at that time was
250Wh/kg. DE 90-10 at 25. The White Paper assumed Lilium would develop a higher density
battery and relied on studies finding that higher density batteries were possible, even if not
commercially available yet. Id. And Plaintiff admits that Lilium did have high-density battery
technology capable of generating >330 Wh/kg. See SAC ¶¶ 175–79; DE 115 at 9 (“[Lilium’s]
batteries could maintain 330 Wh/kg for only two charging cycles.”). Viewing the “total mix” of
available information at the time, these statements were neither false nor misleading. See

FindWhat, 658 F.3d at 1305–06 (dismissing allegations based on “a factually accurate report” that
“did not create a false impression” and “therefore, was not misleading under the circumstances”).
Moreover, many of these statements were (or were accompanied by) forward-looking
statements that, when viewed together, clarified that the battery technology was still in
development and the range projections were just that—projections. See DE 90-7 at 27 (disclosing
that “[b]attery cell technology [was] still under development” and “design [was] not yet finalized”;
and disclosing assumptions about battery power used to calculate “[p]rojected physical range”
(emphasis added)); SAC ¶ 177 (Lilium blog post stating its “custom cells and chemistry” “will be
able to expand the range of the Lilium Jet” (emphasis added)). These forward-looking statements

20
fall within the safe harbor because Plaintiff does not allege facts to support a “strong inference of
actual knowledge.” In re Sanofi Sec. Litig., 87 F. Supp. 3d 510, 530 (S.D.N.Y. 2015); see also 15
U.S.C. § 77z-2(c)(1)(B)(i). The Second Amended Complaint includes a conclusory allegation that
Defendants either had “actual knowledge of the material omissions and/or the falsity of the

material statements” or they “acted with severe reckless disregard for the truth.” SAC ¶ 328. But
it does not contain any allegations that Defendants knew that each of the statements about battery
technology was actually false. See generally SAC ¶¶ 267–94. The safe harbor therefore inoculates
these forward-looking statements about Lilium’s battery technology.
Plaintiff also alleges that Lilium omitted material information about its battery technology
in its 2021 filings and statements. According to Plaintiff, Lilium omitted two key facts: (1)
Lilium’s battery supplier was Zenlabs—a company whose CEO had a history of overpromising
and underdelivering when it came to its battery technology; and (2) Lilium’s high-density battery
technology (330 Wh/kg) was only tested for two charging cycles, so Lilium did not know how it
would perform over many years of use. See DE 115 at 8–9; SAC ¶ 179. These omissions do not

render the statements addressed above materially misleading. See Macquarie Infrastructure Corp.
v. Moab Partners, L. P., 601 U.S. 257, 264–65 (2024) (“Disclosure is required under these
provisions only when necessary ‘to make . . . statements made, in the light of the circumstances
under which they were made, not misleading.’” (quoting Matrixx, 563 U.S. at 44)). Plaintiff
alleges that “Lilium concealed Zenlabs’ name as the battery technology provider until after being
unmasked by Iceberg Research.” SAC ¶ 75. In the documents with the alleged misrepresentations,
Lilium disclosed that it was working with a third-party battery supplier and that the technology
was still under development. See id. ¶ 177; DE 90-7 at 27; DE 90-9 at 8. In fact, rather than
concealing Lilium’s ties to Zenlabs, the White Paper affirmatively cited studies by Zenlabs. DE

21
90-11 at 25. Almost a year later, Iceberg put two and two together and assumed that Lilium might
be working with Zenlabs. See Mar. 14, 2022, Iceberg Report (inferring from the White Paper’s
citations to Zenlabs’ studies that “Lilium’s mysterious battery cell supplier may be Zenlabs”
(emphasis added)). Lilium eventually revealed that Zenlabs was its battery supplier, see SAC
¶ 91,19 but failing to disclose this fact earlier was not misleading given the total mix of information

in the earlier statements. Similarly, the omission of two-cycle battery test data was not misleading
because that testing occurred after the alleged misstatements. See SAC ¶ 278 (citing May 31, 2022,
blog post disclosing test data dated April 11, 2022). Even assuming Lilium had a duty to disclose
those test results, that data did not exist at the time of the allegedly misleading statements.
Range & Hover Time. The Second Amended Complaint alleges that Lilium’s statements
about “the amount of power required for the ‘hover’ phase w[ere] materially false or misleading.”
SAC ¶ 185. Plaintiff says Lilium misrepresented “that the Lilium Jet would have a range of
approximately 155 miles.” Id. ¶ 190. These statements fall within the safe harbor for forward-
looking statements. The PSLRA’s definition of forward-looking statement includes “a statement

of the . . . plans and objectives relating to the products or services.” 15 U.S.C. § 78u-5(i)(1)(B).
Lilium’s projections about the Jet’s range and hover time fall within this definition. See SAC
¶ 177 (Lilium “will be able to expand the range of the Lilium Jet to approximately 250km [155
miles]”); id. ¶ 95 (“projected . . . range of 155+ miles”); DE 90-8 at 23 (showing graph
representing Lilium’s “mission” which was “not to hover” and calculating hover time around 30
seconds). Beyond the plainly forward-looking language (“projected,” “will be able,” “mission”),
it was no secret that Lilium did not have a final prototype of the 7-seater Jet at that time, see id.

19 Citing a May 31, 2022, Lilium blog post, available at: https://lilium.com/newsroom-
detail/liliums-battery-strategy.
22
¶¶ 36, 83 n.18, further demonstrating that each of the statements about the Jet’s range and hover
time was a forward-looking projection. These statements are protected by the safe harbor as long
as Defendants lacked actual knowledge of falsity, the statements were accompanied by sufficient
cautionary language, or the statements were immaterial. See Carvelli, 934 F.3d at 1326. As with

the statements about batteries, Plaintiff has not pled actual knowledge of falsity. See In re Sanofi,
87 F. Supp. 3d at 530; see also SAC ¶¶ 326–28 (alleging knowledge or reckless disregard).
Additionally, these statements were accompanied by sufficient cautionary language. See DE 90-7
at 3 (disclosing risk that “the technology necessary to successfully operate the [Lilium Jet] . . . is
delayed, unavailable, not available at commercially anticipated prices, not sufficiently tested, not
certified for passenger use or otherwise unavailable”); DE 90-8 at 3 (same). These statements fall
within the safe harbor.20
Timeline Projections. The last group of alleged misrepresentations are statements about
Lilium’s projected timelines for regulatory certification and commercialization. See SAC ¶¶ 202–
14. Plaintiff claims many of these statements were false or misleading “because Defendants knew,

or recklessly disregarded the truth, that the target of achieving commercial operations in 2024, and
certification prior to that, was not achievable.” Id. ¶ 215. Defendants claim that each of these
statements is forward-looking. See DE 114 at 14. Plaintiff does not address this argument; instead,
he restates the allegations that the 2024 commercialization timeline was not feasible, and Lilium
most likely never believed it was possible. DE 115 at 7–8, 9–11. Like many of the other

20 Estimates and projections—like those in the White Paper and many of the graphics about range
and hover time—are also statements of opinion which are not actionable under Rule 10b-5(b). See
Martin v. Quartermain, 732 F. App’x 37, 40 n.1 (2d Cir. 2018) (“Estimates, in particular, constitute
a well-established species of opinion,” because estimates “‘will vary depending on the particular
methodology and assumptions used,’ rendering them ‘subjective.’” (quoting Fait v. Regions Fin.
Corp., 655 F.3d 105, 111 (2d Cir. 2011)).
23
statements, the safe harbor for forward-looking statements applies here. “Statements about the
likelihood of regulatory approval are ‘classically forward-looking, as they address what defendants
expect[] to occur in the future.’” In re AstraZeneca PLC Sec. Litig., No. 21-CV-722 (JPO), 2022
WL 4133258, at *9 (S.D.N.Y. Sept. 12, 2022) (quoting Gillis v. QRX Pharma Ltd., 197 F. Supp.

3d 557, 585 (S.D.N.Y. 2016)). Again, Plaintiff does not allege facts supporting a strong inference
that Defendants had actual knowledge of the falsity when making these statements. See In re
Sanofi, 87 F. Supp. 3d at 530; see also SAC ¶ 215 (alleging knowledge or reckless disregard).
Additionally, the projections about certification and commercialization were accompanied by
ample cautionary language. See DE 90-7 at 3; DE 90-8 at 3.
Plaintiff has failed to plead actionable misrepresentations or omissions in violation of Rule
10b-5(b), and the Court therefore dismisses Count III.
b) Rule 10b-5(a) and (c): Scheme Liability
Plaintiff also alleges that Defendants violated Rule 10b-5(a) and (c). As explained above,
Rule 10b-5(a) and (c) prohibit fraudulent schemes and practices. See 17 C.F.R. § 240.10b-5(a),

(c). To allege a violation of Rule 10b-5(a) and (c), a plaintiff must plausibly allege that (1) the
defendant committed a deceptive or manipulative act (2) in furtherance of the alleged scheme to
defraud (3) with scienter. See SEC v. Complete Bus. Sols. Grp., Inc., 538 F. Supp. 3d 1309, 1339
(S.D. Fla. 2021). “The main difference between a 10b-5(b) misrepresentation claim and a 10b-
5(a) and (c) scheme liability claim is that, while 10b-5(b) involves ‘deceptive statements,’ 10b-
5(a) and (c) scheme liability involves ‘deceptive conduct.’” SEC v. Arbitrade Ltd., No. 22-CV-
23171, 2023 WL 2785015, at *7 (S.D. Fla. Apr. 5, 2023). A plaintiff alleging violations of Rule
10b-5(a) and (c) is typically not subject to the PSLRA’s heightened pleading standard for alleged
misrepresentations, unlike claims under Rule 10b-5(b). See SEC v. Rio Tinto PLC, 41 F.4th 47, 52

24
(2d Cir. 2022). However, a plaintiff cannot evade the PSLRA’s pleading standard by repackaging
its misrepresentations claim as a “scheme.” Id. at 54–55. That is precisely what Plaintiff does here.
Plaintiff alleges that Defendants engaged in a fraudulent “scheme” by making “materially
false and misleading statements.” SAC ¶¶ 307, 316. The Second Amended Complaint contains

identical factual allegations in support of each alleged Rule 10b-5 violation. Id. ¶¶ 307, 316, 325.
Defendants argue that Plaintiff cannot bring three separate claims, one under each subsection of
Rule 10b-5, based on the same alleged misrepresentations. See DE 114 at 18–19. They argue that
Plaintiff is trying to bypass the heightened pleading standards for misrepresentations claims under
Rule 10b-5(b). See DE 89 at 20.
Under these circumstances, Plaintiff’s § 10(b) claims alleging violations of Rule 10b-5(a)
and (c) rise and fall with the misrepresentations claim under Rule 10b-5(b). For quite some time,
the law in this Circuit was clear: “Misleading statements and omissions only create scheme
liability in conjunction with ‘conduct beyond those misrepresentations or omissions.’” IBEW Loc.
595 Pension & Money Purchase Pension Plans v. ADT Corp., 660 F. App’x 850, 858 (11th Cir.

2016) (dismissing scheme liability claim premised on the same misrepresentations and omissions
as the Rule 10b-5(b) claim) (emphasis added). However, in 2019, the Supreme Court held that
“dissemination of false or misleading statements with intent to defraud can fall within the scope
of subsections (a) and (c) of Rule 10b–5.” Lorenzo v. SEC, 587 U.S. 71, 78 (2019). Plaintiff relies
on this language from Lorenzo to support pleading duplicative misrepresentations claims under
§ 10(b). See DE 115 at 19. The Court disagrees.
To start, the facts of Lorenzo differed. There, the SEC was not trying to use Rule 10b-5(a)
and (c) as an equal alternative to Rule 10b-5(b). See 587 U.S. at 78. Rather, the SEC brought an
enforcement action against a defendant who “disseminated” false statements but did not “make”

25
the statements. See id. In that case, the defendant could not be held liable for violating Rule 10b-
5(b) because the allegedly false statements could not be attributed to him. See id. In this case,
Plaintiff specifically alleges that each Defendant “made” misrepresentations, bringing the
allegations squarely within the gambit of Rule 10b-5(b). SAC ¶¶ 307, 316. Nonetheless, the

language in Lorenzo is broad enough to cast a shade of doubt on the rule promulgated by the
Eleventh Circuit in IBEW. See Lorenzo, 587 U.S. at 80 (“[T]his Court and the [SEC] have long
recognized considerable overlap among the subsections of [Rule 10b-5] and related provisions of
the securities laws.”).
Although the Eleventh Circuit has not revisited its ruling in IBEW in the wake of Lorenzo,
other circuits have. The Court agrees with the Second Circuit’s holding in SEC v. Rio Tinto PLC,
41 F.4th 47, 52 (2d Cir. 2022), which addressed this exact issue. The Second Circuit, like the
Eleventh Circuit, had a pre-Lorenzo precedent stating that an “actionable scheme liability claim
also requires something beyond misstatements and omissions.” Id. at 49 (citing Lentell v. Merrill
Lynch & Co., 396 F.3d 161 (2d Cir. 2005)) (emphasis in original). The Second Circuit concluded

that Lentell survived Lorenzo. Id. at 54. It explained that “though Lorenzo ruled that there was
‘considerable overlap’ between the misstatement subsections and the scheme subsections, it did
not announce that the misstatement subsections were subsumed.” Id. (internal citation omitted).
The Second Circuit highlighted that “[a]n overreading of Lorenzo might allow private litigants to
repackage their misstatement claims as scheme liability claims to ‘evade the pleading requirements
imposed in misrepresentation cases.’” Id. at 55. The Court agrees with this logic. Where a plaintiff
alleges scheme liability based solely on allegations that the defendant made material
misrepresentations and omissions, those claims are subsumed by the Rule 10b-5(b)
misrepresentations claim. In this case, Plaintiff cannot recast the alleged misrepresentations as a

26
“scheme” to avoid the PSLRA’s heightened pleading standards for alleged misrepresentations.21
The Court therefore dismisses Counts I and II because they are scheme liability claims premised
solely on Defendants’ alleged misrepresentations and omissions.22
2. Sections 11 and 12 of the Securities Act
Section 11 of the Securities Act prohibits issuing a registration statement that “contained

an untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.” 15 U.S.C. § 77k(a). “If a plaintiff
purchased a security issued pursuant to a registration statement, he need only show a material
misstatement or omission to establish his prima facie case.” Herman & MacLean v. Huddleston,
459 U.S. 375, 382 (1983). The misrepresentation or omission requirement under § 11 is the same
as § 10(b) of the Exchange Act and Rule 10b-5(b). See Carvelli, 934 F.3d at 1322 n.7 (“[T]he core
prohibition of Rule 10b-5(b) is worded in the exact same language as § 11.”). However, there is
no scienter element in a § 11 claim. The plaintiff need not prove any intent to defraud on the part
of the defendant, or even knowledge of the misrepresentation or omission. Herman, 459 U.S. at
381–82.

21 Even if the same misrepresentations could support a § 10(b) claim alleging a fraudulent scheme
in violation of Rule 10b-5(a) and (c), the Court would nevertheless apply the heightened pleading
standard and dismiss the claims for the same reasons it dismisses the Rule 10b-5(b)
misrepresentations claim. See 15 U.S.C. § 78u–4(b)(1) (applying heightened pleading standard for
“any private action . . . in which the plaintiff alleges” material misrepresentations or omissions
(emphasis added)). Because the Second Amended Complaint alleges that Defendants’ fraudulent
scheme was limited to the “materially false and misleading statements,” SAC ¶¶ 307, 316, the
PSLRA’s pleading requirements apply to each of the § 10(b) claims as pled. As explained supra
Part IV.1.b, Plaintiff has failed to plead actionable misrepresentations or omissions.
22 Because Plaintiff failed to “adequately plead a violation of Section 10(b) and Rule 10b(5), [his]
claim[s] under Section 20(a) necessarily fail[] as well.” In re KLX, Inc. Sec. Litig., 232 F. Supp.
3d 1269, 1274 (S.D. Fla. 2017) (citing Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th
Cir. 2006)). The Court therefore dismisses Counts IV, V, and VI of the Second Amended
Complaint.
27
“Section 12(a)(2) of the Securities Act creates a private cause of action against persons
who offer or sell a security ‘which includes an untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements, in light of the circumstances under which
they were made, not misleading.’” Ehlert v. Singer, 245 F.3d 1313, 1315–16 (11th Cir. 2001); see

also 15 U.S.C. § 77l. Like with § 11 claims, there is no scienter element, and the plaintiff does
not have to allege an intent to defraud or knowledge of the misrepresentation or omission. See
Herman, 459 U.S. at 381–82.
Plaintiff’s §§ 11 and 12(a) must meet the heightened pleading standard under Federal Rule
of Civil Procedure 9(b). See Wagner v. First Horizon Pharm. Corp., 464 F.3d 1273, 1277 (11th
Cir. 2006) (“Rule 9(b) applies when the misrepresentation justifying relief under the Securities
Act is also alleged to support a claim for fraud under the Exchange Act and Rule 10(b)–5.”).
Plaintiff argues that “the same allegations meet [the Rule 9(b)] standard for the [same] reasons” as
the § 10(b) claims. DE 115 at 20; see also DE 96 at 23 (defending § 11 claim by pointing to single
conclusory allegation that the “Registration Statement . . . contained inaccurate and misleading

statements of material fact, omitted facts necessary to render statements therein non-misleading,
and omitted to state material facts required to be stated therein”).
The alleged misrepresentations in the August 5, 2021, Registration Statement echo the
alleged misrepresentations in other documents. See SAC ¶ 228 (“commercial operations are
planned to launch in 2024”); id. ¶ 235 (“the [battery] pouch cells have yielded nominal energy
density levels of 330 watt-hour per kilogram, which is projected to enable a physical aircraft range
of 155 miles”); id. ¶ 241 (“we aim for less than 60 seconds per mission in the pure hover phase”).
And, like the other statements discussed above, the Registration Statement included detailed risk
factors including that “there is no assurance that our current serial prototype for the Lilium Jet will

28
receive government certification in a way that is market-viable or commercially successful, in a
timely manner or at all” and that the “Lilium Jets require complex software, battery technology
and other technology systems that remain in development and need to be commercialized in
coordination with our vendors and suppliers to complete serial production.” DE 90-3 at 77, 84; see

also In re ProShares Tr. Sec. Litig., 728 F.3d 96, 102 (2d Cir. 2013) (“[W]hen a registration
statement warns of the exact risk that later materialized, a [s]ection 11 claim will not lie as a matter
of law.”). Plaintiff’s Securities Act claims suffer the same defects as his § 10(b) claims—the
Second Amended Complaint failed to sufficiently plead an actionable misstatement or omission.
See Miyahira v. Vitacost.com, Inc., 715 F.3d 1257, 1268 (11th Cir. 2013) (analyzing alleged
misrepresentations under §§ 11 and 12(a) of the Securities Act using same standards as alleged
misrepresentations of § 10(b) of the Exchange Act). The Court therefore dismisses Counts VII
and VIII.23
3. Section 14(a) of the Exchange Act
Section 14(a) imposes liability for violations of SEC rules in connection with proxy
materials. See 15 U.S.C. § 78n(a). Plaintiff alleges that Defendants violated SEC Rule 14a-9,

which prohibits false or misleading statements or omissions of material fact in a proxy statement
or other proxy materials. 17 C.F.R. § 240.141-9(a). To survive a motion to dismiss on this claim,
Plaintiff must “allege that Defendants prepared a proxy statement containing a material
misstatement or omission that caused Plaintiffs’ injuries.” Theodore v. Purecycle Techs., Inc., No.

23 Because Plaintiff failed to plausibly allege a violation of §§ 11 or 12(a)(2) of the Securities Act,
he necessarily failed to plausibly allege a violation of § 15 as well. See 15 U.S.C. § 77o (imposing
joint and several liability upon controlling persons for acts committed by individuals under their
control who themselves violate §§ 11 or 12); see also Miyahira, 715 F.3d at 1268 (“Because
Plaintiffs have failed to establish a primary violation under §§ 11 or 12, their § 15 claim also fails.”
(quoting Ehlert, 245 F.3d at 1320)). The Court therefore dismisses Counts IX and X of the Second
Amended Complaint.
29
6:21-CV-809-PGB-RMN, 2023 WL 4035880, at *11 (M.D. Fla. June 15, 2023). Again, the
Court’s earlier analysis applies equally to Plaintiff's §14(a) claim, which is based on the same
alleged misrepresentations and omissions as the § 10(b) claims. See Vargas v. Citrix Sys., Inc.,
No. 22-CV-62327, 2024 WL 413454, at *5 (S.D. Fla. Feb. 3, 2024) (dismissing § 14(a) claims
after applying safe harbor for forward-looking statements). The Court therefore dismisses Count
XI of the Second Amended Complaint.
te OK OK
Based on the foregoing, Defendants’ Second to Dismiss [DE 114] is GRANTED. It is
ORDERED AND ADJUDGED that Plaintiff's claims in the Second Amended Complaint are
dismissed for the reasons set forth in this Order. Because Plaintiff has now been afforded multiple
opportunities to amend, the Court’s dismissal is without leave to amend.*+ The Clerk of Court
shall CLOSE this case.
DONE AND ORDERED in Chambers, West Palm Beach, Florida, this 23rd day of
August, 2024.
=) ' fo
Tob & ers!
ROBIN L. ROSENBERG (/
UNITED STATES DISTRICT JUDGE

Plaintiff requests leave to amend, but he does not provide any basis for doing so. DE 115 at 20;
see also Avena v. Imperial Salon & Spa, Inc., 740 F. App’x 679, 683 (11th Cir. 2018) (affirming
denial of leave to amend when plaintiff's only request to amend “was a single line at the end of
her motion in opposition to [a] motion to dismiss,” and the request “neither contained a proposed
amendment, nor did it elaborate on the substance of the proposed amendment”). Plaintiff says he
“had no reason to believe edits to the merits” portions of the First Amended Complaint were
necessary because the Court previously dismissed the claims as improper shotgun pleadings. DE
115 at3 n.3. But the R&R laid out in detail the applicable pleading standards and the elements of
each claim. See generally DE 105. Plaintiff had ample notice of the standards he had to meet to
survive a motion to dismiss before filing the Second Amended Complaint. Accordingly, the Court
will not allow further amendment.
30

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10643846. Public record. Not legal advice.