A California federal judge granted View Inc.’s motion to dismiss a lawsuit alleging federal securities law violations following the company’s move to go public in 2021. View, a smart glass manufacturer, had faced a class-action lawsuit filed by lead plaintiff Stadium Capital LLC alleging violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.

View Inc. is a manufacturer of smart glass that uses artificial intelligence to automatically adjust in response to the sun, eliminating the need for blinds and increasing access to natural light.

In her ruling to dismiss, U.S. District Judge Beth Labson Freeman determined that Stadium Capital—formerly known as CF Finance Acquisition Corp. II—did not specifically allege in the lawsuit that it acquired shares of View in connection with any specific statements from its de-special purpose acquisition company (SPAC) registration statement or other referenced filings.

The judge granted Stadium Capital an opportunity to amend the claim, emphasizing that it should proceed if it can adequately assert a connection between its decision to purchase company shares and the claims made in the registration statement.

Material Misrepresentation

The law firm Bragar Eagel and Squire originally filed the suit in 2021 in the United States District Court for the Northern District of California. The suit was presented on behalf of all who purchased or acquired View securities between Nov. 30, 2020, and Aug. 16, 2021. The plaintiffs alleged that View made material misrepresentations to investors in, among other filings with the U.S. Securities and Exchange Commission, its Dec. 23, 2020, de-SPAC registration statement, including the two amendments concerning a materially misstated and understated warranty accrual related to Legacy View’s “smart panels.”

The plaintiffs alleged that because of View’s wrongful acts, omissions and the decline in the market value of its securities, it and others represented suffered significant losses and damages.

Going Public

The lawsuit originates from View’s transition from a private company to a public entity in March 2021 following a business combination with Stadium Capital.

Following the move to go public, original court documents stated that on Aug. 16, 2021, “View announced that it had begun an independent investigation concerning the adequacy of the company’s previously disclosed warranty accrual. On this news, [View’s] share price fell $1.26, or over 24%, to close at $3.92 per share on Aug. 17, 2021, on unusually heavy trading volume.”

The investor lawsuit claimed that the trading prices for View shares declined as the market absorbed the company’s revelations regarding inaccuracies in its financial statements for the fiscal years 2019 and 2020, specifically pertaining to liabilities associated with warranties. The initial blow to the company’s trading prices occurred when it acknowledged the necessity of investigating its accounting practices. Subsequent announcements regarding the repercussions of the company’s findings on its financial condition continued to impact trading prices.