Rivian, a U.S. EV manufacturer, just agreed to pay $250 million to settle a class-action lawsuit filed in 2022 by some shareholders over alleged IPO underpricing fraud. The Irvine, California-based automaker denied the allegations, stating that the agreement did not necessarily imply admission of wrongdoing or fault.
Rivian said the settlement will help it focus on mass-market launching the R2 SUV in the first half of 2026. It stressed that the R2’s success is critical for its survival, especially now that last month’s expiry of the $7,500 EV tax credit is expected to push EV demand in the U.S. downwards. Rivian plans to fund the payment through $183 million in cash and $67 million in officers’ and directors’ liability insurance.
Rivian’s CEO, RJ Scaringe, recently communicated the company’s restructuring plans through an internal memo, which effectively resulted in the elimination of 600 jobs, or approximately 4.5% of its workforce, as reported by Cryptopolitan. Scaringe emphasized that the company needs to control costs ahead of next year’s R2 launch.
Rivian says agreed payment will be made to an Escrow account
The court filing confirmed that Rivian agreed to pay the settlement amount to an Escrow account within 10 business days as ordered by the court. The full $250 million payment is expected to be completed within 30 days following the court’s approval of the settlement. All the money shall be assumed to be under the court’s custody until it is distributed as stipulated.
The court ordered that the settlement amount will be used to pay taxes, notice, and administration costs, as well as any litigation expenses awarded by the court, in an amount not exceeding $6.9 million. It will also be used to pay for any attorney’s fees awarded by the court, up to a maximum of 24% of the total amount, as well as any other payments ordered by the court.
The remaining net settlement fund will be distributed to the authorized claimants. However, all the money can be allocated to charity if the court determines that the authorized claimants are not cost-effective.
Meanwhile, any Class Member who does not submit a valid claim will not be entitled to receive any of the net settlement funds. They will, otherwise, be bound by the terms of the settlement, including the terms of the judgment, or the alternative judgment, if applicable.
Each claimant will also be deemed to have submitted to the court’s jurisdiction with respect to the claimant’s claim. The claims will be subject to investigation and discovery under the Federal Rules of Civil Procedure, provided, however, that the investigation is limited to the claimant’s status as a Class Member.
Verita prepares for settlement administration
The plaintiffs appointed Verita as the claims administrator as part of the preliminary approval order. The court previously approved the settlement administrator as the notice administrator in connection with the Notice of Pendency. ECF No. 408.
Verita will oversee the receipt, review, and either the approval or denial of claims. The company will be operating under Class Counsel’s supervision, subject to the court’s jurisdiction.
Meanwhile, none of the defendants, nor any other parties, shall have any responsibility or involvement in the selection of the claims administrator. The court emphasized that no other parties shall have any authority or liability whatsoever for the plan of allocation, settlement administration, claims process, or disbursement of the net settlement fund.
However, the Class Counsel shall, in accordance with the terms of the preliminary approval order, direct Verita when to send Postcard Notice emails to authorized claimants. The Class Counsel shall also determine when Verita will post the Notice and Claim Form on the website or have the Summary Notice published.
The court also said it will consider the plan of allocation separately to ensure the settlement’s fairness, reasonableness, and adequacy. However, it is not a condition that the court should pick a specific plan of allocation. Any appeals, problems, or objections regarding the plan of allocation will not affect the finality or validity of the settlement.
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Source: https://www.cryptopolitan.com/rivian-agrees-to-a-250m-settlement/
