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Hubiack v. Li-Cycle Holdings Inc.

Actionable False, Misleading Statements Inadequately Alleged; Scienter Not Alleged

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OPINION AND ORDER Defendant Li-Cycle Holdings Corp. (“Li-Cycle”) is a Canadian company that recycles old batteries and battery manufacturing scrap to produce more valuable metals and, it hopes, new batteries for electric cars. Li-Cycle’s latter goal was recently dashed after it paused construction on a purported hub facility, which would have been the site of its first foray into producing new battery grade material. After Li-Cycle announced the pause, its investors sued the company and three of its officers for securities fraud. The amended complaint largely alleges that defendants made false or materially misleading statements about the timeline and budget for the hub’s construction. As explained below, the Court hereby grants defendants’ motion to dismiss the amended complaint because it does not adequately allege an actionable false or misleading statement and, in any event, fails to allege the requisite strong inference of scienter. I. Factual and Procedural Background¹ Li-Cycle was founded in 2016 by Ajay Kochhar and Tim Johnston, who developed a vision “to recycle end of life batteries and scrap into new lithium-ion battery packs for electric cars.” ECF No. 44 (“Am. Compl.”),

2, 24.² The company became public in 2021. Id. 24. Li-Cycle’s planned business model involves four “spoke” facilities — where old batteries and scrap are converted to “black mass,” “a powder-like substance that contains valuable metals such as nickel, cobalt and lithium” — and a “hub” facility, where the resulting black mass is to be converted to battery grade materials for more lucrative use. Id.

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