Danimer Scientific is facing a federal securities class action after an investor, Darryl Keith Rosencrants, filed a suit against the manufacturer in May, 2021. The suit is a result of severe stock price drops after the publication of articles alleging the manufacturer made false claims on their products. Danimer maintains that their claims are accurate.
Danimer sells polyhydroxyalkanoates (PHAs) under their brand name Nodax. These PHAs are used in the creation of various plastic items, such as water bottles, straws, and food containers. Danimer claims on their website that their Nodax products are 100 percent renewable and biodegradable in marine, freshwater, and soil environments. They further state that the biodegradability due to certain microorganisms means the Nodax products have the possibility to biodegrade in landfills.
The plaintiff alleges Danimer overstated and exaggerated claims on the biodegradability of Nodax in oceans and landfills. The plaintiff further claims that these statements led to an inflated value of the company and resulted in the severe drop in stock price once publication reported on the issue. An article published in the Wall Street Journal on March 20, 2021 states Danimer made misleading claims and cites at least one expert calling Nodax’s biodegradability “not accurate” and “greenwashing”. When stock trading opened again, Danimer’s value dropped 12.87 percent.
Spruce Point Capital Management, an investment firm, published a report critical of Danimer on several issues, including degradability, on April 22, 2021. Throughout the trading day, the stock dropped 8.04 percent. From March 20, 2021 to April 22, 2021, the total drop in value was 54 percent. The Plaintiff and other Class members are claiming losses and damages due to the precipitous decline of Danimer’s market value securities.