As Triangle Business Journal first reported late last week, Duke Energy has been hit with yet another shareholder lawsuit arising out of the coal ash mess, this time by shareholder E.F. Greenberg and filed in federal court in Raleigh.
Greenberg contends that Duke Energy’s directors made significant admissions regarding their conduct in response to coal ash problems weeks before board elections took place, yet failed to disclose as much to shareholders and to the Securities and Exchange Commission.
“Despite their obligations under applicable federal law, the director defendants caused Duke to prepare, file and disseminate the proxy statement to Duke shareholders in materially incomplete and misleading form in order to secure the election of directors supported by the director defendants,” the shareholder alleges in her complaint.
Admissions of misconduct, and underlying facts, only became public a week after elections at Duke’s May 14 criminal sentencing hearing.
Here’s more from the complaint:
17. To be clear, plaintiff is not contending that any plea agreements, plea negotiations, sentencing memoranda, or even the Statement of Facts itself were required to be included verbatim in the Proxy Statement. However, the substance of the salient factual matters admitted to by Duke were highly material to shareholders called upon to vote upon directors, and should have been included in or referred to some meaningful extent in the Proxy Statement, just as the Judgment of Sentence, at paragraph 3B requires that Duke advise shareholders of the “criminal behavior.”
18. Further startling disclosures concerning the matters to which Duke had previously admitted and agreed to, including appropriately imposed far reaching and stringent monetary and non-monetary therapeutic relief and judicial oversight are set forth in the Judgment of Conviction and Sentencing entered by the Court following the sentencing hearing on May 14, 2015.
19. The substance of these highly relevant and material facts that Duke admitted to in February of 2015 but did not disclose until one week after the Annual Meeting of Shareholders, involved a documented course of environmental recklessness.
20. These admitted facts were so serious and so extensive that Duke’s management and Board were deemed to be so unreliable and untrustworthy as to environmental matters, that Duke was appropriately required, as part of the Court’s sentence, to agree to cede extensive control of the Company’s operations for the foreseeable future to the management of a Court Appointed Monitor ).
21. Therefore, the substance of the facts to which Duke had admitted in February of 2015 was such as to demonstrate that the very individuals who had been entrusted to manage and oversee Duke’s compliance with its responsibilities under the environmental laws (including the defendants named in this Complaint) had failed so utterly and so completely, that they could no longer be trusted to run the Company on their own, without extensive and invasive outside monitoring and oversight.
That makes at least seven shareholder lawsuits filed against the company arising out its coal ash debacle.
Five had already been filed in Delaware Chancery Court and one in North Carolina Business Court – alleging that the company knew about the clean water act violations at its coal ash plants but failed to take action and exposed the company to potentially billions of dollars in liability. All seek changes in corporate governance and damages from losses resulting from clean-up and fines.
Read the Greenberg complaint here.