November 12, 2024
A South Carolina federal judge on Tuesday certified a class of SCANA Corp. investors accusing Deloitte of issuing audit reports that misled them about the progress the utility company was making on a $9 billion nuclear energy expansion project that failed.
U.S. District Judge Jacquelyn D. Austin, in a 32-page order, granted the class certification motion brought by the lead plaintiff, the International Brotherhood of Electrical Workers Local 98 Pension Fund, finding that it meets the requirements of a typical and adequate class representative. Even though IBEW bought SCANA shares after alleged partial corrective disclosures were made, the judge determined that does not make it atypical.
“Multiple courts have held that ‘a stock purchase after a partial corrective disclosure is not per se evidence that a class representative is atypical and did not rely on the alleged fraudulent representations,'” Judge Austin said, pointing to the 2022 case In re Under Armour Securities Litigation , in which a Maryland federal judge found that the plaintiffs’ allegations suggested the price they paid still “reflected their reliance on the defendants’ alleged misrepresentations and omissions.”
“Similarly, here, IBEW alleges that it relied on Deloitte’s material misrepresentations and omissions when purchasing SCANA’s common stock in an efficient market” after a partially corrective disclosure was made, she added. “Further, as IBEW points out, there is no suggestion that it is the only class member who bought stock after the partial disclosures.”
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IBEW in January moved for class certification and to appoint Cohen Milstein Sellers & Toll PLLC as class counsel and Tinkler Law Firm LLC as liaison counsel.
In her order Tuesday, Judge Austin also determined that IBEW has shown that questions common to class members predominate over any questions affecting just individual members. The judge found that Deloitte hasn’t proven that “the asserted misrepresentation (or its correction) did not affect the market price of the defendant’s stock,” the order states.
“Deloitte has not established that the alleged misstatements in its audit reports … are not related or relevant to the alleged corrective disclosures, which revealed that the nuclear project would not be completed on time or at all; that the costs of the nuclear project were significantly higher than projected; that SCANA knew of and actively misrepresented clear risks to regulators; and that the [Base Load Review Act] rate recovery was at risk,” the judge said.
Judge Austin also approved IBEW’s choice of Cohen Milstein as class counsel and Tinkler as liaison counsel, according to the order.
Counsel for the parties did not immediately respond to requests for comment Tuesday.
SCANA has faced multiple suits over the nuclear power work. It was part of a $520 million settlement with utility customers that was granted preliminary approval in March 2020. Its investors in January 2020 asked a federal judge to sign off on a $192 million settlement resolving allegations the company and its executives misled the public about project delays.
IBEW Local 98 is represented by Laura H. Posner, Steven J. Toll and Jan Messerschmidt of Cohen Milstein Sellers & Toll PLLC and William Tinkler of Tinkler Law Firm LLC.
Read Deloitte Must Face Certified Class Over Nuclear Audit Reports.