Scandal-battered utility faces specter of lawsuits
CLEVELAND — Ohio’s largest electric utility, its reputation battered by scandal, has been besieged by more than a dozen lawsuits filed by angry shareholders who include some of the country’s biggest institutional investors.
And, if history is a guide, FirstEnergy Corp. and its insurers could find themselves paying millions to settle those complaints, as the company did more than 15 years ago when confronted by lawsuits for lying about a dangerous hole in a reactor head at a nuclear power plant and for contributing to the largest blackout in US history.
FirstEnergy and insurers for its corporate officers and board of directors paid out more than $100 million to settle lawsuits in 2004. It is far too early to estimate what settlements of the new lawsuits might total, but the potential payouts could far exceed those from 2004, given the losses shareholders claim to have suffered.
The latest lawsuits were filed as FirstEnergy became a central figure in what has been called the biggest corruption scandal in state history. The company is accused of secretly funding a $60 million bribery scheme aimed at winning a $1 billion legislative bailout in 2019 for two Ohio nuclear plants operated at the time by a wholly owned FirstEnergy subsidiary.
FirstEnergy’s stock price quickly plummeted around 40% after US Attorney David DeVillers announced July 21 that then-Ohio House Speaker Larry Householder and four others had been arrested on suspicion of having roles in the bribery scheme.
The first lawsuits were filed within a week and now total more than a dozen. The bulk have been filed in federal court in Columbus, with several filed in state court in Akron, where FirstEnergy is based.
The company is one of the largest electric utilities in the US, providing power to customers in parts of six states.
Darren Robbins, an attorney for the firm Robbins Geller Rudman & Dowd, said stockholder losses have been estimated at $10 billion