FirstEnergy

about its involvement in the bribery scheme.

Nine federal complaints are known as shareholder derivative lawsuits, which are technically filed on behalf of FirstEnergy against some executives and members of its board of directors who stand accused of breaching their duty to protect shareholders and the company’s reputation.

Both types of lawsuits have been consolidated separately under one case but have not yet been certified by Marbley as classaction complaints, which is expected to happen in the next several months.

Attorneys for FirstEnergy have not yet responded to allegations made in the lawsuits. FirstEnergy spokesperson Jennifer Young said the company does not comment on pending litigation.

Shareholder lawsuits rarely go to trial, Robbins said, with settlements funded by targeted companies and insurers who cover executives and corporate officers.

That’s what occurred in 2004, when FirstEnergy settled lawsuits for concealing the hole at its Davis-Besse Nuclear Power Station outside Toledo and for failing to adequately maintain its electric transmission system prior to the blackout that affected U.S. states and parts of Canada in August 2003.

A shareholder-class action was settled for $90 million, with insurers paying $72 million and FirstEnergy covering the balance. It settled derivative lawsuits later that year, with insurers paying $25 million to the company and FirstEnergy agreeing to reform its corporate structure.

Simon Peck, a business professor at Case Western Reserve University in Cleveland, said members of the board of the directors are supposed to be “a check on nefarious activities by insiders.”

“They are the guardians of the shareholders’ money,” Peck said. “I think it’s a legitimate question to ask how effective are these individuals in monitoring inside executives.”

Board members are elected by stockholders during annual meetings, which FirstEnergy held this year in May. FirstEnergy board members on average are paid around $250,000 in fees and stock options for a year’s service.

“If I was an angry stockholder, I would vote not to reelect board members,” Peck said.

FirstEnergy’s potential problems extend beyond the civil realm into the potential criminal.

The company is being investigated by the U.S. Justice Department, the U.S. Securities and Exchange Commission and the Ohio Secretary of State’s Office. It also has been sued by the Ohio Attorney General’s Office.

Some of the same board members being sued are conducting their own internal investigation.

FirstEnergy CEO Chuck Jones and two other executives were fired in late October, with the company saying they “violated certain FirstEnergy polices and its code of conduct” but not providing details. Two of its top attorneys were dismissed in November.

Beyond the firings, FirstEnergy reported in November in a quarterly earnings report that unnamed executives in early 2019 had improperly paid $4 million to end a consulting contract in place since 2013 with an unnamed individual.

The description in the filing matched Samuel Randazzo, then the chair of the powerful Public Utilities Commission of Ohio and the Ohio Power Siting Board. Randazzo resigned Nov. 20, four days after the FBI searched his Columbus home and the day after the FirstEnergy filing.

Randazzo did not return telephone messages seeking comment.