Trends in Recent Corporate Suit Filing


Lawsuits Filed in Regards to the Environment

As far as cases involving environmental affairs one of the most recent and first cases is in regards to the catastrophe in Brazil involving the mining dam. A plaintiff shareholder filed a suit in New York’s Southern District on the 24th of February, 2016. The suit filed was a  securities class action lawsuit and it was filed against BHP Billiton PLC, BHP Billiton Limited as well as various directors and officers involved.


Fifty Percent of the Brazilian based company Samarco was owned by BHP and the remaining fifty percent of the company belongs to Vale, SA. An event which has now been deemed the worst environmental catastrophe in the history of Brazil took place November 2015 at the Samarco mining location. A dam burst and tens of millions of cubic tons of water were released. This ended unfortunately the lives of at least thirteen individuals and countless injuries were reported.

On February 24th the plaintiffs lawyers release a complaint in which they state that the defendants of BHP and I quote “had knowledge of or recklessly ignored a hazardous mining operation and facility conditions located at the Samarco mine…materially false and fallacious statements were made in regards to the company’s dedication as well as implementation of safety guidelines and observation of said protocols at the mine sites”.

This latest lawsuit filed against BHP is one of the many security class action suits that has come out of the mine catastrophe at Samarco. Another plaintiff shareholders filed a securities class action suit against Vale, SA, the Brazilian company. Vale, SA owns the other half of the Samarco mine as well as some directors and officers located in New York’s Southern District. This lawsuit was filed the 7th of December, 2015.

Another recently filed suit which is also on the subject o f the environment and security related was filed by a shareholder plaintiff in California’s Southern District on the 29th of February, 2016 this one however was against Sempra Energy and  and a couple of its officers and directors.

SoCalGas (Sempra´s California Gas Company) is responsible for segment transmitting, distributing and storing of natural gas in Southern as well as Central California. SoCalGas discovered on the 23rd of October, 2015 that the company’s Aliso Canyon natural gas storage location which is close to the neighborhood of Porter Ranch in Los Angeles had a gas leak.

There were many complaints filed by residents of the area in which they reported strong smells of gas resulting in nausea, headaches and nosebleeds. Stopping the leak seemed to be difficult for SoCalGas. Relocated Porter Ranch residents filed a class action damages suit against SoCalGas on the 23rd of November, 2015. Local news reports informed that on the 18th of February, 2016 the leak was able to be permanently stopped.

The plaintiffs lawyers informed on the 29th of February, 2016 that the complaint filed stated that the defendants, and I quote “provided erroneous and/or fallacious assertions and/or did not inform that: (i) was not capable of immediately repairing any gas leaks which as a result caused risk to the residents; (ii) a dangerous gas leak is in fact a serious hazard to the health and safety of the public; and (iii) the end result of the aforementioned public statements made by the defendants were materially inaccurate and deceptive.

FCPA: Civil Actions Follow Related

My stance on the FCPA follow-on litigation is in regards to an already settled lawsuit not one which has recently been filed. This case involves the well known cosmetics company, AVON which directly involved its dealings in China. In May of 2014 the SEC and DOJ investigations of the company were resolved through a non-prosecution the company made with the government in which they accepted to pay the fines which all added up came out to one hundred and thirty five million dollars.

There had been a previous FCPA investigation of a securities class action suit which was settled for the amount of sixty two million dollars in September of 2015. On top of the securities class action lawsuits filed there was also a civil lawsuit which was filed in relation to the FCPA investigation of Avon.

An action was filed in December of 2014 directly related to the FCPA investigation, it was filed by the participants of Avon´s retirement plan and was against current and former Avon directors. The claimants stated that the defendants had not not protected the interests of the retirement plans participants as is required by ERISA.

The ERISA lawsuit professed that the before resolved enforcement actions, which allegedly had been resolved before filing the ERISA suit emerged due to Avon´s failure to take preventative action as well as investigate, re-mediate and  divulge the performance taken place at Avon´s Chinese subsidiary.

In ERISA´s complaint it states that the trustees of the plan permitted the company’s stock which of course included that of the retirement plan to trade in at artificially inflated prices. The complaint states that the participants of the retirement plan suffered monetarily due to the loss of millions of dollars directly from their retirement savings all because of the stock prices and their steady decline once charges of misconduct had surfaced.

The interesting aspect of this FCPA-related ERISA case is not only that it is representative of another civil litigation succeeding in the path of a FCPA investigation. It is also representative of a novelty in light of the type of lawsuit in question.

There have been endless shareholders derivative lawsuits as well as securities class action lawsuits that have been placed against corporations connected to and FCPA investigation however the above mentioned case against Avon is representative of the first time in which a corporation handling a FCPA investigation has at the same time dealt with an ERISA action.

The conclusion I take from this is that this case implies that the notion of a FCPA follow-on civil suit must be expanded in order to add on the chance of an ERISA lawsuit being filed by the participants of the retirement plan of the corporation being investigated.

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