ALL EYES are on the lawsuit that SCANA filed against the S.C. Public Service Commission earlier this month, seeking to overturn the law that temporarily reduces the nuclear surcharge for the reactors that SCE&G abandoned mid-construction. A federal judge has set a hearing for Monday and Tuesday on the utility’s request for a temporary injunction.
Regardless of the outcome, we’re only at the very start of the litigation over the V.C. Summer nuclear plant.
At least 19 lawsuits have been filed against SCANA over its decision, a year ago next week, to abandon the nuclear construction project and keep collecting the costs on our power bills. Four of them have been consolidated into other cases or dropped, and a few have been moved to different courts.
But none has been resolved — or even gotten close to trial.
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Judges haven’t even agreed which if any of them will go forward as class-action suits.
As of the end of March, SCANA reported in its most recent update filed with the Securities and Exchange Commission, the utility faces:
▪ Four ratepayer class-action lawsuits in state court and two in federal court.
▪ Two shareholder class-action lawsuits in state court and two in federal court.
▪ Three federal lawsuits that seek to block the merger with Dominion Energy.
▪ One federal lawsuit from workers who were laid off when the construction project was canceled.
▪ A lawsuit by Fairfield County alleging that SCE&G violated its fee in lieu of taxes agreement that had granted the company a huge break on property taxes; the county made significant spending plans as a result of that agreement.
Additionally, federal and state criminal investigations are underway, as well as an audit by the S.C. Department of Revenue.
And, of course, there’s the Public Service Commission, which is considering the Dominion-SCE&G proposal to keep collecting the nuclear surcharge, although at a declining rate, for the next 20 years, along with petitions from environmental groups and others to end the surcharge and, in some cases, claw back the $2 billion that ratepayers already paid for the abandoned construction project.
What’s below is information on the litigation from SCANA’s first-quarter report on its financial situation. I’ve deleted the narrative about cases that have been consolidated with other cases and eliminated some of the detail for (relative) brevity. You can find the full report here. Just search for “legal proceedings.”
Ratepayer class-action lawsuits
LeBrian Cleckley filed suit on Aug. 11, 2017 in state Circuit Court in Richland County alleging that SCE&G was negligent and unjustly enriched and breached fiduciary and contractual duties by failing to properly manage the nuclear project. The plaintiff seeks class-action status to recover unspecified damages and specific performance of the alleged implied contract to construct the now abandoned project.
On Oct. 31, 2017, the state Supreme Court consolidated all state court ratepayer class actions and assigned the consolidated cases to Circuit Court Judge John Hayes.
On March 2, Judge Hayes denied SCE&G’s motion to dismiss the cases, ruling that the court does have subject matter jurisdiction to determine plaintiffs’ claims, that the filed rate doctrine does not bar plaintiffs’ claims and that the Circuit Court has concurrent jurisdiction with the Public Service Commission on issues raised in the complaint. On March 8, SCE&G received an order that its appeal of this decision was dismissed by the S.C. Court of Appeals. On March 12, the Circuit Court judge indicated that discovery could proceed. At March 31, plaintiff’s Nov. 1 motions for class certification and to appoint a receiver were pending.
Richard Lightsey filed suit on Aug. 14, 2017, in Circuit Court in Hampton County, making similar allegations as the Cleckley suit and alleging that SCE&G committed unfair trade practices and violated state anti-trust laws. He seeks a declaratory judgment that SCE&G may not charge customers for any past or continuing costs of the nuclear project. On Aug. 25, 2017, SCE&G filed a motion to transfer venue to Lexington County.
Edwinda Goodman filed suit on Aug. 28, 2017 in Circuit Court in Fairfield County, making similar allegations as the Cleckley lawsuit and alleging that SCE&G committed fraud and misrepresentation in failing to properly manage the nuclear project. She seeks to have the defendants’ assets frozen and all monies recovered from Toshiba and other sources placed in a constructive trust for the benefit of ratepayers.
Jessica Cook filed suit against against Santee Cooper, SCE&G, Palmetto Electric Cooperative and Central Electric Power Cooperative on Sept. 7, 2017, making similar allegations as the Cleckley suit and seeking a declaratory judgment that defendants may not charge the class for reimbursement for past or future costs of the nuclear project.
Christine Delmater, filed suit on Sept. 25, 2017, in federal District Court, alleging that SCE&G violated provisions of RICO 18 U.S.C. §1961, was negligent, breached alleged contractual duties and was unjustly enriched by failing to properly manage the nuclear project. The suit seeks compensatory and consequential damages.
Timothy Glibowski, filed suit on Sept. 25, 2017, in federal District Court alleging that SCANA, SCE&G, Kevin Marsh, Jimmy Addison, Stephen Byrne, Martin Phalen, Mark Cannon, Russell Harris, Jeffrey B. Archer, Sarena Burch, W. Keller Kissam, Ronald T. Lindsay, and James Micali participated in an unlawful racketeering enterprise in violation of RICO and conspired to violate RICO by fraudulently inflating utility bills to generate unlawful proceeds. Plaintiff seeks treble damages.
John Crangle filed a shareholder derivative lawsuit on Sept. 26, 2017, in Richland County Circuit Court against SCANA officials Kevin Marsh, Gregory Aliff, James Bennett, John Cecil, Sharon Decker, Maybank Hagood, Lynne Miller, James Roquemore, Maceo Sloan, Alfredo Trujillo, Jimmy Addison, Stephen Byrne, alleging that they breached their fiduciary duties to shareholders by their gross mismanagement of the nuclear project, and that the defendants Marsh, Addison, and Byrne were unjustly enriched by bonuses they were paid in connection with the project. He seeks compensatory and consequential damages. Defendants filed a motion to consolidate this case with a lawsuit filed by R. Wayne Todd and to transfer it to the Richland County Business Court, which was approved on Jan. 8. On March 5, the defendants’ motion to stay these shareholder derivative actions pending the resolution of related regulatory proceedings, ratepayer class actions, securities class actions and government investigations was denied.
Robert L. Norman, filed suit against top SCANA executives on Sept. 27, 2017, alleging that they violated §10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and that they are liable under §20(a) of the Exchange Act. The plaintiff seeks compensatory and consequential damages. On Jan. 18, the federal District Court consolidated this case with lawsuits filed by Kenneth Evans, Marsha Fox and the West Palm Beach Firefighters’ Pension Fund.
Colleen Witmer filed suit against SCANA officials on Nov. 21, 2017, in federal District Court alleging that they violated their fiduciary duties to shareholders by disseminating false and misleading information about the nuclear project, failing to maintain proper internal controls, failing to properly oversee and manage the company, and that the individual defendants were unjustly enriched in their compensation. The suit seeks compensatory and consequential damages, disgorgement of compensation and punitive damages. On Jan. 18, the federal District Court consolidated this case with a lawsuit filed by Richard Wickstrom.
Firemen’s Retirement System of St. Louis filed suit against SCANA officials on Dec. 13, 2017, in Richland County Circuit Court, making similar allegations as the Crangle and Todd lawsuits. On Jan. 8, the court consolidated the case with the Crangle lawsuit. On Jan. 12, the suit was amended to add Dominion Energy and Sedona as defendants and to assert class-action claims alleging that the defendants violated their fiduciary duties to shareholders by executing a merger agreement that unfairly deprived plaintiffs of the true value of their SCANA stock, and that Dominion Energy and Sedona aided and abetted these actions. The plaintiff seeks to enjoin defendants from finalizing and consummating the proposed merger and seeks compensatory and consequential damages, injunctive relief and restitution. On Feb. 21, Dominion Energy removed the case to federal District Court; plaintiff filed its motion for remand on March 2, 2018.
On Nov. 29, 2017, Fairfield County filed suit in Circuit Court in Fairfield County, alleging breach of contract, fraud, negligent misrepresentation, breach of fiduciary duty, breach of the implied duty of good faith and fair dealing and unfair trade practices related to SCE&G’s termination of its fee-in-lieu-of taxes agreement. The county seeks a permanent injunction to prevent SCE&G from terminating the agreement, actual and consequential damages and treble damages. The court heard SCE&G’s motion to transfer venue on Feb. 8.
The City of Warren Police and Fire Retirement System filed suit on Jan. 23 against SCANA, Dominion and SCANA officials in Circuit Court in Lexington County alleging that they violated their fiduciary duties to shareholders by executing a merger agreement that would unfairly deprive plaintiffs of the true value of their SCANA stock, and that Dominion Energy and Sedona aided and abetted these actions. The suit seeks to enjoin and/or rescind the proposed merger. A similar suit was filed in Richland County on Feb. 8 by Metzler Asset Management GmbH and Joseph Heinz. On Feb. 21, Dominion removed both cases to federal District Court.
Mary Turner, filed suit against SCANA, Dominion and SCANA officials on March 15 in federal District Court, alleging that the defendants violated provisions of Section 14(a) of the Exchange Act and SEC Rule 14a-9 by allowing or causing misleading proxy statements to be issued. The plaintiffs alternatively seek to enjoin the merger or monetary damages.
Employment class action
Harry Pennington III and Timothy Lorenz filed suit against SCANA, SCE&G, Fluor and Fluor Enterprises on Aug. 8, 2017, in federal District Court, alleging that they violated the federal Worker Adjustment and Retraining Notification Act in connection with the decision to stop construction on the nuclear project. They allege that the defendants failed to provide adequate advance written notice of their terminations of employment.
(NOTE: The following information is from SCANA’s annual report. Search for “legal proceedings.”)
In September 2017, SCANA was served with a subpoena issued by the U.S. Attorney’s Office and the staff of the Securities and Exchange Commission’s division of enforcement seeking documents relating to the nuclear project. Also in September 2017, top state officials asked SLED to conduct a criminal investigation into the project.
On Jan. 26, the S.C. Department of Revenue notified SCANA that it was initiating an audit of SCE&G’s sales and use tax returns for the periods Sept. 1, 2008, through Dec. 31, 2017. SCANA understands that DOR believes the exemption for sales and use tax for purchases related to the nuclear project should not apply because Unit 2 and Unit 3 will not be placed into service and no electricity will be manufactured for sale.
Here are some other pieces I’ve written about this that you might find useful:
Ms. Scoppe writes editorials and columns for The State. Reach her at email@example.com or (803) 771-8571 or follow her on Twitter or like her on Facebook @CindiScoppe.