backOn November 12, 2024, United States District Court Judge Jacquelyn D. Austin of the District of South Carolina granted a motion filed by lead plaintiff International Brotherhood of Electrical Workers Local 98 Pension Fund (“IBEW”) to certify a class on behalf of itself and similarly situated investors in a lawsuit against Deloitte & Touche, LLP and Deloitte, LLP (“Deloitte”).
SCANA Corporation (“SCANA”), a utility company, received legislative approval to construct two nuclear reactors in 2007 (the “Nuclear Project”). Deloitte was SCANA’s external auditor. The complaint, first filed in 2019, alleges that Deloitte failed to warn SCANA investors of serious issues with the Nuclear Project. Plaintiffs allege, among other things, that SCANA and Deloitte understood that for the Nuclear Project to succeed, SCANA needed to obtain $1.4 billion in federal production tax credits and needed to raise energy rates on consumers to cover construction costs. To qualify for the tax credits and to be able to raise energy rates, the Nuclear Project needed to be operational by January 1, 2021.
Plaintiffs allege that Deloitte was aware that the Nuclear Project would not be in service by January 1, 2021. The complaint avers that a third-party analysis concluded that the earliest possible completion date was June 2022, and that Deloitte knew about the third-party’s findings. Plaintiffs further allege that Deloitte misled investors about the status of the Nuclear Project and, consequently, its financial statements.
Judge Austin found that the lead plaintiff, IBEW, met the requirements of a typical and adequate class representative, despite having purchased SCANA shares after partial corrective disclosures were made. The court noted that “[m]ultiple 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,'” and that IBEW alleges that it relied on Deloitte’s alleged material misrepresentations and omissions. Therefore, she found that IBEW’s interests and those of the putative class members align, certifying the class of investors who purchased SCANA stock between February 26, 2016 and December 20, 2017.
Judge Austin further approved plaintiffs’ choice of class counsel and liaison counsel, as well as the Class Period of February 26, 2016, and December 20, 2017. In the same order, Judge Austin denied a motion filed by Deloitte to exclude a damages-related expert opinion, finding that the expert opinion fulfilled the four requirements of Rule 702 by providing a reliable damages model consistent with IBEW’s liability case and that IBEW’s damages are attributable to that theory of liability.
The case is Intl. Bhd. of Elec. Workers Loc. 98 Pension Fund v. Deloitte & Touche LLP, No. 3:19-CV-03304-JDA (D.S.C. Nov. 12, 2024). The plaintiffs are represented by Cohen Milstein Sellers & Toll PLLC and Tinkler Law Firm LLC. Deloitte is represented by Milbank LLP and Moore & Van Allen PLLC. A copy of the order is attached here.