Class Certification Granted After Botched Power Plant Construction Cost Shareholders $1B
Southern Co. and its subsidiary Mississippi Power had allegedly claimed the "clean coal" power plant was on track, before suddenly saying they would not meet a $2.8 billion budget.
August 23, 2019 at 03:34 PM
2 minute read
Southern Co., Atlanta. (Photo: John Disney/ALM)
A federal judge in Atlanta granted class status Thursday to Southern Co. shareholders suing for more than $1 billion in stock losses related to a failed "clean coal" plant in Mississippi.
Designed to be a "coal gasification" plant, the project was originally slated to cost about $2.4 billion and go online in 2014. Instead, it ballooned into a $7.5 billion money pit, and Mississippi regulators ordered that it be converted to a natural gas facility in 2017.
Southern Co. and its subsidiary, Mississippi Power, had maintained the plant was on time and on budget until October 2013, when they revealed it would not meet a $2.8 billion budget cap.
According to the complaint filed in the U.S. District Court for the Northern District of Georgia in June 2017, the value of Southern Co. stock fell by more than $1.3 billion in two days after the revelation.
The suit was filed on behalf of the Monroe County Employees' Retirement System and Roofers Local No. 149, and named Southern Co., CEO Thomas Fanning and other top officials and directors "who made materially false and misleading statements" that artificially inflated the stock prices.
Southern Co. had sought the suit's dismissal, but on Thursday Judge William Ray II certified a class of "All persons who purchased or otherwise acquired The Southern Company common stock between April 25, 2012, and October 30, 2013," and suffered losses.
The suit was filed by John Herman, who was then a partner with Robbins Geller Rudman & Dowd in Atlanta, and San Diego partners Daniel Drosman and Darryl Alvarado.
Herman, now with Herman Jones, said he could not comment on the case.
Southern Co. is represented by lawyers with Jones Day in Atlanta, and Latham & Watkins in Washington, D.C. They did not immediately respond to a request for comment.
A Southern Co. spokesman declined to comment.
In May, Southern Co. announced that Mississippi Power was the subject of a Department of Justice investigation related to the power plant.
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