FirstEnergy’s headquarters in Akron. Source: Google Maps.
BY: JAKE ZUCKERMAN – Ohio Capital Journal
In an unusual move in a high-profile lawsuit, a federal judge booted lawyers from a lawsuit they filed against FirstEnergy Corp. for their failure to “diligently prosecute” the case against the scandal-mired company.
U.S. District Judge John Adams said Wednesday he would appoint counsel on behalf of the shareholders who sued the company in connection with what federal prosecutors have called the largest bribery scandal in state history.
Both the shareholders and FirstEnergy publicly announced that they’d reached a settlement in March that called for insurers to pay the company $180 million and for the ouster of six board members. One federal judge preliminarily approved the settlement in May, but said he had no authority over the two other judges overseeing the related cases.
Adams has for months lambasted the plaintiffs for agreeing to settlements without deposing witnesses, reviewing evidence, and shirking other typical fact-finding efforts.
“As the parties have made clear that they do not intend to prosecute the matter before this Court, the Court will appoint counsel,” he said Wednesday. “Consistent with the Court’s authority to oversee this derivative action to its conclusion, the Court will appoint counsel that will be willing to diligently prosecute this matter and seek approval from this Court of any potential resolution, if one is reached.”
The lawsuit traces back to the 2019 passage of Ohio House Bill 6 — an energy policy overhaul worth about $1.3 billion to FirstEnergy. In 2020, federal prosecutors arrested then-Ohio House Speaker Larry Householder and accused him and four allies of secretly accepting about $60 million from FirstEnergy and using it for personal enrichment, political gain, and to engineer passage and enactment of HB 6.
Last summer, FirstEnergy Corp. admitted in federal court to the operation, also stating it paid Sam Randazzo, then Ohio’s top utility regulator, a $4.3 million bribe. FirstEnergy paid a $230 million penalty in connection with the filing and agreed to cooperate in related criminal investigations to possibly avert a federal charge of wire fraud.
Householder has pleaded innocent and awaits trial. Two of four alleged conspirators have pleaded guilty. One died by suicide. Randazzo has not been charged with a crime and denied wrongdoing.
FirstEnergy’s shareholders filed a derivative action against the company. This entails the shareholders suing the board of directors on behalf of a corporation for an alleged breach of duties, according to the Legal Information Institute at Cornell University. This allows shareholders to benefit as a derivative of the company’s corrective action.
Adams called on a clerk to post the order in the court’s “News & Announcements” page. Interested lawyers can write him to express interest by July 25.
His colorful outbursts have pockmarked the lawsuit. In the first hearing after the proposed settlement was announced, Adams demanded someone in the case answer a simple question: “Who paid the bribe?”
After repeated attempts went nowhere, Adams told a lawyer for the plaintiffs that the attorney was wasting his time. Adams then stormed from the bench, according to an Akron Beacon Journal report.
He later threatened to dismiss lawyers from the case if someone didn’t answer his question. An attorney for the plaintiffs later identified the alleged orchestrators of the bribery operation — two FirstEnergy executives — for the first time publicly.
Last week, he denied a request from both the company and its shareholders that he dismiss the case, which could have cleared the way for the settlement. He cited uncomplete exchange of evidence between parities, no testimony under oath from any defendants, and an incomplete forensic examination to identify “possible missing communications” from FirstEnergy CEO Charles Jones’ phone.
He also noted that of the $180 million, the settlement allows plaintiff’s lawyers to seek nearly $49 million in fees. Thus, he said it’s “hardly surprising” that they’d prefer the case handled by a judge who’s warmer to the settlement proposal.
Two attorneys representing the shareholders did not respond to inquiries.
A FirstEnergy spokeswoman declined to comment, citing pending litigation.
