(CN) – A South Carolina federal judge refused to dismiss a shareholder derivative complaint against SCANA Corporation’s board of directors over the abandonment of two nuclear reactors that allegedly cost the company billions of dollars.
The company’s incomplete nuclear project has led to a number of lawsuits, some of which have been consolidated.
In one complaint, shareholders Colleen Witmer and Richard Wickstrom sued SCANA’s board of directors over the abandonment of two nuclear reactors at the V.C. Summer Nuclear Generating Stations.
SCANA is a holding company, and its main subsidiary is the South Carolina Electric & Gas Company.
After spending around $9 billion and almost a decade, SCANA announced last July that it was abandoning the nuclear project, blaming rising costs and the bankruptcy of a contractor.
This caused the company’s stock price to fall 3.43%, and led to a number of lawsuits and a state investigation.
The project was “grossly mismanaged,” Witmer and Wickstrom say in their complaint, and claim the board members hid information about the project from regulators and the general public.
They sued for breaches of fiduciary duty and unjust enrichment, and each of the board members moved to dismiss.
Senior U.S. District Judge Margaret Seymour refused to dismiss the action based on allegations regarding ten of the “demand directors,” who served on the board at the time Witmer and Wickstrom filed their action.
Those directors “consciously turned a blind eye to serious problems and failed to act,” according to Seymour’s characterization of the shareholders’ arguments.
Further, six of the ten directors were on an oversight committee, and “could not ignore the profound problems plaguing the project,” Seymour wrote in the 13-page order.
“The court concludes plaintiffs create a reasonable doubt that a majority of demand directors are disinterested and independent or that their decisions relating to the project were products of a valid exercise of business judgment,” the judge wrote, denying the motion to dismiss.
The defendants in the case are: Kevin N. Marsh, Gregory E. Aliff, James A. Bennett, John F.A.V. Cecil, Sharon A. Decker, D. Maybank Hagood, Lynne M. Miller, James W. Roquemore, Maceo K. Sloan, Alfredo Trujillo, Stephen A. Byrne, and Jimmy E. Addison.