Plus, Illinois resident drops lawsuit against Deloitte Consulting, and PwC wants the city of Los Angeles to pay a price.
Deloitte Wants Investor’s Nuclear Energy Project Suit Tossed [Law360]
Deloitte doesn’t think it should have to face a lawsuit accusing the firm of issuing audit reports that misled investors on the progress SCANA Corp. was making on a nuclear energy expansion project that failed.
The lawsuit aims to connect Deloitte to utility company SCANA Corp.’s abandonment of its $9 billion nuclear power plant expansion and its messaging to investors—allegedly despite internal knowledge of delays—that the project was on target to receive $1.4 billion in federal tax credits.
The complaint seeks to represent a class of those that bought SCANA securities from February 2016 through December 20, 2017. It says Deloitte spent decades as SCANA’s auditor and was therefore required to intimately understand its business and statements. The complaint says Deloitte had information showing the project wouldn’t be done in time to take advantage of the tax credits.
Deloitte said investors made only thin allegations the accounting firm violated the Securities and Exchange Act. The only specific Deloitte actions targeted were two auditing statements the firm made about SCANA, and those statements can’t be supplemented “with irrelevant allegations” to keep the securities fraud claim alive, Deloitte argued in a motion to dismiss in South Carolina federal court on July 20.
Accounting giant KPMG asked a Tennessee federal judge again on July 27 to toss some claims in a class action suit against the company for allegedly helping now-defunct Miller Energy Resources Inc. falsify records of its oil and assets.
In its partial motion to dismiss, KPMG argued one of the Miller Energy investors who brought claims is time-barred and lacks standing to sue.
Investor Martin Ziesman’s Section 11 claim that KPMG made misleading or false statements came after he bought Miller Energy Series C preferred stock and should be dismissed because it’s untimely and prohibited by a three-year statute of repose, KPMG said.
While Ziesman bought the Series C preferred stock on June 4, 2014, the clock begins ticking on the three-year statute of repose on Sept. 18, 2012, when the shares were bona fide offered to the public, the accounting firm said.
Ziesman’s claim should also be dismissed because he lacks standing, KPMG argued, he didn’t buy his shares during any of the offerings at issue in the case and he isn’t a member of the class.
His claim under Section 10(b) should be dismissed because on Aug. 2, 2018, the court granted KPMG’s motion to dismiss that claim from the second amended complaint, “and the newly asserted claim is identical to the previously dismissed one,” the motion said.
In the Aug. 2, 2018, decision, the court found the scheme liability claim lacked validity as a matter of law and dismissed that claim for failure to state a claim upon which relief may be granted.
PwC Liable For Startup’s Misleading Audits, Investors Say [Law360]
Investors for a Chinese startup claimed in federal court on July 24 that PwC China deliberately ignored “red flags” by understating the company’s tax expenses and should be held accountable for its fraud.
PwC created audit reports on the startup, Gridsum Holding Inc., that were “materially false and misleading” to the point that the firm is culpable, the investors said Friday in a memo opposing PwC’s June motion to be dismissed from the case.
The investors’ 2018 suit alleges that Gridsum misled investors before its 2016 initial public offering, which raised $87.1 million.
Lead plaintiff Peifa Xu argued in a revised complaint in May that 28.4 million yuan ($4.1 million) in income tax expenses for 2016 should have been revealed in the company’s 2016 prospectus. Had the prospectus included that amount, it would have increased the company’s net losses by 47.8%, “making the company far less appealing to investors,” the complaint stated. The expenses were revealed only in a 2017 SEC filing.
Lawsuit against Deloitte abandoned [Herald & Review]
Briana Julius, a resident of St. Clair County in Illinois, recently dropped her federal lawsuit against Deloitte Consulting, which was contracted by the state to launch an unemployment claims portal she said was solely responsible for a data breach that made available the personal information of nearly 33,000 Illinoisans.
According to the lawsuit filed by Julius on June 8, at least three other states—Ohio, Colorado and Arkansas—also contracted Deloitte to construct similar portals. Within five days of notice that Illinois’ system was compromised, both Colorado and Ohio made announcements their portals had the same flaw.
She was suing on behalf of herself and all other Americans who might have been harmed, and she asked a judge to allow a jury trial.
Consulting firm accuses city of L.A. of concealing evidence in DWP billing case [Los Angeles Times]
And that consulting firm is P. Dubs:
PricewaterhouseCoopers is seeking at least $8 million from the city of Los Angeles over what it alleges were the city’s efforts to conceal documents and other evidence during legal proceedings, according to a new court filing.
L.A. sued PricewaterhouseCoopers several years ago over a new Department of Water and Power billing system, but dropped its lawsuit last fall.
Now, PricewaterhouseCoopers is asking the court to impose sanctions for what it calls the city’s “obstructionist discovery tactics,” including lying to the court and giving false deposition testimony, according to its motion filed [in early July].
The firm alleges “the city went far beyond the boundaries of legitimate adversarial conduct, consciously and persistently abusing the discovery process to hide its wrongdoing,” according to the filing.
California law allows courts to impose sanctions over discovery misconduct. A litigant who unsuccessfully asserts that another misused the discovery process can also face sanctions.