Pomerantz to Serve as Lead Counsel in Shareholder Suit Relating to Maui Fires

Last week, Judge Jacqueline Scott Corley of the United States District Court for the Northern District of California named Pomerantz as sole lead counsel in a securities class action against Hawaiian Electric Industries Inc. The case concerns the utility company’s conduct leading up to the deadly fires that broke out in Maui earlier this year.

In August of 2023, the nation watched in horror as a series of devastating fires ravaged the island of Maui. By the time it was over, more than 100 people had been killed and the island had suffered nearly $5.6 billion in damage. In the days following the outbreak of the fires, videos surfaced that appeared to show downed power lines owned by Hawaiian Electric setting off some of the fires. Other reports claimed that the company had long known about the threat posed by wildfires but failed to take steps to manage the risk or maintain a plan to turn off the power if a fire did occur. This information was never disclosed to investors. The complaint alleges that these omissions led to a precipitous decline in Hawaiian Electric’s share price, which closed at $38 a share the day before the fire broke out and fell to $12 a share three days later.

In being appointed Lead Counsel in this matter, Pomerantz navigated a series of challenges. Initially, Pomerantz proposed a tripartite Lead Counsel structure along with two other firms that represented competing movants. When the judge signaled her intention to appoint a sole Lead Plaintiff, the three firms each argued their case, with Pomerantz representing Daniel Warren, the movant with the second-largest losses. The movant with the largest losses, Phu Tran, had purchased shares over an unusual timeline, first buying shares in Hawaiian Electric two days after the first reports detailing the company’s deficient safety procedures, and selling nearly all his shares one day later. Pomerantz successfully argued that this made Tran an atypical plaintiff and would expose him to unique defenses that would not be representative of the class. The other competing movant was the City of Pontiac Reestablished General Employees’ Retirement system, which argued that, as the sole institutional investor they should be appointed in accordance with the intent of the PSLRA to favor institutional Lead Plaintiffs. Finally, an additional movant, Mark Williams, argued that because Warren, Phu Tran, and the City of Pontiac had all entered into an agreement to propose a tripartite Lead Plaintiff structure, this constituted “attorney-driven behavior”, and Williams should instead take the lead role. In the end, Judge Corley upheld Pomerantz’s argument that Warren should serve as Lead Plaintiff, having suffered the largest losses among the plaintiffs who were not subject to atypical defenses.