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Case Status:    DISMISSED    
On or around 12/20/2004 (Other)

Filing Date: May 23, 2002

According to the Company’s FORM 10-K for the fiscal year ended December 31, 2004, by late 2003, the two federal courts had dismissed all 17 lawsuits. Plaintiffs in the New York cases appealed the dismissal order to the U.S. Second Circuit Court of Appeals. On November 15, 2004, appellate court affirmed the trial court’s dismissal of the New York cases.

As previously reported by the Company’s FORM 10-Q For Quarter Ended September 30, 2003, since April 2002, 17 shareholder class-action lawsuits have been filed against Duke Energy: 13 in the United States District Court for the Southern District of New York and four in the United States District Court for the Western District of North Carolina. The class-action lawsuits and the threatened shareholder derivative claims arise out of allegations that Duke Energy improperly engaged in “round trip” trades which resulted in an alleged overstatement of revenues over a three-year period. The plaintiffs seek recovery of an unstated amount of compensatory damages, attorneys’ fees and costs for alleged violations of securities laws. The 13 lawsuits pending in New York were consolidated into one action and included as co-defendants Duke Energy executives and two investment banking firms. In December 2002, the New York court granted in all respects the defendants’ motion to dismiss the plaintiffs’ claims. On September 17, 2003, the New York court issued a written opinion indicating that the court’s prior ruling constitutes a dismissal with prejudice, such that the plaintiffs are not allowed to re-plead their case. Plaintiffs have appealed this dismissal order to the Second Circuit United States Court of Appeals.The four lawsuits pending in North Carolina name as co-defendants Duke Energy executives. Two of the four North Carolina suits were consolidated. This consolidated case involved claims under the Employee Retirement Income and Security Act relating to Duke Energy’s Retirement Savings Plan. This consolidated action named Duke Energy board members as co-defendants. In late June 2003, the federal court in North Carolina dismissed with prejudice the consolidated ERISA-based action. The plaintiffs initially appealed the dismissal, but later dismissed the appeal. All but two of the original 17 shareholder suits now have been dismissed. Plaintiffs have agreed to dismiss the remaining two cases and a stipulation seeking this dismissal has been filed with the North Carolina federal court. In addition, Duke Energy has received three shareholder derivative notices demanding that it commence litigation against named executives and directors of Duke Energy for alleged breaches of fiduciary duties and insider trading. Duke Energy’s response to the derivative demands is not required until 90 days after receipt of written notice requesting a response. No request for a response has been received to date.

The original complaint alleges that Duke failed to disclose that it was engaging in electricity trades involving simultaneous purchases and sales of power at the same price, overstated Duke's revenues in its public SEC filings and elsewhere by including in such revenues sums received in connection with such simultaneous purchases and sales of power, and failed to disclose that Duke did not have in place sufficient management controls to prevent Duke's traders from engaging in simultaneous purchases and sales of power at the same price. The complaint further alleges that Deloitte & Touche violated the common law by certifying Duke's financial statements and by allowing its unqualified opinion to be incorporated by reference into Duke's filings with the SEC despite the fact that such financial statements and filings were materially misleading in that they materially overstated Duke's revenues by counting as revenue sums received in connection with simultaneous purchases and sales of power at the same price. After the foregoing became known to the public, the complaint alleges, Duke stock tumbled to as low as $32.89 on May 21, 2002, down from a class period high of $47.74.

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