Earlier this week (here), I noted the securities class action lawsuit that a plaintiff shareholder filed against AT&T in the wake of the Wall Street Journal’s series of articles about the network of lead telephone cables in the U.S. Now, another plaintiff has initiated a separate but parallel lawsuit against Verizon. This latest lawsuit, which was filed by the same plaintiff law firm as filed the AT&T lawsuit, alleges that Verizon was aware of but failed to disclose to investors the risks and hazards the company faced owing to its ownership of the lead telephone cables. A copy of the August 1, 2023, complaint against Verizon can be found here.
Beginning with a July 9, 2023 article entitled “America is Wrapped in Miles of Toxic Lead Cables” (here), the Wall Street Journal has published a series of articles raising the alarm about the continued presence of lead telephone cables throughout the U.S. Among other things in the wake of the series of articles, several government agencies have launched investigations concerning the cables. The telecom companies specifically named in he articles included Verizon.
In an August 1, 2023, complaint filed in the Western District of Pennsylvania that names as defendants both Verizon and certain of its directors and officers, a plaintiff shareholder alleges that the defendants were aware of the health and safety threats that the lead telephone cables represent for employees and for the residents of the communities where the cables are located but failed to disclose the threats to investors. The complaint purports to be filed on behalf of investors who purchased the company’s securities between February 4, 2020, and July 26, 2023.
The complaint alleges that during the class period, the defendants failed to disclose that: “(1) Verizon owns cables around the country that are highly toxic due to being wrapped in lead, and which harm Company employees and non-employees alike; (2) it faced potentially significant litigation risk, regulatory risk, and reputational harm as a result of its ownership of these lead cables and the health risks stemming from their presence around the United States; (3) it was warned about the damage and risks presented by these cables but did not disclose that they posed a threat to employee safety, to everyday people, and communities around the country; and (4) as a result, Defendants’ statements about its business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.”
The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Journal series about the lead telephone cables has now spawned at least two securities class action lawsuits — this latest lawsuit against Verizon and the earlier one against AT&T. The obvious question is whether there may be more lawsuits to come.
The Journal articles refers by name to AT&T and Verizon, but generally otherwise refers only to “other telecom giants.” The lead cable network itself seems to be a vestigial relic of the old pre-break-up American Telephone and Telegraph company, so other current telecom companies that are remnants of the pre-break up company would seem to be potential candidates for further lawsuits. In any event, other companies whose share prices dropped following the publication of the Journal articles included Frontier Group Holdings (ULCC); Lumen Technologies (LUMN); and Consolidated Communications Holdings (CNSL).
It is an interesting question whether other companies could get dragged into securities litigation in the wake of the Journal articles. The thing is that the Journal articles really focused on AT&T and Verizon, other companies were not really mentioned by name. The pathway to a potential lawsuit against another company arguably is not nearly as clear as was the case for AT&T and Verizon.
At least one plaintiffs’ law firm seems to see the potential for securities suits derived from the allegations that the Journal articles raised – the same plaintiffs’ firm (The Rosen Law Firm) filed the lawsuits against AT&T and Verizon. Whether or not there will be other securities suits arising out of the Journal’s lead telephone cable exposé may depend on whether that same law firm sees the potential for targeting other telecom companies based on similar allegations, even if the other companies were not mentioned by name in the Journal articles.