CINCINNATI (Legal Newsline) – An alleged $60 million bribe by power provider FirstEnergy will cost insurance companies $180 million.
Plaintiff lawyers pursuing derivative claims on behalf of the company against its former leadership unveiled a proposed settlement to Cincinnati federal judge Algenon Marbley on March 11 in a motion for preliminary approval. The agreement calls for $180 million, with lawyers at Bernstein Litowitz and Saxena White asking for fees of up to 27% - or $48.6 million.
FirstEnergy has already entered into a deferred prosecution agreement with criminal prosecutors and paid a $230 million penalty. The derivative settlement says insurers will pay $180 million to the company, while requiring six defendants to leave the board of directors. It also adds new duties for the new board like "actively" overseeing spending and lobbying activities.
“Plaintiffs achieved this result by vigorously prosecuting their claims on behalf of the Company for 18 months with a team of more than 30 attorneys,” plaintiffs lawyers wrote. “Plaintiffs prevailed on myriad contested motions and secured extensive discovery over the strenuous efforts and objections of all Defendants and the SLC, including a document production broader than that obtained by the DOJ prior to its entry into the DPA with FirstEnergy.
“Through those efforts, Plaintiffs developed considerable confidence in their ability to ultimately prevail at trial, but also identified significant risks associated with further litigation—including as to the recoverability of damages.”
FirstEnergy was accused of sending $60 million to then-Ohio House Speaker Larry Householder in exchange for legislation that would bail out the company’s failing nuclear power plants.
Litigation followed the FBI’s complaint against Householder and two FirstEnergy lobbyists.
Householder has pleaded not guilty to the alleged bribery scheme. It started in 2016, when FirstEnergy told investors it was seeking “legislative solutions” to the financial problems at two of its aging nuclear plants in Northern Ohio.
Householder was running for a House seat he previously held. He resigned in 2004 after bribery allegations arose. But his district’s voters picked him to retake the seat and he took office in 2017.
FirstEnergy flew Householder to D.C. for the presidential inauguration and allegedly began making quarterly payments of $250,000 to Householder’s PAC, Generation Now.
FirstEnergy and its subsidiaries put tens of millions of dollars into entities controlled by Generation Now as Householder mounted a campaign to be named House Speaker, it is alleged.
Once speaker, Householder helped HB6 get passed, which charged ratepayers a monthly surcharge. It was essentially a $1.3 billion bailout.
The FBI called it a “sophisticated criminal conspiracy to enact legislation.” Voters were given a ballot initiative to overturn the bailout, and First Energy spent $38 million to defeat it.