The Chemours Co. owes its investors hundreds of millions of dollars for concealing the true extent of its PFAS liabilities, according to a new class action filed in federal court by a pension fund for Boston electricians.
Exposure to perfluoroalkyl and polyfluoroalkyl substances is tied to a suite of health problems, including developmental complications in fetuses and young children, cancer, liver and thyroid complications, and reduced hormone and immune function.
Unsealed legal filings from the Delaware Chancery Court began to reveal that Chemours had significantly understated its potential environmental liabilities to shareholders, the Electrical Workers Pension Fund, Local 103, told the U.S. District Court for the District of Delaware in its Oct. 8 complaint.
E. I. du Pont de Nemours and Company spun off its performance chemicals division as the independent publicly traded Chemours Co. in 2015, a move the pension fund says was meant to shift as much PFAS liability from DuPont as possible.
DuPont has allegedly known about the links between PFAS exposure and health medical complications since the 1950s, and its own workers experienced liver damage and birth defects in the 1980s, according to the pension fund’s complaint. Yet news around the spin-off emphasized the “remote” chance Chemours would be saddled with unexpected PFAS costs and responsibilities, the pension fund says.
When the news broke in August 2019 that Chemours’ estimated liability tied to the use of perfluorooctanoic acid products like Teflon and firefighting foam was actually five times greater than what it had told investors and the SEC, Chemours shares tumbled 19% over the course of a single day, constituting a $560 million shareholder loss, the pension fund alleges.
Chemours purportedly told investors that it had accrued several hundred million dollars to prepare for PFAS lawsuits. But it wasn’t until the summer of 2019 that the public learned from the unsealed chancery court documents that Chemours actually estimates its potential PFAS liability at $2.5 billion, the pension fund says.
The proposed class period begins in February 2017, when Chemours discussed a $670 million PFAS settlement on an earnings call and company liability for future PFAS lawsuits, through August 2019, when Chemours’ 10-Q form disclosed “significant increases” in its PFAS liabilities and market analysts then downgraded the company’s ratings, the pension fund says.
The pension fund wants to represent all purchasers of Chemours’ publicly traded common stock between February 2017 and August 2019 at a trial to recover their losses.
Causes of Action: Securities Exchange Act.
Relief Requested: Class action certification, trial by jury, compensatory damages in an amount to be determined at trial, and further injunctive relief the court deems just and proper.
Response: Chemours didn’t immediately respond to a request for comment.
Attorneys: Bernstein Litowitz Berger & Grossmann LLP represents the pension fund.
The case is Elec. Workers Pension Fund, Local 103, I.B.E.W. v. The Chemours Co., D. Del., No. 19-cv-01911, complaint filed 10/8/19.