Verizon, Like AT&T, Is Sued for Allegedly Omitting Toxic-Lead Cable Disclosures

The same lawyer who filed the securities fraud class action Friday against AT&T over the carrier’s alleged failure to disclose that its telecom cables were covered with toxic lead (see 2307300002) took aim with a similar complaint Tuesday against Verizon, its CEO Hans Vestberg and Matt Ellis, who left his chief financial officer role May 1.

Plaintiff George Meehan, a Verizon shareholder, seeks to recover “compensable damages” on behalf of himself and a class of others who owned Verizon stock between February 4, 2020, and July 26, said his class action (docket 2:23-cv-01375) in U.S. District Court for Western Pennsylvania in Pittsburgh. Meehan’s complaint lists James Hockenberry, of the Law Office of Leon Aussprung in Philadelphia, as his liaison counsel. His additional counsel is Laurence Rosen, of The Rosen Law Firm in New York, who also represents shareholder John Brazinsky in the AT&T class action.

Verizon’s positive environmental-impact disclosures in its annual and quarterly reports for 2020, 2021, 2022 and into 2023 were “materially false and misleading,” alleged the complaint, because at the time the statements were made, Verizon owned cables that were “covered in toxic lead,” harming the environment “as well as employees and non-employees alike.” Verizon’s ownership of the cables “and failure to disclose their ownership of them to employees and others likely to be harmed by them,” constituted a threat to the company’s reputation and “ability to create business value,” it said.

As with the AT&T complaint, the Verizon class action references a series of Wall Street Journal articles documenting the proliferation in the U.S. of toxic-cable telecom cables owned by AT&T and Verizon. The release of each new installment in the WSJ series caused Verizon shares to fall modestly, including by as much as 2.1% July 27, said the complaint. Due to Verizon’s wrongful acts and omissions, and those of CEO Vestberg and Ellis, plus “the precipitous decline in the market value” of Verizon’s common shares, Meehan and his proposed class members “suffered significant losses and damages,” it said.

The market for Verizon’s stock “promptly digested current information” about the company “from all publicly available sources and reflected such information in the prices of the common units,” said the complaint. Meehan and the class “are entitled to a presumption of reliance upon the integrity of the market,” it said.

The complaint asserts one count of securities law violations against all the defendants and one against the individual defendants Vestberg and Ellis. In light of all the wrongdoing, alleges the class action, the market price of Verizon’s shares was “artificially inflated” during the class period between February 2020 and July 26. In “ignorance of the falsity” of the defendants’ statements, Meehan and the class relied on those statements and the integrity of the market price of Verizon’s shares when they bought the stock during the class period, it said.

Had Meehan and the class been aware the market price of Verizon’s shares “had been artificially and falsely inflated” by the defendants’ misleading statements and by “the material adverse information” the defendants didn’t disclose, they wouldn’t have bought the stock “at the artificially inflated prices that they did, or at all,” said the complaint. Verizon didn’t comment.