Another Suit Seeks to Hold Verizon CEO Accountable for Concealing Toxic Lead Cables

The same attorney who previously helped bring shareholder derivative class actions against top AT&T and Verizon executives and board members for allegedly covering up their knowledge of abandoned toxic lead-laden telecom cables (see 2308020046) filed another suit Thursday (docket 3:24-cv-00063) in U.S. District Court for New Jersey in Trenton on behalf of Verizon shareholder Wade Sarver.

Sarver’s complaint names Verizon CEO Hans Vestberg, former Chief Financial Officer Matt Ellis and 15 current and former Verizon board members for their alleged “breaches of fiduciary duties, unjust enrichment, waste of corporate assets, and violations of federal securities laws.” Sarver is represented by Laurence Rosen of the Rosen Law Firm in Newark.

Sarver’s shareholder derivative action “stems from Verizon’s long-standing decision to leave toxic cable wires buried in the ground throughout the country,” and left abandoned on utility poles in many communities, said the complaint. Verizon’s misconduct “allowed these wires to contaminate ground water and pose potential health risks to those exposed to these wires,” it said.

At all relevant times, Verizon “kept this policy quiet,” concealing the existence of the toxic cables “from nearby residents as well as from investors in violation of its disclosure obligations and fiduciary duties,” said the complaint. Verizon is potentially exposed “to hundreds of millions of dollars, if not billions, in potential damages and liability” as a result of fines, penalties, remedial work, ongoing testing and “adverse government action,” it said.

Verizon filed multiple 10-Qs and 10-Ks with the SEC “attesting to the accuracy of its financial statements,” which are required to disclose any material changes to the company’s internal controls, plus any fraud committed by its officers or its directors, said the complaint: “These attestations failed to disclose the potential risks and exposure that would arise from Verizon’s policy to leave the toxic cables in the ground.”

Plaintiff Sarver didn’t make a demand on Verizon before bringing his action “because it would be futile,” said the complaint. Verizon’s directors “are neither disinterested nor independent,” it said. In the absence of Sarver’s action, the company “will neither recover its damages nor properly remediate the weaknesses in its internal controls and corporate governance practices and procedures,” it said.

The conduct of the individual defendants “involves a knowing and culpable violation of their obligations as directors and officers of Verizon,” said the complaint. They lacked “good faith,” and showed “a reckless disregard for their duties” to Verizon and its shareholders, it said. The individual defendants “were aware or should have been aware” that the existence of the toxic lead cable “posed a risk of serious injury” to the company, it said.

Various Verizon SEC filings, including its 2021 and 2022 proxy statements, were “false and misleading” because they omitted mention that “the known damage caused by the legacy copper cables” that Verizon “abandoned” underground and on utility poles were covered in lead, “a known neurotoxin,” said the complaint. The lead-laden cables “were harming and posed further risk of harm to the environment, Verizon employees, and the public,” it said.

Sarver’s seven-count complaint seeks an award of money damages against all the individual defendants. It also asks the court to order the defendants “to account for all damages caused by them,” plus all profits, special benefits and unjust enrichment “they have obtained as a result of their unlawful conduct.” Verizon didn’t comment Friday.