2 shareholders file class action lawsuits against Duke Energy

by: Linzi Sheldon Updated:

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CHARLOTTE, N.C. —

Two former Progress Energy shareholders, who now own Duke stock because of the companies' merger, have filed federal class action lawsuits against Duke Energy.

They stem from the quick CEO switch that happened just after Duke and Progress Energy merged.

Like regulators, shareholders were told that Progress's CEO Bill Johnson would lead the newly merged company.           

Instead, the new board immediately asked him to step down, replacing him with Duke CEO Jim Rogers.

In hearings earlier this month, Rogers revealed that Duke board members contacted him on June 23 regarding their concerns about Johnson and asked him the following night if he'd be willing to replace him.

Rogers said he agreed, but both he and Duke board members did not relay the information to commissioners, who gave their final approval on the merger June 29.

One lawsuit filed by shareholder Maurine Nieman called the merger documents filed by Duke "inaccurate and misleading."

Another lawsuit, from shareholder James Craig, accused Duke and Rogers of having "engaged in acts, practices, and a course of business which operated as a fraud and deceit upon the purchasers of the company's common stock."

Last week, the Chairman of the North Carolina Utilities Commission, Ed Finley, hinted at possibly forcing Rogers out and putting Johnson back in.

The commission does have the ability of altering or modifying a merger or rescinding their approval.

Jim Hester, a Duke customer who owns Duke stock and also owned Progress Energy stock before the merger, said he supports bringing back Johnson or bringing in someone else.

"Put somebody else in there that's not involved in the politics of it," he said.

But UNC Charlotte economics professor Dr. Peter Schwarz said an outsider may not be able to guarantee the $650 million in savings promised to rate payers in this merger.

"How that person's going to carry out those plans... some of the cost savings, maybe all.. maybe more than all are going to be lost in that transition," he said.

Schwarz said the best plan for ratepayers, shareholders, and the company is Duke coming to a quick settlement with the Commission.

Legal experts, like Professor Jim Cox of Duke University, said if commissioners tried to appoint a new CEO, he believes there would be too much pushback from Duke and the entire business community for it to work.