On February 19, 2020, United States District Judge Gerald A. McHugh, the Judge overseeing Allegheny County Employees’ Retirement System, et al. v. Energy Transfer LP, et al., Case No. 2:20-cv-00200-GAM, in the U.S. District Court for the Eastern District of Pennsylvania, appointed Barrack, Rodos & Bacine clients, the Iowa Public Employees’ Retirement Plan and Denver Employees Retirement Plan, along with the Allegheny County Employees’ Retirement System, Employees’ Retirement System of the City of Baton Rouge and the Parish of East Baton Rouge, and IAM National Pension Fund, to serve as the Lead Plaintiffs in that securities case. In the same order, the Judge also appointed Barrack, Rodos & Bacine to serve as Co-Lead Counsel for the case.
On May 17, 2024, following court decisions upholding substantial portions of the claims asserted by Lead Plaintiffs and certifying the case to move forward as a class action, as well as the completion of all documentary, fact witness and expert discovery in the case (all of which are more fully described below), the Court issued an order directing Lead Plaintiffs to disseminate a Notice of Pendency of Class Action (the “Notice”) to potential class members. Click here for a copy of the Notice.
The Class certified by the Court consists of:
All persons who purchased or otherwise acquired common units of Energy Transfer LP between February 25, 2017, and November 11, 2019, inclusive (the “Class Period”).1 Excluded from the Class are: (i) Energy Transfer; (ii) any directors or officers of Energy Transfer during the Class Period and members of their immediate families; (iii) the subsidiaries, parents, and affiliates of Energy Transfer; (iv) any firm, trust, corporation, or other entity in which Energy Transfer has or had a controlling interest; and (v) the legal representatives, heirs, successors, and assigns of any such excluded party.
Barrack, Rodos & Bacine advises all potential Class members to review the Notice to learn about your rights in the class action. If you wish to request exclusion from the Class, you must submit a request for exclusion in accordance with the instructions in the Notice postmarked by July 16, 2024. In addition to the Notice, other case-related information can be found on the website that the Court-approved Notice Administrator, JND Legal Administration, established for the case, available here.
Case Background and Summary of Lead Plaintiffs’ Allegations
This is a securities class action against Energy Transfer LP and certain of its senior executives on behalf of investors in Energy Transfer common units between February 25, 2017 and November 11, 2019, inclusive.
Energy Transfer is a Dallas, Texas-based natural gas and energy transportation and storage company. Its projects include the Mariner East pipeline, a multibillion-dollar, 350-mile pipeline that carries highly volatile natural gas liquid from the Marcellus and Utica Shale areas in western Pennsylvania, West Virginia, and Eastern Ohio to destinations in Pennsylvania. On February 13, 2017, Energy Transfer obtained approval from the Pennsylvania Department of Environmental Protection (“PaDEP”) to construct an expansion of the Mariner East pipeline, referred to as Mariner East 2 (“ME2”).
Throughout the Class Period, defendants repeatedly assured investors that Energy Transfer had properly obtained valid permits to begin construction on ME2. In addition, Energy Transfer repeatedly touted that that ME2 would have an initial capacity of 275,000 barrels of natural gas liquids per day, with an “upside” capacity of up to 450,000 barrels per day. Unbeknownst to the investing public, however, Energy Transfer decided to bring ME2 into service using. in one area, an existing 12-inch pipeline which was nearly 100 years old, along with the Mariner East 2 pipe, in order to place Mariner East 2 in service by the end of 2018. The use of this 12-inch pipeline would result in ME2’s initial capacity being far smaller than 275,000 barrels of natural gas per day. However, Defendants continued to tell the investing public that ME2 would have an initial capacity of 275,000 barrels of natural gas liquids per day with an “upside” capacity of up to 450,000 barrels per day. Lead Plaintiffs further allege that defendants made false and misleading statements about the schedule for ME2’s completion and about Energy Transfer’s claim that it was giving priority to safety and compliance with all of the requirements of Pennsylvania law and to the permits for the pipeline projects.
Lead Plaintiffs allege that the truth began to be revealed when Energy Transfer discussed the use of the 12-inch line during its August 9, 2018, earnings conference call and analysts, after following up with Energy Transfer executives after the call, issued reports on August 10, 2018, that revealed the reduction in initial capacity due to the use of the 12-inch line. Energy Transfer’s unit price declined significantly in response, causing severe investor losses. Then, on October 21, 2018, the Pittsburgh Post-Gazette published two news stories that detailed new information concerning, among other things, geological challenges for ME2’s construction and Energy Transfer’s lack of candor with PaDEP concerning construction risks. Energy Transfer’s unit price also declined significantly after these revelations. Finally, on November 12, 2019, the Associated Press published an article, “FBI Eyes How Pennsylvania Approved Pipeline,” which cited interviews with current and former state employees who reported that Energy Transfer’s Mariner East pipeline project was under investigation by the FBI, and that the investigation “involves the permitting of the pipeline, whether [Pennsylvania Governor Tom] Wolf and his administration forced environmental protection staff to approve construction permits and whether Wolf or his administration received anything in return,” and the Philadelphia Inquirer also reported on the investigation. On this news, the price of Energy Transfer’s common units fell sharply, which caused significant losses to Energy Transfer investors, including members of the Class.
Summary of the Litigation
Lead Plaintiffs, through the efforts of Co-Lead Counsel, researched and filed their Amended Complaint on June 15, 2020. On April 6, 2021, the Court issued an Opinion and Order denying in large part the defendants’ motion to dismiss, and leaving the vast majority of Lead Plaintiffs’ claims in place. The parties then proceeded to discovery.
On September 17, 2021, Lead Plaintiffs filed their opening brief in support of their motion for class certification. Defendants filed their opposition to the class certification motion on March 1, 2022, and Lead Plaintiffs filed a reply in further support the motion on April 22, 2022. Defendants filed a sur-reply in further opposition to class certification on May 6, 2022 and Lead Plaintiffs filed a responsive brief on May 27, 2022. The Court heard oral argument on class certification on July 8, 2022. On August 23, 2022, the Court granted Lead Plaintiffs’ Motion for Class Certification, certifying a Class Period from February 25, 2017 to November 11, 2019.
On September 6, 2022, defendants submitted a Petition for Permission to Appeal the Class Certification Order, under Federal Rule of Civil Procedure 23(f). Under Rule 23(f), such appeals are discretionary and must concern important and unsettled issues of law related to class actions. On September 30, 2022, Lead Plaintiffs filed an opposition to defendants’ Rule 23(f) petition and on October 24, 2022, the Third Circuit denied defendants’ petition to appeal.
Defendants were scheduled to substantially complete document production in response to Lead Plaintiffs’ First Set of Requests for Production of Documents by May 13, 2022, and the parties continued to engage in discovery. On November 30, 2022, the Court granted in part and denied in part Lead Plaintiffs’ Motion to Compel Defendants’ Production of Documents and Communications Concerning Related Investigations and Litigations. The Court ordered defendants to produce four categories of certain previously produced materials by December 30, 2022.
On December 7, 2022, the Court approved the parties’ stipulation regarding fact and expert depositions and discovery deadlines, extending, among others, the deadline to complete non-expert depositions to May 31, 2023; the deadline to serve opening expert reports and the disclosures required under Rule 26 to June 30, 2023; and the deadline to take expert depositions to October 13, 2023.
On April 20, 2023, Lead Plaintiffs filed a motion to compel defendants’ production of responsive documents from two additional custodians, as well as text message communications. On May 19, the Court granted Lead Plaintiffs’ motion and extended the deadline to complete fact discovery to July 14, 2023. In response, on June 16, defendants filed a motion to compel Lead Plaintiffs’ production of text message communications. Then, on July 7, 2023, defendants moved to quash Lead Plaintiffs’ subpoenas for certain non-party depositions. On July 18, Lead Plaintiffs opposed defendants’ motion to quash. On July 19, 2023, the Court denied defendants’ motion to compel Lead Plaintiffs’ production of text message communications and granted defendants’ motion to quash.
On September 15, 2023, Lead Plaintiffs served their opening expert reports, which included reports from Chad Coffman (concerning loss causation and damages), Edward Ziegler (concerning pipeline construction issues), and Mark Gallagher (concerning water quality and safety issues). Defendants served rebuttal expert reports on November 10, 2023, and the expert deposition period concluded on December 22, 2023.
On January 19, 2024, Lead Plaintiffs moved for partial summary judgment on falsity and scienter for certain of defendants’ alleged misrepresentations, while defendants moved for summary judgment on falsity, scienter, and loss causation for all of the alleged misrepresentations. Briefing on both motions was completed on March 29, 2024, and the parties’ motions are pending before the Court.
1 Before October 19, 2018, Energy Transfer LP was known as Energy Transfer Equity, L.P. and its common unit ticker symbol was ETE. On October 19, 2018, Energy Transfer Equity, L.P. changed its name to Energy Transfer LP and changed its common unit ticker symbol to ET.