A securities-fraud lawsuit brought by shareholders against current and former officials of Owens Corning has been dismissed by a federal judge in Toledo, Ohio, two years after its inception.
Judge Da…
A securities-fraud lawsuit brought by shareholders against current and former officials of Owens Corning has been dismissed by a federal judge in Toledo, Ohio, two years after its inception. Judge David Katz ruled that the suit, which sought class-action status and was instigated by national law firms that specialize in securities litigation, is barred by the statute of limitations. The shareholders alleged that retired Chief Executive Officer Glen Hiner and others concealed Owens Corning“s poor financial state from investors in the months before the filing for Chapter 11 bankruptcy on 5 October 2000. However, the suit is only one of three filed across the country against Mr. Hiner and certain other executives and board members. A four-year-old lawsuit by disgruntled bond-holders is pending in Boston while in state court in New York, a similar action by firms holding Owen Corning bank debt has been put on hold by the Delaware judge overseeing the bankruptcy case. The aim of such securities lawsuits, which have become commonplace when a company goes bankrupt, is to access rich insurance policies that firms take out on directors and officers, according to legal experts. The plaintiffs, who bought shares between 20 September 1999, and the October 2000 bankruptcy filing, argued that they were misled about the success of a program set up by the company in 1998 to manage its multibillion-dollar asbestos liability. In filing for Chapter 11, the firm cited an inability to keep up with claims payments. Judge Katz, of US District Court in Toledo, did not address the substance of the allegations but rather accepted defense arguments that the plaintiffs had not filed within the allowed time. In the early March 2005 ruling, Mr. Katz said shareholders had one year from the discovery of the alleged fraud, or until late 2001, to file suit. Passage of the Sarbanes-Oxley bill extended the time to two years. But in waiting until 2003, the action was still too late, he said. In written arguments, plaintiffs tried to overcome the statute of limitations obstacle by saying that they did not learn of the alleged fraud until evidence emerged much later in Owens Corning“s bankruptcy case. However Judge Katz said that there were plenty of “storm warnings” in 2000, and the plaintiffs had a duty under law to begin their own investigation at that time. They presented no evidence to show that they did so, he ruled. Besides Mr. Hiner, defendants included current Chairman Michael Thaman, who is also the company“s chief financial officer; J. Thurston Roach, former CFO; Deyonne Epperson, comptroller; Landon Hilliard, a director, and Maura Abeln Smith, former legal chief.