July 17 Duke Energy Corp directors who
voted to abruptly oust the company's former chief executive this
month should pay for the damage they caused the largest U.S.
power company, according to a shareholder lawsuit filed on
Hours after Duke closed its $18 billion merger with Progress
Energy on July 2, which regulators approved on the understanding
that Progress CEO Bill Johnson would lead the company, the board
voted to replace Johnson with Duke CEO James Rogers.
The move led rating agencies to consider cutting Duke's debt
rating, citing the boardroom uncertainty. The CEO change also
prompted an investigation by regulators. The probe could make it
tougher for the company to get regulatory approval for higher
"The director defendants' conspiracy and tactics have had a
devastating effect on Duke's credibility," said the complaint,
which was brought by individual investor Lesley Rupp of Alabama.
It said damages could be "enormous."
The complaint said the potential harm included the
resignations of former Progress executives who were expected to
help merge operations and Johnson's severance package of $44
Duke spokesman Dave Scanzoni said the company believed the
lawsuit was entirely without merit and that Duke intended to
defend itself vigorously.
The lawsuit was filed in Court of Chancery in Delaware,
where Duke is incorporated, and also names Rogers as a
It does not name as defendants the former Progress directors
who are now on the Duke board. They voted against replacing
The case is a derivative lawsuit, which means the
shareholder essentially is seeking to step into the shoes of the
company and seeks to recover from the directors the damage they
caused Duke. Shareholders will benefit only indirectly.
Rogers told the North Carolina Utilities Commission last
week that Duke's board had lost confidence in Johnson due to
Johnson's "autocratic" management style.
Rogers also questioned Johnson's management of Progress's
nuclear power business as well as the utilities' financial
performance after the deal was announced.
Law firm Prickett Jones in Wilmington represents the
plaintiff, along with Hare Wynn Newton & Newell of Birmingham
and the Law Office of Frank DiPrima of Morristown, New Jersey.
The case is Lesley C. Rupp v James E. Rogers et al, Delaware
Court of Chancery, No. 7705