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Judge dismisses Miller Energy lawsuit Other cases remain alive against the Tennessee-based parent of Cook Inlet Energy; shareholders allege fraud in stock price drop Wesley Loy For Petroleum News
Miller Energy Resources Inc. is making some headway in defending against a flurry of lawsuits brought against the company in 2011 after its stock price took a nosedive.
On Sept. 21, a federal judge in Knoxville, Tenn., where Miller is based, dismissed a case shareholders brought against the company’s board of directors.
The shareholders sued derivatively on behalf of the company, alleging the directors were culpable in misleading public statements Miller issued on the value of oil and gas assets it acquired in Alaska’s Cook Inlet basin in late 2009.
Miller’s stock price plunged in the summer of 2011, in part because of an online report purporting to expose the company’s overvaluation of its Alaska assets.
Company executives have stood by their valuation, and have said the report was the work of short sellers looking to profit from a decline in Miller’s stock.
Miller Energy shares trade on the New York Stock Exchange. The company is the parent of Anchorage-based Cook Inlet Energy LLC, which operates an assortment of oil and gas properties on the inlet’s west side.
‘Pleased with the outcome’ Two shareholder derivative suits were filed against the Miller board in late August 2011. The suits subsequently were consolidated into one case.
On Sept. 21, U.S. District Judge Thomas A. Varlan granted Miller’s motion to dismiss the case.
The judge ruled plaintiffs skipped a necessary step. He held that under Tennessee law and federal court rules, before filing a derivative action a shareholder “must first make a written demand on the corporation’s directors requesting them to prosecute the suit or to take other suitable corrective action.”
The lead Miller plaintiff, shareholder Patrick P. Lukas, admitted he didn’t do that, arguing it would have been “a futile, wasteful and useless act.”
“We are pleased with the positive outcome,” Miller’s chief executive, Scott M. Boruff, said of the judge’s dismissal. “We have maintained throughout this litigation that the cases were without merit, and this dismissal reflects that in their rush to file, the plaintiffs did not carefully consider the facts or follow the proper procedure in bringing their claims.”
More cases pending But Miller Energy is not yet in the clear with respect to lawsuits filed in the wake of the stock collapse.
A shareholder class action alleging stock fraud is pending in the federal court in Knoxville.
This case also concerns the stated value of the Alaska assets. The lead plaintiff is the Oklahoma Firefighters Pension and Retirement System.
The plaintiffs say company executives “made false and misleading statements” and violated accounting principles, which “artificially inflated” the price of Miller’s stock ahead of the crash.
Miller has filed a motion to dismiss. Judge Varlan is presiding over the case.
Yet another lawsuit, a derivative action, is pending in the Knox County Chancery Court in Knoxville.
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