How can a series of catastrophic explosions in Lawrence, Massachusetts lead the pension system for firefighters in Detroit, Michigan to file a lawsuit in Delaware? Let’s give the ending away right now, since it is not nearly as interesting as how the case came to be brought: the Detroit pension system loses.
Now for the more interesting part: how did this case happen?
On September 13, 2018, the over-pressurization of gas mains in the greater Lawrence area led to numerous explosions and fires. According to the Court of Chancery of Delaware, one person died and 131 structures in three communities were damaged in the disaster. The response to the incident included 180 fire departments, 140 law enforcement agencies, and 15 task forces. The National Transportation Safety Board (NTSB) investigated the incident (referred to as the Greater Lawrence Explosions) concluding the gas company, NiSource, Inc. “displayed an informal, unstructured approach for documenting this critical project” and that “inadequate planning, documentation, and recordkeeping processes led to [the Greater Lawrence Explosions].”
NiSource pled guilty to federal criminal charges under the Natural Gas Pipeline Act, paying $53 million in fines. The State of Massachusetts also investigated NiSource, but the parties settled for $56 million without criminal charges or a civil suit being filed.
The Detroit Police & Fire Retirement System was a stockholder in NiSource. In 2020, the retirement system filed what is referred to as a shareholder derivative suit accusing the corporation and board of bad faith in “that the directors knew that they were not discharging their fiduciary obligations.” The suit sought “to hold certain current and former NiSource directors liable for the corporate trauma resulting from the Greater Lawrence Explosions.”
In the end, the court dismissed the pension system’s claims. The legal eagles may be interested in the nuances contained in the lengthy decision but it is rather complicated. Oh… any why was the suit brought in Delaware? NiSource is incorporated in Delaware.