The opinion
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
Jennifer Miller, ) CASE NO: 5:20CV1743
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)
Plaintiffs, ) JUDGE JOHN ADAMS
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v. ) ORDER AND DECISION
)
Michael J. Anderson, et al., )
)
)
)
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Defendants. )
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The first amended complaint in this matter asserted that “the total cost to []
FirstEnergy and shareholders of its goodwill, diminished value, civil litigation and
scorched-earth investigations may well stretch into the billions of dollars.” Doc. 31 at 3
(emphasis added). The complaint alleged that executives, directors, and officers of
FirstEnergy Corporation engaged in a sprawling bribery scheme that wasted corporate
assets, unjustly enriched the defendants, and violated securities law. Specifically,
Defendants named in this matter include members of FirstEnergy’s Board of Directors,
its CEO, its President, the non-executive Chairman of the Board, its Senior Vice
President and Chief Legal Officer, its Senior Vice President of External Affairs, and its
General Counsel and Chief Ethics Officer. The complaint alleged that these individuals
acted in concert to engage in a “racketeering scheme involving the payment of over $60
million by FirstEnergy” to influence Ohio elected officials to pass HB6, legislation that
gave FirstEnergy a $1.3 billion bailout. Despite Plaintiffs’ allegations that losses easily
climbed into the billions, the parties’ settled their dispute for only $180 million.1
With that background in mind, the Court acknowledges that “the world is
governed more by appearances than by realities[.]”2 In this litigation that involved what
“is likely the largest bribery, money laundering scheme ever perpetrated against the
people of the state of Ohio,”3 appearances surrounding any resolution become all the
more important. As more information is uncovered almost weekly, the knowledge of the
depth and reach of FirstEnergy’s bribery scheme and use of dark money to influence
Ohio elected officials continues to expand:
▪ Utility That Bribed Ohio Regulators Secretly Bankrolled Republican Mike
DeWine’s 2018 Governor Bid, Records Show4
▪ Ex-First Energy executives, Ohio utility regulator charged by state in bailout
and bribery scandal5
▪ Fired FirstEnergy execs indicted in $60 million Ohio bribery scheme; regulator
faces new charges6
▪ FirstEnergy made secret $1 million payment in 2017 to support ‘Husted
campaign’ in Ohio7
1 As detailed later in this order, actual recovery to FirstEnergy was well below that $180
million once attorney fees of roughly $36 million were paid to Plaintiff’s counsel.
2 Quote most often attributed to former Secretary of State Daniel Webster.
3 Quote taken from a press conference given by United States Attorney for the Southern
District of Ohio David DeVillers.
4 https://www.motherjones.com/politics/2024/04/firstenergy-bribery-scandal-ohio-mike-
dewine-jon-husted-documents/ (last visited 4/26/2024).
5 https://ohiocapitaljournal.com/2024/02/12/ex-first-energy-executives-ohio-utility-
regulator-charged-by-state-in-bailout-and-bribery-scandal/ (last visited 4/26/2024).
6 https://apnews.com/article/firstenergy-ohio-bribery-
481071b407b54fc7ca2e34a9bd5263de (last visited 4/26/2024).
7 https://apnews.com/article/bribery-investigation-ohio-lieutenant-governor-jon-husted-
d9012cc1a46a85129c596a449301c345 (last visited 4/26/2024).
▪ FirstEnergy paid $300k to nonprofit tied to Huffman8
▪ Ohio indictments provide a better picture of squalid relationships that spurred
massive scandal9
▪ Regulators. DeWine aides. FirstEnergy execs: Bribery witness list stuffed with
statehouse regulars10
The above is only a small sample of media accounts and information that has become
known after settlement was reached in this matter. In fact, as recently as May 6, 2024,
FirstEnergy was ordered in other litigation to release the results of its internal
investigation after fighting to withhold it for multiple years.11 This ever-growing release
of additional information surrounding the scandal should serve as a reminder that the
appearances surrounding the settlement in this matter have given the people of Ohio far,
far less than they deserve – both in process and substance.
Pending before the Court is the parties’ joint motion to lift the stay in this matter
and dismiss these proceedings with prejudice in favor of the settlement that was approved
before the Southern District of Ohio in Case Number 2:20-cv-4813 and now affirmed on
appeal. For the reasons stated below, the motion is reluctantly granted.
8 https://www.limaohio.com/top-stories/2024/04/23/firstenergy-paid-300k-to-nonprofit-
tied-to-huffman/ (last visited 4/26/2024).
9 https://ohiocapitaljournal.com/2024/02/14/ohio-indictments-provide-a-better-picture-of-
squalid-relationships-that-spurred-massive-scandal/ (last visited 4/26/2024).
10 https://www.cleveland.com/open/2024/04/regulators-dewine-aides-firstenergy-execs-
bribery-witness-list-stuffed-with-statehouse-regulars.html (last visited 4/26/2024).
11 See https://finance.yahoo.com/news/judge-orders-firstenergy-release-findings-
005131939.html (last visited 5/15/2024). Despite that order, it appears that the dispute
over releasing the results of that internal investigation will continue on for the foreseeable
future. See https://www.cleveland.com/news/2024/05/firstenergy-fights-release-of-
reports-documenting-internal-investigation-of-house-bill-6-scandal.html (last visited
5/16/2024).
The operative complaint in this litigation alleges that the people of Ohio were
directly impacted by the FirstEnergy bribery scheme in several ways. First and foremost,
the bribery scheme was designed to influence the passage of House Bill 6, a bill
described in the complaint as providing “a billion-dollar-bailout for FirstEnergy’s
uncompetitive power plants funded by monthly ratepayer surcharges.” Doc. 75 at 10.
When a statewide ballot referendum threatened to repeal House Bill 6, FirstEnergy
funneled more than $38 million dollars to its alleged co-conspirators to assist in defeating
the citizen initiative.
As alleged, the bribery scheme was designed to directly take money out of the
pockets of millions of Ohioans. Moreover, when the scheme came to light, then Speaker
of the House Larry Householder was criminally indicted and subsequently convicted for
his role. At the time of this order, additional criminal charges are pending against
FirstEnergy executives Charles Jones and Michael Dowling. Moreover, two others, Neil
Clark, a lobbyist, and Sam Randazzo, the former PUCO Chairman, had charges against
them dropped following their deaths. Through the diligent work of the media and
subsequent criminal investigations, the public has heard allegations that their elected
officials were for sale to the highest bidder and that House Bill 6 was only passed through
the transfer of millions and millions of dollars in dark money funneled through entities
but ultimately paid by FirstEnergy.
With respect to this derivative suit, the parties engaged in litigation
simultaneously before this Court and the Southern District of Ohio, with the first filed
complaint being filed in this Court. From this Court’s review, Plaintiffs were eager to
litigate the matter before this Court when the undersigned mandated an expedited
discovery schedule. However, when the parties settled the matter with almost no
discovery, their tune changed dramatically.12 A review of the transcripts of proceedings
before this Court and the Southern District reveals why the parties may have desired to
have their settlement reviewed by another District. In short, this Court offered an honest
assessment when the parties indicated a desire for early mediation. The Court indicated
that it would be extraordinary if the parties could demonstrate that a settlement was fair
and reasonable despite the following:
▪ incomplete written discovery
▪ no testimony under oath from any Defendant or other witness
▪ incomplete privilege logs detailing withheld documentation
▪ an incomplete forensic examination to identify possible missing
communications contained on Defendant Charles Jones’ personal electronic
devices and
▪ an inadequate period to review and analyze the documents that were
provided.
It is apparent from the parties’ actions that the Court’s candor caused the parties to seek
approval of their settlement from another District.
If the above were not alone sufficient to undermine the confidence in the
appearance of the proceedings and their resolution, additional information undermines
that appearance when one reviews the fairness hearing in the Southern District. Before
delving into the fairness of the settlement, the district judge presiding over the matter
12 Nearly all of the information publicly revealed over the past few months it appears was wholly unknown
by the parties at the time of their settlement.
revealed that counsel for many of the FirstEnergy executives and Directors13 was a
former law clerk for the judge and that her spouse was a current law clerk for the judge.14
The court there then continued: “I know all of you have researched my history of
fairness hearings, and you’ve all seen a couple of things. One is that I have pretty much
been consistent. Once the parties agree, I defer to the agreement.”15 (emphasis added).16
Given the above facts, it can hardly be surprising that the parties practically sprinted to
the Southern District to seek approval. Moreover, a mere 19 days after the fairness
hearing, their settlement was approved, and plaintiffs’ counsel received roughly $36
million in attorney fees from the award while none of the named Defendants were
required to answer a single question under oath.
The statements above stand in stark contrast to what the parties heard before this
Court. At the first hearing in this matter, the Court stressed the need for transparency and
openness and informed that parties that “[w]e’re not going to keep things off the docket
or out of the record if it isn’t required.” Doc. 166 at 20. Further, when the parties
suggested mediation prior to any meaningful discovery, the Court made its view on such
a process quickly known to the parties:
13 The docket reflects that counsel represented FirstEnergy Corp., Michael J. Anderson,
Steven J. Demetriou, Julia Johnson, Donald Misheff, Thomas Mitchell, Christopher
Pappas, Sandra Pianalto, Luis Reyes, Leslie Turner, Paul Addison, Jerry Sue Thornton,
William Cottle, George Smart, James Pearson, Steven Strah, K. Jon Taylor, Robert
Reffner, and Ebony Yeboah-Amankwah.
14 The Court does not suggest anything ethically improper occurred with respect to these
facts. However, given the nature of the case, perhaps a heightened standard would have
better served the people of the Ohio.
15 See Doc. 38, Page ID # 1379, Case No. 2:20CV5876 (S.D. Ohio).
16 While the Sixth Circuit “afford[s] the district court ‘wide discretion’ in making that
assessment,” In re Wendy's Co. S’holder Derivative Action, 44 F.4th 527, 536 (6th Cir.
2022), no precedent supports deferring to the parties’ agreement.
So I’m more than concerned about the vigorous or adequate prosecution of
this case if you haven’t even done the most what I would characterize
rudimentary things that you would need to undertake before what I think is
somewhat of a mad rush to mediate this case.
…
Counsel, I don’t want to get into a debate back and forth with you. I guess
maybe you and I are just going to have to agree to disagree because I don’t
see how you can assess the relative responsibility, alleged responsibility,
of any officers or others without taking their depositions, without seeing
all the paper discovery.
I candidly can’t grasp the idea that you would know enough about this
case against the relative -- again, the relative position of the defendants to
in any way mediate, settle, assess responsibility, if any, liability, if any, on
what you now know.
Doc. 235 at 8, 11.
Faced with this Court’s skepticism and the Southern District’s admitted history of
deference to settlement agreements, plaintiffs’ counsel – seeking more than $40 million
in attorney fees – of course chose what they undoubtedly believed to be the path of least
resistance. The result was a fairness hearing that lasted less than three hours17 in which
1) no evidence was received, 2) no witness testimony was taken, and 3) formal, written
approval was obtained in less than three weeks.
The Court is mindful that the Sixth Circuit has now affirmed the Southern
District’s approval of the parties’ settlement. As a result, this Court is legally required to
find the matters herein are precluded by that agreement. As a result, the stay must be
lifted, and this matter must be dismissed. With that said, the Court notes that it has now
been more than 100 years since Supreme Court Justice Louis Brandeis penned his most
famous statement in a 1913 Harper’s Weekly article titled “What Publicity Can Do.”
17 Docket No. 193, Page ID 4946, Case No. 2:20CV4813 (S.D. Ohio).
Brandeis’ statement rings just as true today. “Sunlight is said to be the best of
disinfectants.” The people of Ohio deserved to have sunlight cast upon all aspects of the
FirstEnergy bribery scheme. Instead, the public is left with proceedings that allowed a
shroud of darkness to remain in place covering many of the details surrounding
FirstEnergy’s bribery scheme to occur – a shroud that is only slowly being lifted by an
aggressive media and subsequent criminal proceedings. The people of Ohio – the
ultimate victims of the FirstEnergy bribery scheme – deserved much, much more, but the
law does not allow this Court to compel further proceedings. Accordingly, this matter is
hereby DISMISSED.
IT IS SO ORDERED.
May 17, 2024 ____/s/ Judge John R. Adams_______
Date JUDGE JOHN R. ADAMS
UNITED STATES DISTRICT COURT