Hawaiian Electric Industries Inc. was hit with lawsuits by investors and Maui County claiming the utility didn’t cut power and take safety measures to contain raging flames that engulfed the city of Lahaina this month.
(Bloomberg) — Hawaiian Electric Industries Inc. was hit with lawsuits by investors and Maui County claiming the utility didn’t cut power and take safety measures to contain raging flames that engulfed the city of Lahaina this month.
Hawaiian Electric’s share price has plummeted since the wildfires that broke out two and a half weeks ago, drawing a complaint from investors in San Francisco federal court alleging that the utility’s compromised safety protocols put the island at a heightened risk.
Maui County is seeking compensation for the losses to public infrastructure, fire response costs, environmental damage and destruction of historical or cultural landmarks caused by three fires that started on Aug. 7 and Aug. 8, the county said in a statement.
Suits are piling up against Hawaiian Electric alleging that its power lines contributed to the fires that destroyed much of Lahaina and killed more than 100 people. The utility faces liabilities of almost $4 billion if it’s found negligent, according to investment research firm Capstone LLC. The complaints include claims for property damage and wrongful death based on arguments that the utility kept power on despite high-wind warnings, and that it didn’t follow through on safety upgrades for its equipment.
Read More: Maui Fire Lawyers Eye Tactic That Got Californians $13.5 Billion
Hawaiian Electric’s creditors have hired law firm Davis Polk & Wardwell to tackle the potential financial fallout from the calamitous fires, Bloomberg has reported.
Hawaiian Electric “inexcusably kept their power lines energized during the forecasted high-fire danger conditions,” Maui County said in its suit in Hawaii state court. The estimated cost to rebuild and restore the damage from just one of the three fires is more than $5 billion, according to the county’s complaint.
The blaze in Lahaina damaged or destroyed more than 2,000 structures. Investigations into the cause of the conflagration are still ongoing and it’s not clear if the blame lies with Hawaiian Electric.
The utility’s failure to disclose its vulnerability to wildfires contributed to the “precipitous decline in the market value of the company’s securities,” the investors claim, adding that they suffered “significant losses and damages” as a result. The utility’s share price has plunged about 70% since July 26.
The suit filed in San Francisco appears to be the first securities fraud suit that focuses on the impact on investors rather than island residents.
The complaints say the utility’s internal files show officials were aware power shutdowns could have helped avoid wildfires, but failed to implement them.
Read more: Maui Fire Lawyers Eye Tactic That Got Californians $13.5 Billion
Hawaiian Electric didn’t immediately respond to phone and email messages seeking comment on the suits. The company previously has said it doesn’t comment on pending litigation.
The county case is County of Maui v. Maui Electric Co., 2CCV-23-0000238, Hawaii Circuit Court, Second Circuit. The investor case is Bhangal v. Hawaiian Electric Industries Inc., 23-cv-04332, US District Court, Northern District of California (San Francisco).
–With assistance from Mark Chediak.
(Updates with details on Maui County suit)
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