Fortune 50 telecommunications company wins dismissal with prejudice of securities class action related to lead-sheathed telephone cables
Client(s) Fortune 50 telecommunications company
Jones Day secured dismissal with prejudice of a securities class action brought against a Fortune 50 telecommunications company and its senior leaders following the Wall Street Journal's publication in July 2023 of a series of articles highlighting the presence of lead-sheathed cables in the networks of all the major telecom companies and asserting that they may pose environmental or public health hazards. Plaintiffs alleged that, in violation of §§ 10(b) and 20(a) of the Securities Exchange Act, the company misled investors about the alleged risks the company faced relating to the cables, which artificially inflated the company's stock price. Following the publication of the WSJ articles, the company experienced a multi-billion-dollar market capitalization drop.
In May 2026, the United States District Court for the District of New Jersey dismissed the second amended complaint with prejudice, agreeing with Jones Day's arguments that the plaintiffs had failed to allege a false or misleading statement with particularity and had failed to raise a strong inference of scienter. It held that statements about the company's transition to a fiber-optic network and its commitments to the environment and worker safety were not materially misleading, and that the complaint lacked facts showing that any defendant believed that lead-sheathed cables were a material risk to the company and yet covered up that risk.
