Bennett faces class action suit over NJ Superfund cleanup contractThe New York law firm of Shalov Stone & Bonner LLP has launched a class action lawsuit on behalf of people who purchased shares in Bennett Environmental between June 2, 2003 and July 22, 2004. The complaint alleges that the company violated U.S. federal securities laws by making material misrepresentations and omissions of material facts about its business performance during the relevant time period.
"The Bennett lawsuit alleges that the company and its ranking executives polluted the market with misleading information for more than a year about the company's largest contract, which was largely withdrawn immediately after Bennett announced it. This enabled the company's insiders to unload tens of thousands of shares at an enormous profit, leaving public investors holding the bag," said Ralph Stone of Shalov Stone & Bonner.
Oakville, Ontario-based Bennett says it disagrees with the allegations and intends to defend itself vigorously against them.
The case relates to a contract for the cleanup of up to 300,000 tons of contaminated soil at Phase III of the Federal Creosote Superfund site in New Jersey. Announced by the company in June 2003, the contract was valued at $200 million (Cdn). The contract was subsequently revised, however, resulting in a substantial reduction in projected soil shipments and a lower contract backlog.
The complaint alleges that the company and its officers "knew or recklessly disregarded the fact that its Phase III contract to treat soil had been repudiated by the U.S. Army; that as a consequence...the company's backlog was artificially inflated in the amount of $200 million or the amount of the repudiated contract; and therefore, the defendants lacked a reasonable basis for their posititive statements about the company's growth and progress."
In a statement of progress on the Phase III contract, Bennett reported on July 22 that the U.S. Army Engineering Corps had purported to withdraw its consent to the contract but had agreed to ship up to 10,000 tons for treatment under the contract. The revelation caused the value of the company's stock to drop sharply.
The lawsuit was filed in the United States District Court for the Southern District of New York on behalf of both American and Canadian investors. Similar actions have been filed by several other U.S. law firms as well, including Schatz & Nobel PC; Schiffrin & Barroway LLP, of Bala Cynwyd, Pennsylvania; and Charles J Piven PA, of Baltimore, Maryland. To provide updated information on the legal action, Shalov Stone & Bonner has opened a dedicated Web site, www.bennettclassaction.com.
Meanwhile, Bennett has formed a special committee of independent directors to oversee the company's review of the Federal Creosote Phase III contract as well as the process by which Bennett monitors contractual arrangements for existing and future work from the site. Members of the committee include Pierre Meunier, George Ploder and David Williams; Bennett president and CEO Al Bulckaert will act as spokesman. The Washington DC law firm of Piper Rudnick LLP is assisting with the review.
"Bennett is continuing a process that includes the evaluation of the circumstances surrounding the FC Phase III contract awards and shipments made under them," Bulckaert said. "We intend to ensure that the best possible processes are in place so that awards and shipments under "indefinite quantity/indefinite delivery" contracts are reported appropriately to investors. The Special Committee anticipates that it will complete its review by the end of September," he added.
More information is available on the Bennett Environmental Web site, www.bennettenv.com, or from Al Bulckaert at 905/339-1540.