On August 11, 2022, Judge Robert J. Colville of the U.S. District Court for the Western District of Pennsylvania issued a thorough 51-page opinion that granted Plaintiffs’ motion for class certification in this securities class action alleging EQT’s statements about the synergistic benefits of a merger with Rice Energy were false and misleading, among other things. Defendants then filed a motion for leave to appeal the District Court’s decision to certify the class to the Third Circuit pursuant to Federal Rule of Civil Procedure 23(f). On September 23, 2022, just nine days after the parties’ briefing on the petition was complete, a Third Circuit panel denied Defendants’ petition for leave to appeal.

Cohen Milstein is court-appointed Co-Lead Counsel in this certified class action.

Other Important Rulings

  • On December 2, 2020, of the U.S. District Court for the Western District of Pennsylvania denied Defendants’ motion to dismiss and upheld all nine claims brought by lead plaintiffs pursuant to the Securities Exchange Act of 1934 and the Securities Act of 1933. In doing so, Judge Colville found that the achievability of Defendants’ purported synergies presented “a genuine issue of material, present fact,” as did EQT’s leaders’ post-acquisition statements touting the newly forged company’s successes. Judge Colville also rejected defendants’ argument that Plaintiffs’ assertions should have put investors on notice of the potential unreliability of their statements; to the contrary, Judge Colville held, defendants’ “consistent and strong” denials supported a finding that defendants at least spoke recklessly.
  • On September 19, 2019, the court appointed Cohen Milstein Co-Lead Counsel in this securities class action. Cohen Milstein’s client, Northeast Carpenters Annuity Fund and the Northeast Carpenters Pension Fund (“Northeast Carpenters”), was appointed Co-Lead Plaintiff.

Case Background

EQT is a major producer of natural gas that drills wells through hydraulic fracturing, or “fracking.” In November 2017, EQT acquired rival gas producer Rice Energy for $6.7 billion. EQT’s senior executives told investors at the time that the merger would create “substantial synergies” worth between $2.5 billion and $7.5 billion by combining the two companies’ supposedly contiguous drilling acreage, which would allow for longer and more efficient lateral wells, and by enabling EQT to capitalize on best practices and new technologies developed by Rice Energy.

Plaintiffs allege that these representations were false and misleading because, among other things, the claimed synergies were based on assumptions Defendants knew or recklessly disregarded were invalid, and because EQT did not in fact intend to adopt Rice Energy’s best practices or technology following the merger. After the acquisition, EQT concealed skyrocketing costs and serious problems drilling long lateral wells, instead telling shareholders it was “ahead of schedule for achieving our capital synergies.” The truth was ultimately revealed through EQT’s financial disclosures and a series of presentations the former Rice Energy executive team made during a proxy contest for control of the company.

On October 25, 2018, EQT reported its financial results for the third quarter of 2018, revealing the truth: the merger had not only failed to achieve the represented benefits, it had created inefficiencies.  In particular, the Company had not been able to achieve the lateral well length it told investors was possible. EQT shares fell 13% on the news, dropping from a close of $40.46 per share on October 24, 2018 to $35.34 on October 25, 2018—a single-day erasure of nearly $700 million in shareholder value. Over the next several days, the price of EQT shares fell to as low as $31.00 per share—less than half what the Company was worth when the acquisition closed in November 2017.

Plaintiffs are pursuing the action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5 on behalf of all investors who purchased EQT common stock between June 19, 2017 and June 17, 2019, inclusive. Plaintiffs are also asserting claims under Section 20A of the Exchange Act on behalf of investors who purchased shares of EQT common stock contemporaneously with Defendants’ insider sales.  Additionally, Plaintiffs are asserting claims under Section 14(a) of the Exchange Act and SEC Rule 14a-9 on behalf of shareholders of EQT and Rice who held EQT or Rice shares as of the record dates of September 25, 2017 and September 21, 2017, respectively, and were entitled to vote at an EQT or Rice special meeting on November 9, 2017 with respect to the acquisition.  Finally, Plaintiffs are bringing claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) on behalf of all persons who acquired EQT common stock in exchange for their shares of Rice common stock in the acquisition.  

The case is styled: In re EQT Corporation Securities Litigation, No. 2:19-cv-00754, U.S. District Court, Western District of Pennsylvania.