Mikulski v. Centerior Energy Corporaton

Summary

It has been described as an "extraordinary" decision with a "virtually unheard of" result -- the decision issued in August 2007 by the judges of the Sixth Circuit sitting en banc which vindicated the position Gary, Naegele & Theado, LLC has championed for the last five years in Mikulski v. Centerior Energy Corp.

Mikulski is a class action on behalf of hundreds of thousands of shareholders who are suing Centerior Energy Corporation, First Energy Corporation, Cleveland Electric Illuminating Company, and The Toledo Edison Company on claims for fraudulent tax accounting and breaches of contract.  The shareholders contend that the companies' conduct caused the shareholders to overpay their taxes estimated to total, for the entire class of claimants, in the hundreds of millions of dollars.

        The lawsuit started in an Ohio state court in December 2001.  A year later, the companies moved the case to federal court.  The companies defended that move by claiming that the lawsuit presented a "substantial federal question" since the interpretation of one provision of the Internal Revenue Code would be involved in deciding the shareholders' case.

        Once in federal court, the shareholders requested that their suit be returned to the Ohio state court.  The federal court denied that request, kept the case, and then dismissed the shareholders' claims altogether.

         The shareholders then appealed to the Court of Appeals for the Sixth Circuit.  In January of 2006, a three-judge panel of that court decided that the shareholders were right, and ordered that their lawsuit be returned to the Ohio state court.

        Unhappy with that result, the companies asked the Court of Appeals to rehear the case en banc (that is, with all the active judges present and participating -- quite different than the normal three-judge panel).  That request was granted, and in a decision issued on August 21, 2007 the Sixth Circuit en banc confirmed that the shareholders' case must be returned to the Ohio state court from which the companies had taken the suit nearly half-a-decade ago.

        You can read the en banc appellate court's decision HERE

        Gary, Naegele & Theado, LLC will now continue representing the shareholders in the Ohio state court, where we look forward to moving the case along through class certification and on to eventual victory.