Levine v. NL Industries, Inc.

NL Industries, Inc. (NL) (defendant) wholly owned a subsidiary, NLO, Inc. (NLO). NLO operated a uranium processing center violating state and federal environmental laws (facility). As a result of NLO’s activities, NL subjected itself to significant liability. NLO operated the facility the Department of Energy (DOE) owned. NLO and the DOE agreed that the DOE would indemnify NLO for various expenses, including litigation expenses. The facility had been emitting uranium dust that impacted landowners and residents near the facility. Landowners and residents within a five-mile radius brought a class action against NL and NLO. Ohio brought a separate action against DOE, NLO, and NL seeking clean-up and response costs, residual damages, and civil penalties for alleged violations of various environmental statutes and regulations. Levine (plaintiff) brought an action on behalf of NL’s common-stock purchasers during the relevant time. Levine’s claim alleged that NL should have disclosed that NLO was operating the facility violating environmental statutes and regulations, thereby subjecting NL to significant liability. NL’s common-stock purchasers during the class period were alleged to have paid inflated prices due to the alleged disclosures and misrepresentations. The district court granted NL summary judgment on this claim because it found that NL had no duty to disclose under Securities and Exchange Commission Rule 10b-5 that NLO was operating the facility violating environmental laws.