Wielgos v. Commonwealth Edison Co.

Commonwealth Edison Company (Commonwealth Edison) (defendant), an Illinois electric-utility company, operated several nuclear reactors and was constructing five more. The reactors could not be operated without the approval of the Nuclear Regulatory Commission (NRC), which was becoming increasingly difficult to obtain due to incidents such as the Chernobyl disaster. In September 1983, Commonwealth Edison put 3,000,000 shares on the shelf under Rule 415 of the Securities and Exchange Commission, 17 C.F.R. § 230.415, including a registration statement with over 100 incorporated pages. The shares were sold on December 5, 1983, at a market price of $27.625. Stanley Wielgos (plaintiff) bought 500 shares. The NRC considered giving a license to one of the reactors being constructed by Commonwealth Edison, but on January 13, 1984, the application was denied. As a result, Commonwealth Edison’s stock dropped to $21.50 with a loss of equity of about $1,000,000,000. Each year, Commonwealth Edison would publish a projection regarding the cost of completion of each project. With each projection, Commonwealth Edison would increase the estimated costs. When the application had been denied on January 13, 1984, Commonwealth Edison had added $100,000,000 in costs to the projections. These estimates proved to be erroneous. Wielgos filed suit, demanding $6.125 per share, the amount by which the stock had declined. Wielgos also contended that Commonwealth Edison had violated § 11 of the Securities Act of 1933, 15 U.S.C. § 77k. The district court found for Commonwealth Edison, and Wielgos appealed.