The fire that killed 79 people in London’s Grenfell Tower was a U.K. tragedy, but it’s also getting the attention of the securities plaintiffs bar in the United States. That could spell legal trouble for Arconic, the New York-based company that made the exterior paneling being blamed for the fire’s ferocity—and potentially for its directors and officers.
This week Pomerantz; Goldberg Law Group, Bronstein, Gewirtz & Grossman and other firms all announced they were investigating potential shareholder claims related to the disaster. Arconic, meanwhile, announced it would halt sales of the paneling.
Bronstein’s press release cited a June 24 report from The New York Times noting that Arconic’s U.K. marketing resources for the panels contained a less thorough safety warning than what was offered in other countries. After the story was published the company’s stock dropped by more than 11 percent, the firm said.
Mark Lanier, the Houston plaintiffs lawyer, said in an email that he suspects Arconic and its lawyers made avoidable missteps. (Lanier isn’t currently pursuing any claims related to the fire.)
“First, the company should have tested the panels in fire situations … Failure to test properly leads to a failure to warn properly,” he wrote. “Second, the legal department (GC, etc.) should have restricted sales until outside safety company approval. In other words, I would have sent the panels to some company outside Arconic to have that company determine whether or not there is a problem. That way some other company has involvement,” he added.
“Third, the GC should have made incredible informative warnings, and included the limitations on testing,” Lanier wrote. The lawyer who serves as Arconic’s chief legal officer has changed in the past year.
Divisions of Alcoa Corp. split off to form Arconic in early 2016. As a newly formed company, Arconic initially tapped Audrey Strauss, who had been Alcoa’s top lawyer, to serve as its chief legal officer. Strauss joined Alcoa in 2012 from Fried, Frank, Harris, Shriver & Jacobson, where she led a white-collar criminal defense practice and was a prominent litigation partner. Before that Strauss was a federal prosecutor in the U.S. District Court for the Southern District of New York.
Alcoa’s former CEO Klaus Kleinfeld also joined Arconic.
In 2016, Kleinfeld’s total annual compensation was $16.8 million and Strauss’ was $3.6 million, according to Arconic’s proxy statement.
When Strauss announced her retirement in August 2016, Arconic named Kate Hargrove Ramundo as executive vice president and chief legal officer. Ramundo had previously served as general counsel for New York-based ANN Inc. and deputy general counsel for Colgate-Palmolive.
Neither Strauss nor Ramundo responded to requests for comment made to the company.
For its part, Arconic has said it will no longer sell the same type of paneling material, also known as cladding, for use in high-rise construction.
“While the official inquiry is continuing and all the facts concerning the causes of the fire are not yet known, we want to make sure that certain information is clear,” the company said in a June 26 statement. “Arconic supplied one of our products … to our customer, a fabricator, which used the product as one component of the overall cladding system on Grenfell Tower. The fabricator supplied its portion of the cladding system to the facade installer, who delivered it to the general contractor. The other parts of the cladding system, including the insulation, were supplied by other parties. We were not involved in the installation of the system, nor did we have a role in any other aspect of the building’s refurbishment or original design.”
The company also noted that regulations in the United States, Europe and the U.K. “permit the use of aluminum composite material in various architectural applications, including in high-rise buildings depending on the cladding system and overall building design.”
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