Arconic, Inc.

Arconic, Inc. is an American industrial company focused on the engineering and manufacturing of lightweight metals. They produce Reynobond insulation panels consisting of two sheets of thin aluminum bonded to a thermoplastic core. The panels can be constructed with a Fire-Resistant (“FR”) core, or a less expensive but combustible Polyethylene (“PE”) core. Due to their combustible nature, Reynobond PE panels are known to be unsuitable for use in any structures measuring ten meters or higher. In multiple instances, Arconic had explicitly warned against using Reynobond PE for buildings taller than ten meters, including in marketing brochures on their website, which stated that “as soon as the building is higher than the firefighters’ ladders, it has to be conceived with incombustible material.”

On June 14, 2017, a devastating fire broke out in the Grenfell Tower block of flats in London, United Kingdom, resulting in the deaths of 72 people and injuries to more than 70 other tenants. In the wake of the tragedy, numerous investigations were conducted, ultimately revealing that, while an electrical fault within a refrigerator located on the fourth floor instigated the blaze, Arconic’s Reynobond PE panels, which covered the outside of the building, likely acted as an accelerant, contributing to the rapid spread of the flames to the floors above.

In August 2017, Pomerantz, led by Partner Emma Gilmore, filed a securities class action against Arconic alleging that its stock price was artificially inflated by the company’s misstatements about the safety of its Reynobond PE insulating panels. Despite internal knowledge that the panels used to clad the tower were highly flammable, the company repeatedly misrepresented to the market its safety protocols and the safety classification of its products.

The second amended complaint cited numerous instances in which Arconic sold Reynobond PE panels for use in other high-rise towers in the UK and across the globe. In the UK alone, the amended complaint cited at least ten additional buildings that had been constructed or refurbished using Reynobond PE panels.

Additionally, multiple witnesses with firsthand knowledge of Arconic’s business practices testified that the company kept exhaustive records of its Reynbond PE sales, which included the building specifications for each project. Thus, in selling flammable panels for these structures, Arconic ignored its own safety recommendations and created a serious risk to public safety. The complaint also pointed to at least eighteen other instances in which deadly fires had spread through exterior wall assemblies, most of which involved high-rise buildings.

The $74 million settlement represents approximately 22% of recoverable damages for defrauded Arconic shareholders, an amount far exceeding the 1.8% median recovery for all securities class action settlements in the previous year. Pomerantz not only secured a substantial monetary recovery for investors but convinced the Court to adopt new legal precedents in plaintiffs’ favor on several significant issues, including matters related to risk disclosure statements, loss causation, and scienter, i.e., intent to deceive investors.

Pomerantz’s Arconic Team is led by Partners Emma Gilmore and Jeremy A. Lieberman, Senior Counsel Patrick V. Dahlstrom and Associate Villi Shteyn