$47.5 Million Settlement for Hawaiian Electric Investors

On March 3, 2026, Pomerantz achieved an excellent result for damaged investors by settling a nationwide securities class action against Hawaiian Electric Inc. (“Hawaiian Electric”) and certain of its officers for $47.5 million. The action, in the U.S. District Court for the Northern District of California, alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

Hawaiian Electric Industries (“HEI”) acts as an umbrella for Hawaiian Electric, the state’s largest electric utility provider, which services about 95% of Hawaiian residents.

In early August 2023, a series of severe wildfires broke out on the island of Maui. The most destructive of these began in West Maui near the town of Lahaina on the morning of August 8, 2023. By that afternoon, intense winds had knocked down approximately 30 utility poles throughout Maui, causing the fire to spread widely. Videos captured by local residents provided early evidence that the fires were caused by uninsulated power lines belonging to Hawaiian Electric falling onto dry, untrimmed and unmanaged grassy areas. Tragically, the fires resulted in the deaths of over one hundred people and destroyed most of the historic Lahaina district.

The complaint alleged that HEI repeatedly misled investors to believe that the company was taking appropriate action to mitigate risk of wildfires like these, when in fact, HEI was failing to do so. Indeed, the complaint alleged that in some cases, HEI’s own written policies were not to take the very actions it assured investors it was taking. HEI allegedly misrepresented that it was taking measures to address each of the points of failure that resulted in the Maui fires.

First, HEI informed investors that it had successfully replaced uninsulated (traditional) power lines with insulated wires, when it allegedly had not, even in areas it recognized to be at high risk of wildfires due to dry vegetation, including West Maui. Had HEI successfully insulated all power lines, including those in the Lahaina area, the lines might not have sparked and created a brush fire when high winds caused them to fall.

Second, HEI assured investors that it was regularly maintaining its utility poles and that they complied with national safety standards, when in fact, HEI’s pole maintenance allegedly was severely deficient, and the majority of its poles did not meet national standards. The complaint alleged that during the Class Period, HEI was failing to replace thousands of severely outdated utility poles that posed a danger of falling and sparking during high winds. Multiple sources supported the allegations that downed poles were a common occurrence in West Maui and the targeted Lahaina area, and that the pole that had snapped in half and appeared to have caused the Lahaina fire was 43 years old and had severe termite damage. Had HEI regularly maintained its poles and prevented them from rotting and had HEI’s poles met national standards for wind resistance, they may well not have fallen and caused the Maui fires.

Third, HEI assured investors that it was actively trimming dry grasses and brush beneath and around power lines. For example, in the company’s 2020 Environmental, Social and Governance Report, HEI stated “[w]e regularly trim the vegetation around our equipment.” In fact, as the complaint alleged, HEI’s own written poli-cy, expressed in its Wildfire Mitigation Plan since 2019, expressly recommended against trimming already low-lying vegetation, and against creating vegetation firebreaks as part of the vegetation management program, because the measures were too costly. Had HEI in fact actively trimmed dry grasses and brush around its power lines, the sparks generated from falling, uninsulated conductor wires may well not have ignited the brush fire that resulted in the Maui fires.

The complaint alleged that investors suffered losses from these misrepresentations in the days, weeks and months following the Maui fires, when the unmitigated risk of catastrophic wildfire that Hawaiian Electric had concealed materialized in the tragic Lahaina fire, and when subsequent findings revealed the full scope of that concealed risk.

Defendants moved to dismiss the original complaint, and the Court granted the motion but permitted the plaintiffs to amend. Indeed, in its opinion, the Court set a clear roadmap for what changes the Court required the amended complaint to contain to state a securities law violation with adequate particularity. Following the opinion, Pomerantz undertook an extensive further investigation. The investigation was highly successful, and the subsequent amended complaint amply satisfied the requirements set forth by the Court.

First, the amended complaint added significant new findings from public investigations of the Maui fires, which showed unequivocally that the Maui fires were caused by the very risks about which HEI had allegedly misled the public. On October 1, 2024, the County of Maui Department of Fire and Public Safety released an Origin and Cause Report about the Lahaina Fire, and on September 19, 2024, the U.S. Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives issued a separate report detailing the causes of the incident. These reports concluded that a utility pole (Pole 7A)—which was riddled with termite damage and over 40 years old at the time of the fire—snapped as a result of the extensive termite damage, which put pressure on, and eventually snapped, uninsulated and energized power lines connected to poles 24 and 25, which contacted the ground and ignited the “overgrown” and “unmaintained vegetation below.” The Maui Fire Department report explained that the “cause of the fire was the re-energization of broken utility lines which caused the ejection of molten metallic material (sparks) to fall to the base of pole 25, igniting the unmaintained vegetation below” and “the arcing and severing of the energized overhead power line between pole 24 and 25 resulted in that line falling to the ground, subsequently igniting vegetation below.”

Second, the amended complaint added powerful new allegations that the defendants knew that their misstatements were misleading. The amended complaint newly alleged that the Public Utilities Commission produced an audit report specifically for the defendants that notified them that the company was not regularly trimming vegetation or adequately addressing its pole infrastructure. Likewise, the amended complaint alleged that HEI’s Wildfire Mitigation Plan, which was drafted in part by Defendant Shelee Kimura, CEO of Hawaiian Electric, contained photos showing that HEI was failing to trim the vegetation around its poles.

Following the plaintiffs’ filing of the amended complaint, the defendants sought mediation, which was conducted jointly over a series of months with the plaintiffs in a related derivative action. The resulting settlement of $47.5 million for the securities plaintiffs was an outstanding result, particularly for a settlement based largely on the strength of the amended complaint.