The Canadian Commercial Workers Industry Pension Plan has filed a $1 billion class action lawsuit in an Ontario court claiming that Royal Group and eight former and current company officials were in violation of US securities laws and failed to disclose a series of related party transactions and overstated financial results. This statement of claim brought about several new class actions filed in US federal court after it was recently dismissed without prejudice on the grounds that Canadian courts would provide a more convenient and appropriate forum.
The Ontario based pension plan bought shares of Royal Group between 1998 and 2004. It claims $700 million in damages and $300 million in punitive damages. The suit also claims that three company officials bought a parcel of land and sold it to Royal Group, making a $6.5 million profit. It further states that the three officials also owned stakes in the Royal St. Kitts Beach Resort Ltd. from about 1998 to 2002, during which Royal Group sold the resort more than $32 million worth of company products.
