Cabot Oil Beats Shareholders’ Derivative Pollution Suit, for Now

Cabot Oil & Gas Corp. fought off a derivative suit alleging its leadership misled investors about continued water pollution due to gas migration, but a federal judge in Texas said shareholders may amend their complaint and try again.

The energy company’s shareholders didn’t make a required demand on Cabot’s board before filing their derivative complaint or sufficiently allege that taking this step would have been futile, the U.S. District Court for the Southern District of Texas said.

Shareholders can excuse their failure to make a pre-suit demand if they can show demand futility. The shareholders here allege that a ...