12/21/2012 06:58 EST | Updated 02/20/2013 05:12 EST

Quebec factory faces lawsuit after explosion

A New York law firm is claiming that the Sherbrooke, Que., factory where three people were killed in an explosion last month was storing "dangerously high levels of acetone."

Robbins Geller LLP has filed a class-action lawsuit in the United States District Court for the Southern District of New York on behalf of shareholders against Neptune Technologies et Bioressources Inc., which is headquartered in Laval, Que.

The Nov. 8 blast killed three people and injured 18 others. A tank of acetone, which is a highly flammable solvent, is believed to have been the source of the explosion.

In November, Radio-Canada reported that the quantity of acetone being stored inside the factory was higher than what was authorized by the Quebec Environment Ministry.

The suit alleges that Neptune, along with some of its officers and directors, violated U.S. law.

It also claims that Neptune failed to disclose key information about its Sherbrooke facility, in violation of the Securities Exchange Act of 1934.

A statement released by Robbins Geller alleges that Neptune "issued materially false and misleading statements regarding the company's operational status and financial projections."

The claim goes on to say that officials failed to disclose that they had installed larger acetone storage tanks at the plant, which stored "dangerously high levels of acetone," exceeding those permitted by the environment ministry.

The complaint also alleges that the company did not have government permission for the plant's expansion project, which was underway when the explosion occurred.

None of the allegations have been proven in court.

"There is absolutely no foundation for what this legal class action refers to," said André Godin, Neptune's chief financial officer.

Godin said the company is in the process of hiring legal counsel in the U.S. to defend the company and its directors against the claims, which he called "completely false."

According to a statement released by the law firm, Neptune stock "plunged" after the explosion to 32 per cent of its closing price the evening before the incident.