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(Updates with excerpt from BP filing in fourth paragraph.)
July 27 (Bloomberg) -- BP Plc employees shouldn’t be allowed to sue the company’s retirement savings plan managers for investing too heavily in BP stock, because the workers chose to invest in those shares, company lawyers said.
BP asked a federal judge in Houston late yesterday to throw out multiple employee suits that seek recovery of millions of dollars the worker retirement plans lost during last year’s Gulf of Mexico oil spill.
The workers claim plan managers should have known the stock was an “imprudent investment” given BP’s safety and compliance record before the April 2010 sinking of the Deepwater Horizon, which sparked the worst offshore oil spill in U.S. history. The employee suits, brought under the federal Employee Retirement Income Security Act, or ERISA, are among hundreds of claims filed in U.S. courts after the explosion.
“Participants have complete discretion whether or not to invest in the BP stock fund,” company lawyers said in papers filed in Houston federal court, where cases are consolidated. “As a result, the basis for this lawsuit is not that defendants invested participants’ assets in the BP stock fund, but rather that defendants allowed plan participants to invest in that option and did not override participants’ decisions to do so.”
U.S. courts “have routinely rejected such claims” on the grounds that “employer stock is a presumptively prudent investment that employees should have the option to own in their retirement accounts,” according to the filing.
“We will vigorously oppose BP’s motion to dismiss,’’ Dona Szak of Ajamie LLP in Houston, who represents works in the case, said today by telephone.
The company faces lawsuits by workers and investors over the roughly 50 percent plunge in BP’s share price in the weeks after the spill, caused by the blowout of a BP well off the Louisiana coast. The cases are consolidated for pretrial processing before U.S. District Judge Keith P. Ellison.
BP previously asked Ellison to throw out lawsuits by investors who claim the company fraudulently misled them about its safety record and improvements made in safety compliance following a fatal refinery blast in 2005.
London-based BP also faces more than 350 lawsuits from thousands of property owners, fishing interests and tourism businesses claiming economic damage from the oil. Those cases are before a different federal judge in New Orleans.
The ERISA case is In re BP Plc Securities Litigation, 4:10- md-2185, U.S. District Court, Southern District of Texas (Houston).
--Editors: Charles Carter, Peter Blumberg
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