BP Plc (BP/) asked a federal judge to deny U.S. investors the right to pursue a class action, or group, lawsuit claiming the company misled them before and after the 2010 Gulf of Mexico oil spill.
The investors, led by the New York and Ohio pension funds, sued BP and certain officers in 2010, alleging violations of U.S. securities laws.
The investors claim the company lied about the size of the worst offshore spill in U.S. history and its ability to contain a deep-water blowout to prop up its share price. Shareholders also claim BP’s senior management publicly proclaimed a commitment to safety improvement while internally cutting budgets and rejecting employees’ concerns about safety.
“Plaintiffs must demonstrate that the alleged misrepresentations were publicly known, that the stock traded in an efficient market, and that the relevant transaction took place between the time the misrepresentations were made and the time the truth was revealed,” BP’s lawyers said yesterday in a filing in federal court in Houston.
BP has denied fraud or any lack of attention to safety in court filings. “A commitment to safety is not a guarantee that no future accidents will occur,” the company said in an earlier court filing.
Richard Mithoff, a lawyer for the plaintiffs, said BP’s bid was a routine maneuver seen in all class-action suits.
“I expect at the end of the day we’ll be able to convince the court this case should proceed to trial,” Mithoff said today in a telephone interview.
The investors asked U.S. District Judge Keith P. Ellison of Houston in June to let them sue in two groups.
One composed primarily of institutional investors includes all buyers of BP’s American depositary receipts from Nov. 8, 2007, to May 28, 2010. One claiming to represent about 900,000 individual investors bought BP ADRs from March 4, 2009, to April 20, 2010, the date the Macondo well blew out off the Louisiana coast.
The judge in March refused to dismiss the bulk of the claims while ruling that only investors who purchased shares on the U.S. stock exchange were eligible to participate in the litigation.
BP shares fell about 40 percent in the weeks after the explosion, according to court filings. The drop eliminated billions of dollars in the London-based company’s market value, which hasn’t fully recovered.
The investors also sued BP ex-Chief Executive Officer Tony Hayward and Doug Suttles, ex-chief operating officer of BP’s exploration unit, over statements they made about the spill.
Hayward allegedly misled investors about how thoroughly BP had improved its safety practices and said the company was prepared to handle a large spill in very deep water, according to the shareholders’ complaint.
Both men lied publicly about the size of the spill, according to the complaint.
Investor securities-fraud suits were among hundreds filed after the explosion and sinking of the Deepwater Horizon drilling rig in April 2010. Eleven rig workers were killed and the blast sent more than 4 million barrels of oil into the Gulf.
BP agreed to pay $525 million to settle a U.S. Securities and Exchange Commission claim that the company underestimated the size of the spill.
The company also pleaded guilty to obstruction of Congress related to its spill size estimate, part of a $4 billion resolution of criminal charges brought by the U.S. BP pleaded guilty to 11 other felony counts related to the rig workers’ deaths and two misdemeanor environmental law violations.
BP is currently between phases of a different trial in federal court in New Orleans, in which a judge is weighing liability for the spill between BP and its contractors, including Transocean Ltd. (RIG:US), which owned the rig, and Halliburton Co. (HAL:US), which provided cementing services.
Testimony in the liability phase of that trial concluded in April, and no decision has been announced. The second trial phase will focus on the size of the spill, which will affect the size of the fine BP would pay for violating the U.S. Clean Water Act. That phase is scheduled to begin in September.
The case is In Re BP Plc Securities Litigation, 4:10-md-2185, U.S. District Court, Southern District of Texas (Houston).
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