Federal judge hears BP motions to dismiss shareholder suits

David Yates Nov. 7, 2011, 5:29am


HOUSTON - Like a sushi chief, a Houston judge must decide whether to chop up suits brought by BP shareholders so they can be served up in London courts.

On Friday, U.S. District Judge Keith Ellison heard motions to dismiss three groups of Deepwater Horizon suits from BP shareholders.

Judge Ellison, of the Southern District of Texas-Houston Division, is presiding over a multi-district litigation panel on BP securities litigation.

All three suits in question seek to recover damages from BP on behalf of the company's shareholders.

The judge made no immediate rulings on the cases, but told attorneys he would get a ruling to them soon.

The first hearing centered on a motion to dismiss claims from all who bought BP's American depository shares in the 13 months prior to the April 20, 2010, explosion.

Court records show that the class asserted its claim under the Securities Exchange Act.

The plaintiffs contend that BP made several inaccurate claims that safety was its focus – statements that shareholders relied on.

During the hearing, Judge Ellison pointed out that, "there seems to be disharmony between (BP's) general statements and what was actually going on in the oil patches."

In its defense, BP attorneys argued that the federal act doesn't allow claims of internal corporate mismanagement.

"Vague and optimistic statements concerning topics such as safety and deepwater drilling lack a standard against which a reasonable investor would expect them to be pegged, and thus are immaterial to an investment decision," Thomas Taylor of Houston wrote for BP.

"Plaintiffs readily acknowledge that the risks and dangers inherent in offshore drilling and oil extraction have been well known for decades."

The second hearing Friday focused on public pension funds of Ohio and New York. The class represents all buyers of American depositary shares between Jan. 16, 2007, and May 28, 2010.

During the afternoon hearing, BP presented the U.S. Supreme Court case Morrison vs. Australia Bank – a case centered on a foreign company that did not trade in the U.S.

BP argued that the U.S. Supreme Court bars all Exchange Act claims based on purchases of BP shares that trade only in London and Frankfurt.

Steve Korris contributed to this story

Federal case No. 4:10-md-02185

Want to get notified whenever we write about U.S. Supreme Court ?
Next time we write about U.S. Supreme Court, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

U.S. Supreme Court
1 First St NE
Washington, DC 20543

More News