BP shareholder suits standing still in federal court

By Steve Korris | Sep 16, 2010


HOUSTON - While litigation over the Deepwater Horizon oil rig explosion runs at full speed in Louisiana, shareholder suits against BP stand still in Texas.

U.S. District Judge Keith Ellison of Houston took charge of three shareholder suits on Aug. 10, but no further docket entries appeared as of Sept. 14.

Judges in Washington assigned the suits to Ellison the same day they assigned most oil spill cases to District Judge Carl Barbier of New Orleans.

Barbier's docket carries more than 200 entries, while Ellison's docket carries nothing but the order that appointed him.

BP wanted to consolidate the shareholder suits with other oil spill suits, but the U.S. Judicial Panel on Multi District Litigation found the two groups vastly different.

Panel chairman John Heyburn wrote that the broader litigation would focus on the incident, the respective fault of three or four primary actors, and the incident's effects.

"In the securities actions, discovery will likely focus on BP alone, its safety record over the past five years, and, in particular, the alleged duty of BP officials to recognize and disclose the likelihood that a calamity such as this might occur," he wrote.

"We are unaware of any instance in which the Panel has ever centralized such disparate claims," he wrote.

The panel gave Ellison two suits from the Western District of Louisiana and one from the Central District of California, all seeking damages under securities law.

The panel deferred a decision on three suits seeking damages under pension law.

BP also faces three shareholder suits before state court judges in Harris County.

On Sept. 3, for BP, former Supreme Court Justice Scott Brister petitioned the Texas Judicial Panel on Multi District Litigation to consolidate the Harris County actions.

"The petitions in each case are largely identical," he wrote.

In one case, Charles Branham and Hamilton Lindley of Dallas represent Raymond Vallerga before District Judge Sylvia Matthews.

In another, Patrick Powers and Mark Taylor of Dallas represent Kenneth Flacks before District Judge Larry Weiman.

In the third, William Federman of Dallas represents Marjorie Delmar before District Judge Tad Halbach.

All three suits named the same 15 officers and directors as defendants, Brister wrote, alleging steps they should have taken to avoid the incident.

The suits quoted extensively from newspaper and television reports, he wrote.

They referred to accidents and incidents in Texas City, Alaska, Los Angeles and Toledo, he wrote.

And, all three alleged breach of fiduciary duty, gross mismanagement and waste, he wrote.

Two out of three sought a new election of directors, he wrote.

"It is unknown at this time how many shareholder lawsuits will be filed in Texas state courts arising out of the Deepwater Horizon incident, or where those cases may be filed," he wrote.

"But pretrial litigation should be consolidated in one place for coordination and convenience," he wrote.

He tied his argument to Ellison's docket in federal court.

"Additionally, this state court litigation will require some degree of coordination with the parallel MDL proceedings in federal court," Brister wrote.

"No court can consolidate cases pending in both federal and state courts," he wrote.

"But it will be far more convenient for one state judge to coordinate proceedings with those in federal court than for several state judges to do so," he wrote.

"To date, almost 400 lawsuits (including almost 200 class actions) have been filed relating to the incident," he wrote.

"Most of the personal injury and property damage claims originally filed in Texas state courts are still pending in federal court, and it is unclear how many, if any, will be remanded," he wrote.

He asked the panel for a decision without prejudice to further order on consolidation of claims other than shareholders that might return from federal court.

He wrote that "piecing together what happened 5,000 feet underwater and as much as three miles below the seabed surface will take time and patience."

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