BP Wins U.S. Dismissal of Some Investors’ Derivative Suits
BP Plc (BP/) convinced a federal judge that it shouldn’t have to face some lawsuits in the U.S. brought by institutional investors on behalf of the company over last year’s Gulf of Mexico drilling-rig explosion and oil spill.
U.S. District Judge Keith P. Ellison in Houston agreed with BP’s arguments that the claims should be filed in U.K. courts because the company is based in London. Ellison said he may reverse this dismissal if English courts “refuse to accept jurisdiction” for reasons other than the plaintiffs’ failure to comply with procedural requirements.
“Because this derivative lawsuit involves the internal governance of an English corporation, the convenience of the parties and the interests of justice favor England as a more convenient forum,” Ellison said yesterday in a 31-page decision.
Investors sued BP claiming that the company’s management and board caused the spill by knowingly putting profits ahead of safety. The Deepwater Horizon rig exploded in April 2010 while drilling a BP well off the Louisiana coast, killing 11 and spilling more than 4.1 million barrels of oil.
The investors’ suits, so-called derivative claims brought on behalf of the company, are combined with other shareholder actions before Ellison in Houston. Lawsuits seeking money for economic and personal injuries from the spill are consolidated before a different U.S. judge in New Orleans.
The other shareholder lawsuits before Ellison, including those claiming securities fraud, aren’t affected by his decision on the derivative claims.
“The primary concern of this derivative litigation is the internal affairs of an English corporation, and the suit seeks to recover damages for the benefit of BP only,” Ellison said in his ruling. “English law governs this dispute and will determine whether the individual defendants breached their fiduciary duties and harmed BP in the process.”
Mark Lebovitch, a lawyer for the investors, said in an interview today that his clients “continue to believe that if ever there was a case where a federal judge should retain jurisdiction over a foreign corporation’s board, this case is it.” The plaintiffs are “reviewing their options” for a response to the dismissal, he said.
BP spokesmen Daren Beaudo declined to comment.
The case is In re BP Shareholder Derivative Litigation, 4:10-cv-03447, U.S. District Court, Southern District of Texas (Houston).
To contact the reporter on this story: Margaret Cronin Fisk in Detroit at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Hytha at email@example.com