U.S. District Judge Keith Ellison in Houston yesterday threw out least eight employee lawsuits that sought to recover millions of dollars in losses that BP’s employee retirement plans allegedly suffered from the largest offshore oil spill in U.S. history. The suits questioned plan managers’ investments in BP’s shares.
“Examining the fluctuations in BP’s stock price suggests that plaintiffs’ losses were only temporary,” Ellison wrote in his 42-page ruling. “BP’s steady revenue stream and expansive worldwide operations belie plaintiffs’ contention that the Deepwater Horizon explosion and subsequent spill were a threat to the viability of the company going forward.”
BP officials said today the U.S. government is withholding evidence that would show the spill was smaller than claimed. BP disputes the government’s estimates that that about 4.9 million barrels of oil spilled into the Gulf after a rig exploded.
U.S. Environmental Claims
The London-based company is facing litigation over its handling of the Macondo well off the coast of Louisiana, including environmental claims by the federal government and several states, which could result in as much as $17.6 billion in fines. Earlier this month, it agreed to pay at least $7.8 billion to settle private plaintiffs’ claims related to economic loss, property damage and personal injuries.
Guy Potvin, a BP’s spokesman, declined to comment on yesterday’s ruling. Ron Kravitz, co-lead counsel for the BP employees in the lawsuits, said in a telephone interview, “We’re reviewing our options on behalf of the participants in the BP plans.”
The workers’ consolidated suits alleged BP retirement-plan managers should have known the company’s stock was an “imprudent investment” given BP’s safety and compliance record before the Macondo spill. The cases were brought under the federal Employee Retirement Income Security Act, or ERISA.
BP employees have “complete discretion whether to invest in the BP stock fund” and plan managers can’t be held liable for employees’ own investment decisions, the company’s lawyers countered in their court filings in the case.
Ellison concluded that BP employees couldn’t produce enough evidence of wrongdoing on the part of the retirement plans’ managers to justify taking their claims to trial.
“Plaintiffs allegations are insufficient to demonstrate that the alleged fiduciaries should have considered the long- term viability of BP’s operations at risk,” the judge wrote.
Ellison last month allowed holders of BP American depositary receipts to pursue claims alleging violations of U.S. securities law. He dismissed claims by investors who bought ordinary shares of London-based BP.
Last year, Ellison also dismissed some lawsuits brought by institutional investors against BP’s board and managers over the company’s losses from the spill. The judge found the claims should be filed in U.K. courts because BP is based there.
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