Lawyers for BP Plc and investors suing over billions of dollars in market losses tied to the Gulf of Mexico oil spill must submit lawsuit leadership proposals by Oct. 27, a judge overseeing the suits said.
“We should start with ideas about how to select the lead plaintiff and class counsel,” said U.S. District Judge Keith P. Ellison today, at the first hearing over investor suits combined in his court.
Lawsuits by investors in U.S. shares of BP allege the company misrepresented the risks of its offshore drilling programs, artificially inflating the value of its American depositary receipts. The suits, brought by shareholders against BP for their own losses or derivatively on behalf of the company, claim BP’s directors and senior managers are responsible for as much as $50 billion in lost stock value after the spill.
“BP’s procedures for minimizing its financial losses from drilling rig problems were no more than fantasies,” Stanley M. Chesley, an attorney for one of the investor cases consolidated in Houston federal court, said in a court filing. “BP was simply not the enterprise that its public communications pictured.”
The investor lawsuits were combined before Ellison in August in a multidistrict litigation, or MDL, for evidence-gathering and pretrial decisions.
BP is facing more than 400 lawsuits over the largest offshore oil spill in U.S. history, set off by the April 20 explosion of the Deepwater Horizon drilling rig.
Claims by fisherman, restaurants, real estate interests, governments and others for economic loss have been combined with personal injury and wrongful-death suits for pretrial treatment in a separate multidistrict litigation before U.S. District Judge Carl Barbier in New Orleans.
The Judicial Panel on Multidistrict Litigation, which sent the shareholder cases to Ellison, is still considering whether to consolidate a third set of investor suits in his court. Lawyers for those investors, BP employees in the company’s retirement savings plan, are seeking consolidation in federal court in Chicago.
BP’s shares initially lost more than half their value before rebounding. BP’s American depository shares, each valued at six ordinary shares, were trading at $60.48 on April 20, the day the well blew out, and fell as low as $26.75 June 28. The shares rose 2 cents to $41.26 today in New York Stock Exchange composite trading.
The investors claim losses to the company from the spill might exceed $100 billion, when shareholders’ losses are combined with what BP must pay to settle other types of claims. Investors suing on behalf of the company also seek changes to BP’s management and safety policies in addition to financial compensation.
BP took a $32.2 billion charge against earnings in July to cover potential pollution fines, cleanup costs, and the creation of a $20 billion fund for spill-related economic injuries. This month, BP said it had paid more than $11.2 billion in cleanup and compensation costs so far.
BP’s lawyer, Daryl Libow of Sullivan & Cromwell, told Ellison the company has been discussing case management and discovery issues with lawyers in the case already. He said BP envisions dealing with one lead plaintiff for the securities fraud claims and another for the derivative claims.
“Then if the ERISA cases are sent here by the judicial panel, we will end up with three separate tracks’’ within the investor MDL, Libow said. He suggested the judge select lead plaintiffs and their lawyers before setting any discovery or trial schedules. ERISA refers to the Employee Retirement Income Security Act of 1974.
Investors suing derivatively have asked Ellison to name as co-lead counsel over their portion of the MDL two firms that specialize in class actions and securities fraud litigation.
Bernstein Litowitz Berger & Grossman LLP, of New York, has represented some of North America’s largest public pension funds in securities litigation and has won five of the 10 largest securities recoveries in U.S. history, according to the application filed with the court.
Kahn, Swick & Foti LLC, of Madisonville, Louisiana, specializes in class actions concerning securities and consumer fraud, according to its application. Partner Charles Foti was Louisiana’s Attorney General from 2004 to 2008, and he was criminal sheriff of Orleans Parish, where New Orleans is located, for 30 years before that.
Investors alleging securities fraud and suing for their own losses haven’t yet filed petitions asking Ellison to name lead plaintiffs and lawyers for their portion of the MDL. Lawyers for the state employee pension funds of New York and Ohio asked Ellison for lead status during today’s hearing, as did several Houston attorneys.
Ellison told lawyers he would sign those lead counsel appointments today for the derivative cases, as they were not contested.
The case is In Re: BP Plc Securities Litigation, MDL 2185, U.S. District Courts, Southern District of Texas (Houston).