BP Plc will face a jury trial Aug. 25, 2014, in federal court in Houston on investors’ multibillion-dollar allegations that the company hid the true size of the 2010 Gulf of Mexico oil spill to limit the effect on its stock price.
The investors, led by Ohio and New York pension plans, sued BP and certain officers in 2010, alleging violations of U.S. securities law. The investors also claim the company publicly claimed a commitment to and implementation of expanded safety measures while internally cutting budgets and rejecting employees’ safety warnings.
The investors asked U.S. District Judge Keith P. Ellison, who is overseeing the lawsuit, for a February 2014 trial, while BP wanted January 2015. Ellison set the Aug. 25, 2014, trial date in a one-page order today.
“We are very pleased to have a firm trial date in August 2014,” Richard Mithoff, lead attorney for individual investors suing over BP share losses, said in a telephone interview. “The shareholders will now have their day in court.”
Investor securities-fraud suits are among hundreds of claims filed in U.S. courts after the explosion and sinking of the Deepwater Horizon drilling rig in the Gulf of Mexico in April 2010. Eleven people were killed in the blast and hundreds of miles of coastline were soiled in what became the largest offshore spill in U.S. history.
Injury, economic loss and environmental suits are combined before U.S. District Judge Carl Barbier in New Orleans, who began a nonjury trial last week on liability for the incident. Barbier will determine responsibility and whether one or more of the companies involved on the project acted with willful or wanton misconduct or reckless indifference -- the legal requirement for establishing gross negligence.
The investor suit, which seeks unspecified billions of dollars from BP in lost share value, is combined with other shareholder actions before Ellison in federal court in Houston.
Ellison has limited the lawsuit to claims brought by investors who bought shares on the U.S. stock exchange. BP has denied fraud or any lack of attention to safety in court filings.
Scott Dean, BP spokesman, declined to comment on the trial date.
The shareholders also sued several BP officers, including Chief Executive Officer Robert Dudley and BP America Inc.’s chairman and president at the time of the incident, Lamar McKay. Ellison dismissed the claims against Dudley and McKay, while allowing the suit to go forward against former BP Chief Executive Officer Tony Hayward and Douglas Suttles, former chief operating officer for exploration and production.
BP agreed to pay $525 million to settle a Securities and Exchange Commission claim that the company underestimated the size of the spill. The company also pleaded guilty to a felony count of obstruction of Congress related to its spill size estimates.
The plea was part of a $4 billion settlement of criminal charges brought by the U.S. against BP over the incident. BP also pleaded guilty to 11 other felony counts related to the deaths of the crew members and two misdemeanor environmental law charges.
BP shares fell about 40 percent in the weeks after the explosion, investors said in their complaint. The drop eliminated billions of dollars in the company’s market value, shareholders said.
The pension plans leading the litigation are suing on behalf of investors in BP ADRs from Jan. 16, 2007, to May 28, 2010.
Mithoff, the shareholder attorney, told Ellison at a hearing last month that investors would be ready by February 2014 to start the trial.
“With one or two exceptions,” Mithoff told Ellison, the process of taking sworn statements from BP executives and exchanging evidence “has already been substantially completed over the last two years” through coordination with attorneys in New Orleans who are leading the separate litigation against BP over economic and medical damages from the spill.
Richard Pepperman, BP’s attorney, told Ellison it was “overly ambitious” to think the parties would be ready for trial by early next year. He claimed that investors must prove the alleged misrepresentations were material in order to pursue the “fraud on the market” theory they’ve proposed in court filings.
Ellison cautioned lawyers for both BP and the investors at the hearing that there won’t be additional delays. “I’m pretty stubborn on trial dates,” Ellison told the lawyers last month. “That’s not a docket call date; it’s the day we pick a jury and begin with opening statements.”
The case is In re BP Plc Securities Litigation, 4:10-md-02185, U.S. District Court, Southern District of Texas (Houston).