Last year, Judge Ellison permitted the certification of a class of investors who purchased BP stocks from April 26 to May 28, 2010. Ellison, however, ruled that investors who purchased BP securities in the 2 ½-year period before the spill were not permitted to sue as a class. Disappointed, both BP and the plaintiffs’ attorneys appealed the rulings. Writing for the unanimous panel, Circuit Judge Patrick Higginbotham found that the question of BP executives’ forthrightness during the early days of the spill was “undeniably common to the class, and is susceptible of a class-wide answer.”
While most of the environmental damage has been contained and things are relatively back to normal in lands surrounding the Gulf of Mexico following the disastrous 2010 BP oil spill, some lingering issues remain. Fresh off of agreeing to $18.7 billion in federal and state-level penalties earlier this summer, the 5th Circuit U.S. Court of Appeals in New Orleans ruled that a class-action lawsuit, which was filed on behalf of investors claiming the company misled them during the initial stages of the crisis, will be allowed to proceed. Plaintiffs’ attorneys allege that BP misled the institutional investors by downplaying the severity of the crisis in its initial stages. BP stock dropped nearly 40 percent over the first 33 days of the disaster, leading to billions of dollars in losses. In a 3-0 panel decision on Tuesday, the court upheld a pair of 2014 rulings by U.S. District Judge Keith Ellison in Houston. In 2012, BP agreed to a $525 million settlement with federal regulators to resolve accusations that the company lied about the spill’s severity during the initial aftermath.
Last year, Judge Ellison permitted the certification of a class of investors who purchased BP stocks from April 26 to May 28, 2010. Ellison, however, ruled that investors who purchased BP securities in the 2 ½-year period before the spill were not permitted to sue as a class. Disappointed, both BP and the plaintiffs’ attorneys appealed the rulings. Writing for the unanimous panel, Circuit Judge Patrick Higginbotham found that the question of BP executives’ forthrightness during the early days of the spill was “undeniably common to the class, and is susceptible of a class-wide answer.” Higginbotham also upheld Ellison’s ruling however, that investors who purchased securities before the spill could not form a class. The panel did agree that investors who were excluded could still sue the company on an individual basis. One plaintiffs’ attorney, Russell Post, spoke for many in the suit, saying “We are disappointed with the decision, which we believe erects additional hurdles to class certification that the Supreme Court does not require.” BP spokesman Geoff Morrell called the claims “meritless,” and said that the company would continue to fight the class-action case in U.S. District Court.
Investors have been seeking up to $2.5 billion in claims, potentially adding to the growing pricetag for the spill’s aftermath. In addition to the whopping federal penalty, BP has already agreed to pay over $11 billion in civil settlements to over 66,000 claimants. The company still faces claims involving hundreds of foreign pension funds, who claim to have lost hundreds of millions on purchases during the same 33-day time window in addition to the individual claims brought forth by those excluded by Judge Ellison’s rulings. In a July earnings report, BP claims that the total pre-tax charge for all expenses related to the spill’s cleanup and damages to be $54.6 billion. The aforementioned class-action case will go before a federal jury in Houston in January.
Sources:
Bidness ETC – Micheal Kaufman
Insurance Journal – Laurel Brubaker Calkins
Reuters – Jonathan Stempel
Join the conversation!