In re BP P.L.C. Securities Litigation
2012 U.S. Dist. LEXIS 17787
S.D. Tex.2012Background
- Deepwater Horizon explosion (April 20, 2010) spawned multi-district securities litigation with groups centralized in SD Texas and separate Louisiana matters; Ludlow Plaintiffs lead a securities class action, New York and Ohio Plaintiffs lead another, both involving BP and executives.
- Consolidation and leadership: the court consolidated securities actions; New York/Ohio and Ludlow leads did not file a single joint complaint.
- Timeline: Ludlow filed consolidated class action Feb 11, 2011; New York/Ohio filed Feb 14, 2011; BP moved to dismiss May 6, 2011; hearing held Nov 4, 2011.
- Claims: plaintiffs asserted violations of Section 10(b) and Rule 10b-5 and Section 20(a) against BP and nine individuals, seeking class certification, damages, prejudgment interest, costs, and fees.
- Outcome: the court granted BP’s motion to dismiss the Ludlow Plaintiffs’ claims, with specific dismissals of certain individual defendants and a path for amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PSLRA pleading requirements were met for §10(b) claims | Ludlow argues strong scienter and particularized misstatements. | Defendants contend group pleading and lack of particularized scienter. | Particularity and scienter not sufficiently pled; claims dismissed. |
| Materiality of OMS-related statements | OMS was material and misrepresented; investors relied on it. | Statements were forward-looking or vague and not material. | Some OMS statements deemed actionable on materiality grounds; overall scienter deficiencies still doom claims. |
| Scope and truth of statements regarding safety as BP's priority | BP repeatedly claimed safety was highest priority. | These are vague puffery not actionable. | Statements not actionable due to lack of particularity/materiality. |
| Whether scienter can be inferred for corporate statements | Corporate statements reflect deliberate recklessness or intent. | Cannot infer corporate scienter from group facts; must tie to specific officers. | Corporate scienter not adequately pleaded; several unattributed statements fail. |
| Section 20(a) control liability viability | Control persons liable if primary §10(b) violated. | No viable primary §10(b) claims for individuals or corporations. | With §10(b) claims dismissed, §20(a) claims fail. |
Key Cases Cited
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (U.S. 2007) (three-step scienter standard; strong inference required)
- Basic Inc. v. Levinson, 485 U.S. 224 (U.S. 1988) (materiality test for misrepresentations/omissions)
- Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (U.S. 2011) (materiality assessed in fact-specific context without bright-line rule)
- Southland Sec. Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353 (5th Cir. 2004) (rejects group pleading in scienter; require individual defendant ties)
- ABC Arbitrage Plaintiffs Group v. Tchuruk, 291 F.3d 336 (5th Cir. 2002) (requirements for pleading fraud with particularity under PSLRA/Rule 9(b))
- Bridgestone Corp. v./DC, 399 F.3d 651 (6th Cir. 2005) (materiality and testing of information in market disclosures)
- In re TETRA Techs., Inc. Sec. Litig., No. 4:08-cv-0965, 2009 WL 6325540 (S.D. Tex. 2009) (PSLRA pleading standard; safe harbors and forward-looking statements considerations)