Pomerantz LLP

Pomerantz LLP Achieves Important Victory for BP Investors

The April 20, 2010 Deepwater Horizon rig explosion and the resulting oil spill – the worst in U.S. history – caused immeasurable damage in the Gulf of Mexico and along its coastlines. The spill also injured investors in BP p.l.c. (“BP”), the majority owner of the blown well. Within weeks, the price of BP’s ordinary shares and its American Depository Shares (ADS) plummeted nearly 50%, a decline driven by revelations regarding BP’s prior misstatements about its commitment to safety and the spill’s true scope.

The U.S. Supreme Court’s decision in Morrison v. Nat’l Australia Bank Ltd., presented a seeming insurmountable hurdle to recovery in the U.S. for BP’s ordinary share investors. Morrison has been interpreted to bar the use of the U.S. federal securities laws to recover investment losses incurred as a result of trades on foreign exchanges, and BP’s common stock trades on the London Stock Exchange. This outcome would have left only investors in BP’s ADS protected by the U.S. federal securities laws. Moreover, the federal Securities Litigation Uniform Standards Act of 1998 (“SLUSA”) bars class actions under U.S. state laws seeking to recover for securities losses, regardless of the exchange.

In 2012, Pomerantz met these challenges by filing common law fraud and negligence claims on behalf of three U.S. pension funds against BP, in U.S. court, to recover losses associated with their BP common stock investments. Each client’s claims were pursued in an individual action, rather than a class action. For investors who also purchased BP’s ADS’s, Pomerantz simultaneously pursued U.S. federal securities claims – in the same lawsuit.

In a landmark 2013 decision, U.S. District Judge Keith Ellison rejected most of Defendants’ arguments seeking dismissal. He rejected their argument that his court was inconvenient and that the case should be dismissed to be litigated in England. Choosing to apply English common law, he eliminated Defendants’ arguments under Morrison and the Dormant Commerce Clause of the U.S. Constitution, which has been interpreted to preclude pursuit of certain U.S. law claims as regards commerce abroad. He held that Pomerantz adequately alleged BP’s intent to induce investment in BP securities, via direct representations made to our clients’ investment managers and public statements (like SEC filings) aimed at shareholders, and he credited our method of alleging actual reliance on BP’s misstatements. He also upheld our negligent misstatement claim, and its more lenient standard of proof, concerning BP’s misrepresentations in face-to-face meetings with plaintiffs’ investment managers. See Alameda County Employees’ Ret. Assoc., et al. v. BP p.l.c., et al., No. 4:12-cv-1256, 2013 WL 6383968 (S.D. Tex. Dec. 5, 2013).

This decision was an important victory for Pomerantz’s first group of clients and helped resolved significant issues as well for Pomerantz’s other later-filed clients with similar BP cases on file. Our litigation team included Marc Gross, Jeremy Lieberman, Matthew Tuccillo, Emma Gilmore, and Jessica Dell.

Pomerantz currently represents nearly three dozen institutional plaintiffs in the BP litigation, including U.S. public and private pension funds, U.S. limited partnerships and ERISA trusts, and pension funds from Canada, the U.K., France, the Netherlands, and Australia. On behalf of these clients, we have continued to earn significant victories, including a series of orders issued in October 2014, discussed here.

Pomerantz’s BP litigation as a whole is overseen by partners Marc Gross, Jeremy Lieberman, and Matthew Tuccillo.

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