Foreign investors who sued BP PLC over stock losses they suffered after the 2010 Deepwater Horizon disaster have been allowed to continue with their claims in U.S. District Court. Judge Keith P. Ellison, the Texas federal judge who has this case, ruled in an order made public on Oct. 1. In a memorandum and order made under seal. Judge Ellison wrote that while he could dismiss the claims brought by Avalon Holdings Inc. and other overseas investors and “relieve congestion” on his own docket, other factors weigh against such a move, which would send the litigation to an English court. That is because the parties are litigating under English law about shares that trade on the London Stock Exchange. Judge Ellison wrote:
[T]he private and public interest factors must weigh heavily in favor of England to disrupt the foreign plaintiffs’ choice of forum. Because it does not, the court once again declines to dismiss English law, securities fraud claims asserted in this MDL under the doctrine of forum non conveniens.
The decision is considered a significant one because of the U.S. Supreme Court’s ruling in Morrison v. National Australia Bank. It was believed by many that the decision all but closed U.S. courts to overseas securities claims. Judge Ellison’s ruling has been called a landmark decision. That is because it permits foreign investors who purchased securities traded in London to pursue English law claims in the Texas court.
Judge Ellison last year rejected a similar motion by BP seeking to move other related litigation to England, though that case involved U.S.-based pension funds that owned BP shares trading on the LSE. Texas was an appropriate forum for the cases considering that BP is actively involved in multidistrict litigation (MDL) and that two of the U.S. pension funds are pursuing claims related to domestic trading losses under the Securities Exchange Act that cannot be heard in the U.K.
The claims in the MDL before Judge Ellison involve allegations that BP and individual executives made material misrepresentations about the company’s commitment to safety in the run-up to the 2010 Deepwater explosion. They also involve plaintiff’s ability to clean up the massive spill. The extent of BP’s likely responsibility once the disaster occurred is also a part of the MDL. Judge Ellison has also denied a separate motion by BP to dismiss a complaint brought by Plaintiffs including the New York City Employees’ Retirement System on the basis that they had exceeded the five-year statute of repose for certain claims.
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