The Fifth Circuit Court of Appeals has upheld the certification of a class action lawsuit filed by a class of BP investors alleging that BP misled them about the rate of oil spewing from the Macondo well as a result of the Deepwater Horizon oil rig explosion on April 20, 2010. The lawsuit, filed by pension funds in New York and Ohio, can continue on behalf of purchasers of certain types of BP securities during the 33-day period of April 26, 2010-May 28, 2010.
The lawsuit alleges that BP initially lowballed the oil flow rate which, at the time, falsely inflated securities prices. Plaintiffs claim that share prices began to tumble as the severity of the spill became known and eventually plunged about 40 percent. The Court determined the issue of whether revelations of the spill’s severity were linked to earlier BP misrepresentations was “undeniably common to the class, and is susceptible of a class-wide answer.”
The Court simultaneously denied certification for another class of pre-spill investors who bought BP shares up to two and a half years prior to the spill based on the allegation that BP “lulled” them into believing it was equipped to sufficiently manage safety issues, which was not the case in light of the evidence divulged during the three phases of trial in New Orleans. The court reasoned that some conservative investors may have divested from BP if they knew the company’s true risk of the disaster while other more aggressive investors may have stayed invested despite the risk. Such a determination ultimately turns on an individualized inquiry rather than an issue common to all class members.
While the pre-spill investors may still proceed with their individual lawsuits against BP, their grievances are certainly understandable in this day and age when some corporations make decisions based on their short-term financial interests and end up harming ordinary people in the process.
Sources: Oil and Gas Investor; gulflive.com
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