Post-Explosion Remarks Could Sustain BP Suit
HOUSTON (CN) - BP investors can advance a class action accusing the company of downplaying the scope of the Deepwater Horizon oil spill, a federal judge ruled.
After the Deepwater Horizon oil rig exploded and caught fire on April 20, 2010, its Macondo well released nearly 5 million barrels of oil into the Gulf of Mexico.
The disaster led dozens of investors to file class actions against BP in Houston federal court, alleging they bought shares due to false statements made by BP executives.
Beginning in 2007, such statements convinced the market that BP was committed to keeping its workers safe, the investors claimed.
Investors also accused BP directors of publicly lowballing the rate of the oil spill to prevent share prices from hitting a level that accurately reflected the spill's size.
U.S. District Judge Keith Ellison refused to certify a class action in December, finding the plaintiffs had not given enough specifics on how to determine classwide damages.
At Ellison's urging the plaintiffs went back to the drawing board and divided their class into "pre-explosion and post-explosion subclasses."
The pre-explosion plaintiffs argued that BP's misstatements about its safety culture prevented them from divesting their BP shares before the Deepwater Horizon disaster.
Ellison found the methodology used by the pre-explosion plaintiffs to calculate their damages lacking, however, and denied them class certification last week.
The post-explosion litigants were more persuasive in arguing that BP's understatements about the spill's size had caused an artificial delay in the stock price falling, according to the May 20 ruling.
Ellison certified the class as all people or entities who bought BP stock between April 26, 2010, and May 28, 2010, excluding BP executives, their families and affiliates.