Class Certified in BP Shareholder Action

     NEW ORLEANS (CN) – BP’s investors can sue as a class over $2.5 billion in losses they claim to have suffered after the 2010 Deepwater Horizon disaster led to a sharp decline in the energy giant’s share prices, a federal appeals court ruled.
     The Fifth Circuit on Tuesday upheld the decision of a federal judge in Houston that granted class certification to investors who said they were misled when they purchased BP stocks in the days immediately following the start of the oil spill, the magnitude of which was still unknown.
     The court ruled that while the true difference between that actual magnitude of the spill and what BP said it was in the days immediately after the disaster will never be known with certainty, it is clear that there was a huge gap between the two. To support this contention, it pointed to the Coast Guard’s statement that it believed the spill rate “estimate was five-fold higher than first anticipated.”
     The court also upheld a decision barring investors who purchased shares before the oil spill from seeking damages for their losses. The shareholders had said they were misled by the oil giant’s false promises it had improved its safety following the 2005 explosion of its Texas City refinery.
     While investors who bought BP shares after the disaster will be included in the class, those who bought them before the April 20, 2010 event will not be.
     In ruling against class certification for those investors who purchased shares before the oil spill, the Fifth Circuit said that the question of whether shareholders would have bought shares at all if it weren’t for BP’s alleged misrepresentations is a “determination not derivable as a common question, but rather one requiring individualized inquiry.”
     BP said in an emailed statement that “The Fifth Circuit has joined the District Court in rejecting a proposed class of plaintiffs who purchased BP stock over a two-and-a-half-year period before the Deepwater Horizon explosion and certifying only a 33-day class period after the explosion. BP has long argued that the plaintiffs’ damages theories do not meet their burden under the law and that all of the plaintiffs’ securities claims are meritless, and we will continue to vigorously defend against them.”
     The case pertains to the 87 day oil spill that followed the April 20, 2010 explosion and fire aboard the Deepwater Horizon rig that killed 11 and wounded 17 others, 5 million barrels of oil spilled into the Gulf of Mexico.
     The Fifth Circuit panel ruling was written by Judge Patrick E. Higginbotham, who was joined in the opinion by judges E. Grady Jolly and W. Eugene Davis.

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