BP 2014 Annual Report Download - page 239

subsequently transferred to MDL 2179 on 4 November 2010. These
lawsuits allege that the Incident harmed their tourism, fishing and
commercial shipping industries (resulting in, among other things,
diminished tax revenue), damaged natural resources and the
environment and caused the states to incur expenses in preparing a
response to the Incident. On 9 December 2011, the district court in
MDL 2179 granted in part BP’s motion to dismiss the three Mexican
states’ complaints, dismissing their claims under OPA 90 and for
nuisance and negligence per se, and preserving their claims for
negligence and gross negligence only to the extent there has been a
physical injury to a proprietary interest of the states. On 12 September
2013, the court issued a final judgment dismissing the three Mexican
states’ claims with prejudice. On 4 October 2013, the three Mexican
states filed notices of appeal from the judgment to the Fifth Circuit.
Following briefing, oral argument was heard on the appeal on 27 October
2014 and the appeal is now under review.
On 5 April 2011, the State of Yucatan submitted a claim to the Gulf Coast
Claims Facility (GCCF) alleging potential damage to its natural resources
and environment, and seeking to recover the cost of assessing the
alleged damage. On 18 September 2013, the State of Yucatan filed suit
against BP in federal court in Florida and, on 13 December 2013, its
action was transferred to MDL 2179.
On 19 April 2013, the Mexican federal government filed a civil action
against BP and others in MDL 2179. The complaint seeks a
determination that each defendant bears liability under OPA 90 for
damages that include the costs of responding to the spill; natural
resource damages allegedly recoverable by Mexico as an OPA 90
trustee; and the net loss of taxes, royalties, fees or net profits.
Insurance-related matters
On 1 March 2012, the district court in MDL 2179 issued a partial final
judgment dismissing with prejudice certain claims by BP, Anadarko and
MOEX for additional insured coverage under insurance policies issued to
Transocean for the sub-surface pollution liabilities BP, Anadarko and
MOEX have incurred and will incur with respect to the Macondo well oil
release. BP filed a notice of appeal from the district court’s judgment to
the Fifth Circuit and on 1 March 2013, the Fifth Circuit reversed the
district court’s judgment, rejecting the district court’s ruling that the
insurance that BP is entitled to receive as an additional insured under the
Transocean insurance policies at issue is limited to the scope of the
indemnity in the drilling contract between BP and Transocean. On
29 August 2013, the Fifth Circuit withdrew its 1 March 2013 opinion and
certified two questions of Texas law at issue in the appeal to the
Supreme Court of Texas. On 13 February 2015 the Supreme Court of
Texas held that the insurance BP is entitled to receive as an additional
assured is limited to the liabilities that Transocean assumed in the drilling
contract which does not include liabilities for damages arising from sub-
surface pollution.
False Claims Act actions
BP is aware that actions have been or may be brought under the Qui Tam
(whistle-blower) provisions of the False Claims Act (FCA). On
17 December 2012, the court ordered unsealed one complaint that had
been filed in the US District Court for the Eastern District of Louisiana by
an individual under the FCA’s Qui Tam provisions. The complaint alleged
that BP and another defendant had made false reports and certifications
of the amount of oil released into the Gulf of Mexico following the
Incident. On 17 December 2012, the DoJ filed with the court a notice
that the DoJ elected to decline to intervene in the action. On 31 January
2013, the complaint was transferred to MDL 2179 and remains stayed.
MDL 2185 and other securities-related litigation
Since the Incident, shareholders have sued BP and various of its current
and former officers and directors asserting shareholder derivative claims
and class and individual securities fraud claims. Many of these lawsuits
have been consolidated or co-ordinated in federal district court in
Houston (MDL 2185).
Securities class action
On 13 February 2012, the federal district court in Houston in MDL 2185
issued two decisions (the February 2012 ruling) on the defendants’
motions to dismiss the two consolidated securities fraud complaints filed
on behalf of purported classes of BP ordinary shareholders and ADS
holders. The February 2012 ruling dismissed all the claims of the ordinary
shareholders, and the claims of the lead class of ADS holders against
most of the individual defendants while holding that a subset of the
claims against two individual defendants and the corporate defendants
could proceed. In addition, all of the claims of a smaller purported
subclass were dismissed with leave to re-plead in 20 days. On 2 April
2012, the plaintiffs in the lead class and subclass filed an amended
consolidated complaint with claims based on (1) the 12 alleged
misstatements that the court held were actionable in the February 2012
ruling; and (2) 13 alleged misstatements concerning BP’s operating
management system that the judge either rejected with leave to re-plead
or did not address in the February 2012 ruling. On 2 May 2012,
defendants moved to dismiss the claims based on the 13 statements in
the amended complaint that the judge did not already rule are actionable.
On 6 February 2013, the court granted in part this motion to dismiss,
rejecting the plaintiffs’ claims based on eight of the statements at issue
in the motion and also dismissing all claims against former BP employee
Andrew Inglis. On 20 May 2014, the judge denied plaintiffs’ motion to
certify a proposed class of ADS purchasers before the Deepwater
Horizon explosion (from 8 November 2007 to 20 April 2010) and granted
plaintiffs’ motions to certify a class of post-explosion ADS purchasers
from 26 April 2010 to 28 May 2010 and to amend their complaint to add
one additional alleged misstatement. Both parties sought permission to
appeal from the district court’s class certification decisions and on 3 July
2014, the Fifth Circuit granted both parties’ requests. Briefing on those
appeals is expected to conclude in March 2015.
The trial of the securities fraud claims of the class of post-explosion ADS
purchasers has been scheduled to commence on 11 January 2016.
Individual securities litigation
In April and May 2012, six cases (three of which were consolidated into
one action) were filed in state and federal courts by one or more state,
county or municipal pension funds against BP entities and several current
and former officers and directors seeking damages for alleged losses
those funds suffered because of their purchases of BP ordinary shares
and, in two cases, ADSs. The funds assert various state law and federal
law claims. From July 2012 to April 2014, 27 additional cases were filed
in Texas state and federal courts (later consolidated into 24 actions) by
pension or investment funds or advisers against BP entities and current
and former officers and directors, asserting state, federal, and non-US
law claims and seeking damages for alleged losses that those funds
suffered because of their purchases of BP ordinary shares and/or ADSs.
Two cases were filed in New York federal court by funds that purchased
BP ordinary shares and ADSs, asserting state and federal law claims. All
the cases have been transferred to federal court in Houston and, with the
exception of one case that has been stayed, the judge presiding over
MDL 2185. One case was voluntarily dismissed on 9 May 2013. On
3 October 2013, the judge granted in part and denied in part the
defendants’ motion to dismiss three of the remaining 29 cases
dismissing a subset of the claims. The judge held that English law
governs the plaintiffs’ remaining claims (with the exception of the federal
law claims based on purchases of ADSs and a potential claim under Ohio
state law against BP p.l.c. by certain Ohio funds). On 11 December 2013,
defendants moved to dismiss 10 of the remaining cases and answered
the complaints in two others. On 5 December 2013, the Ohio funds
(plaintiffs in one of the first three cases defendants moved to dismiss)
filed an amended complaint withdrawing their English law claim and
asserting only a claim under Ohio state law. On 6 January 2014, BP
moved to dismiss that case for a second time, and on 7 April 2014, the
judge dismissed the Ohio action with leave to replead English law claims
within 30 days. On 8 June 2014, the Ohio funds filed a second amended
complaint asserting only English law claims. On 30 September 2014, the
court granted in part and denied in part the defendants’ motion to dismiss
10 cases. The court dismissed the negligent misstatement claims in all
but one of the 10 cases and dismissed claims in these cases based on
certain public and private misstatements. The court also rejected BP’s
arguments that the ordinary share claims of the non-US plaintiffs should
be heard in England. On 29 October 2014, the case brought by the Ohio
funds was transferred to federal court in Houston for all purposes. On
30 December 2014, defendants answered the complaints in 11 cases.
Amended complaints in the remaining 15 cases are due by 1 April 2015.
Additional disclosures
BP Annual Report and Form 20-F 2014 235