MDL Panel Centralizes BP Securities Litigation in Southern District of Texas to Judge Keith P. Ellison

by charlesjung

Deepwater Horizon Flaring Operation
Image by DVIDSHUB via Flickr

The U.S. Judicial Panel on Multidistrict Litigation considered a motion, pursuant to 28 U.S.C. § 1407, to centralize certain securities litigation related to BP in the Western District of Louisiana.  In re BP P.L.C. Securities Litigation, MDL No. 2185, — F.Supp.2d —-, 2010 WL 3238321 (U.S. Jud. Pan. Mult. Lit. Aug. 10, 2010).  The actions all involve alleged violations of Sections 10(b) (and Rule 10b-5 promulgated thereunder) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78a, et seq., and share allegations that BP and its executives misled the investing public concerning the company’s safety measures and commitment to conducting safe operations.  The Panel transferred the proceedings to the Southern District of Texas, to Judge Keith P. Ellison.

All responding plaintiffs supported centralization, but defendants BP p.l.c. and BP America Inc. (collectively BP), opposed, arguing that these actions should be included in MDL No. 2179, In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, and thus that creation of a separate MDL is not warranted.

On the basis of the papers filed and the hearing session held, we find that the three actions listed on Schedule A involve common questions of fact, and that centralization under Section 1407 will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation. All three actions share allegations that BP and its executives misled the investing public concerning the company’s safety measures and failed to disclose that its safety procedures were inadequate and that it cut costs at the expense of safety. As a result, according to plaintiffs, they and other investors purchased American Depositary Receipts of BP p.l.c. at artificially inflated prices. The Panel has typically centralized cases involving these kinds of securities claims and implicating common factual issues. See, e.g., In re: Citigroup Inc. Securities Litigation, 648 F.Supp.2d 1382, 1383 (J.P.M.L.2009).

BP’s argument that these actions belong in MDL No. 2179 has facial appeal, but no more. Of course, the securities actions and the actions centralized in MDL No. 2179 do share an underlying genesis: the causes and consequences of the “Deepwater Horizon” disaster. However, the true factual focuses of these two dockets are vastly different. Plaintiffs in MDL No. 2179 will likely focus on the incident itself, the respective fault, if any, of the three or four primary actors, and the incident’s economic and other after effects. In the securities actions, discovery will likely focus on BP alone, its safety record over at least the past five years, and, in particular, the alleged duty of BP officials to recognize and disclose the likelihood that a calamity such as this might occur. Thus, the typical benefits of common discovery would likely be few. Moreover, the MDL No. 2179 claims alone will require, in all probability, the transferee judge’s undivided attention. To combine these essentially different factual pursuits in a single MDL would likely create an unwieldy and ultimately counterproductive litigation vehicle. We are unaware of any instance in which the Panel has ever centralized such disparate claims. In our view, this is not the occasion to deviate from that sound policy. . . .

IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C. § 1407, the actions listed on Schedule A are transferred to the Southern District of Texas, and, with the consent of that court, assigned to the Honorable Keith P. Ellison for coordinated or consolidated pretrial proceedings.

Id. **1-3.

Chairman John G. Heyburn II wrote the opinion for the Panel.

By CHARLES H. JUNG

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