BP 2012 Annual Report Download - page 164

Legal proceedings
Proceedings relating to the Deepwater Horizon
oil spill
BP p.l.c., BP Exploration & Production Inc. (BPXP) and various other BP
entities (collectively referred to as BP) are among the companies named as
defendants in approximately 750 civil lawsuits resulting from the 20 April
2010 explosions and fire on the semi-submersible rig Deepwater Horizon
and resulting oil spill (the Incident) and further actions are likely to be
brought. BPXP is lease operator of Mississippi Canyon, Block 252 in the Gulf
of Mexico (Macondo), where the Deepwater Horizon was deployed at the
time of the Incident. The other working interest owners at the time of the
Incident were Anadarko Petroleum Company (Anadarko) and MOEX
Offshore 2007 LLC (MOEX). The Deepwater Horizon, which was owned
and operated by certain affiliates of Transocean Ltd. (Transocean), sank on
22 April 2010. The pending lawsuits and/or claims arising from the Incident
have generally been brought in US federal and state courts. Plaintiffs include
individuals, corporations, insurers, and governmental entities and many of
the lawsuits purport to be class actions. The lawsuits assert, among others,
claims for personal injury in connection with the Incident itself and the
response to it, wrongful death, commercial and economic injury, breach of
contract and violations of statutes. The lawsuits seek various remedies
including compensation to injured workers and families of deceased
workers, recovery for commercial losses and property damage,
compensation for personal injuries and medical monitoring, claims for
environmental damage, remediation costs, claims for unpaid wages,
injunctive and declaratory relief, treble damages and punitive damages.
Purported classes of claimants include residents of the states of Louisiana,
Mississippi, Alabama, Florida, Texas, Tennessee, Kentucky, Georgia and
South Carolina; property owners and rental agents, fishermen and persons
dependent on the fishing industry, charter boat owners and deck hands,
marina owners, gasoline distributors, shipping interests, restaurant and hotel
owners, cruise lines and others who are property and/or business owners
alleged to have suffered economic loss; and response workers and
residents claiming injuries due to exposure to the components of oil and/or
chemical dispersants. Among other claims arising from the spill response
efforts, lawsuits have been filed claiming that additional payments are due
by BP under certain Master Vessel Charter Agreements entered into in the
course of the Vessels of Opportunity Program implemented as part of the
response to the Incident. Purported class action and individual lawsuits have
also been filed in US state and federal courts, as well as one suit in Canada,
against BP entities and/or various current and former officers and directors
alleging, among other things, shareholder derivative claims, securities fraud
claims, violations of the Employee Retirement Income Security Act (ERISA)
and contractual and quasi-contractual claims related to the cancellation of
the dividend on 16 June 2010. In August 2010, many of the lawsuits
pending in federal court were consolidated by the Federal Judicial Panel on
Multi-district Litigation into two multi-district litigation proceedings, one in
federal court in Houston for the securities, derivative, ERISA and dividend
cases and another in federal court in New Orleans for the remaining cases.
BP has had discussions with the DoJ regarding possible settlements of
the claims by the DoJ, other federal agencies and certain States, in whole
or in part, and remains open to further discussions but there are a number
of significant issues and considerable uncertainty as to whether any
agreement could ultimately be reached.
On 25 February 2013, the first phase of a Trial of Liability, Limitation,
Exoneration and Fault Allocation commenced in the federal multi-district
litigation proceeding in New Orleans. For further information, see
page 164 below.
In addition, BP has been named in several lawsuits alleging claims under the
Racketeer-Influenced and Corrupt Organizations Act (RICO). On 15 July
2011, the judge granted BP’s motion to dismiss a master complaint raising
RICO claims against BP. The court’s order dismissed the claims of the
plaintiffs in four RICO cases encompassed by the master complaint.
On 26 August 2011, the judge in the federal multi-district litigation
proceeding in New Orleans granted in part BP’s motion to dismiss a
master complaint raising claims for economic loss by private plaintiffs,
dismissing plaintiffs’ state law claims and limiting the types of maritime
law claims plaintiffs may pursue, but also held that certain classes of
claimants may seek punitive damages under general maritime law. The
judge did not, however, lift an earlier stay on the underlying individual
complaints raising those claims or otherwise apply his dismissal of the
master complaint to those individual complaints. On 30 September 2011,
the judge in the federal multi-district litigation proceeding in New Orleans
granted in part BP’s motion to dismiss a master complaint asserting
personal injury claims on behalf of persons exposed to crude oil or
chemical dispersants, dismissing plaintiffs’ state law claims, claims by
seamen for punitive damages, claims for medical monitoring damages by
asymptomatic plaintiffs, claims for battery and nuisance under maritime
law, and claims alleging negligence per se. As with his other rulings on
motions to dismiss master complaints, the judge did not lift an earlier stay
on the underlying individual complaints raising those claims or otherwise
apply his dismissal of the master complaint to those individual complaints.
Shareholder derivative lawsuits related to the Incident have been filed in
US federal and state courts against various current and former officers and
directors of BP alleging, among other things, breach of fiduciary duty,
gross mismanagement, abuse of control and waste of corporate assets.
On 15 September 2011, the judge in the federal multi-district litigation
proceeding in Houston (MDL 2185) granted BP’s motion to dismiss the
consolidated shareholder derivative litigation pending there on the
grounds that the courts of England are the appropriate forum for the
litigation. On 8 December 2011, a final judgment was entered dismissing
the shareholder derivative case and, on 3 January 2012, one of the
derivative plaintiffs filed a notice of appeal to the US Court of Appeals for
the Fifth Circuit. On 16 January 2013, the Court of Appeals affirmed
dismissal of the action. The plaintiffs in the two remaining state-court
actions, which are pending in Texas and Louisiana, have agreed to be
bound by the outcome of the federal case.
On 13 February 2012, the judge in the federal multi-district litigation
proceeding in Houston issued two decisions 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. In those
decisions the court dismissed all of the claims of the ordinary shareholders,
dismissed 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, and
dismissed all of the claims of a smaller purported subclass with leave to re-
plead in 20 days. On 2 April 2012, 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 its February
2012 order on BP’s motion to dismiss the earlier complaints; 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 his
February decisions. 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 judge granted in
part this motion to dismiss, rejecting plaintiffs’ claims based on 10 of the 17
statements at issue in the motion and also dismissing all claims against
Andrew Inglis. On 5 March 2013, the court announced that a trial date has
been scheduled for 25 August 2014.
In April and May 2012, six new 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. All
of the cases have been transferred to the judge in the federal multi-district
litigation proceeding in Houston. In May and June, plaintiffs in the two cases
that were filed in state court moved to send those cases back to state court,
which was denied on 3 October 2012. On 4 January 2013, the judge denied
a motion to certify that decision for immediate appeal. On 21 December
2012, defendants filed motions to dismiss these cases. From July 2012 to
January 2013, nine additional cases were filed in Texas state and federal
courts (four of which were consolidated into one action) by pension or
investment funds against BP entities and current and former officers,
asserting Texas state law claims and seeking damages for alleged losses
that those funds suffered because of their purchases of BP ordinary shares.
All of the cases have been transferred to federal court in Houston, and it is
anticipated that they will be handled by the same judge presiding over the
multi-district litigation proceeding.
162 Additional disclosures
BP Annual Report and Form 20-F 2012