In re BP P.L.C. Sec. Litig.

843 F.Supp.2d 712

In re: BP P.L.C. SECURITIES LITIGATION.

MDL No. 10–md–2185.

Civil Action No. 4:10–md–2185.

United States District Court,

S.D. Texas,

Houston Division.

Feb. 13, 2012.

Jordanna G. Thigpen, Aron K. Liang, Bryan M. Payne, Hester H. Cheng, Joseph W. Cotchett, Mark C. Molumphy, Matthew K. Edling, Nancy L. Fineman, Victor S. Elias, Cotchett Pitre McCarthy, Burlingame, CA, Richard Warren Mithoff, Jr., W. Mark Lanier, Mithoff Law Firm, W. Mark Lanier, The Lanier Law Firm, Thomas Robert Ajamie, Dona Szak, Ajamie LLP, Houston, TX, James P. Roy, Domengeaux Wright et al., Lafayette, LA, Ana M. Cabassa, Robert S. Schachter, Sona R. Shah, Zwerling Schachter & Zwerling LLP, Amy Miller, Jeremy Friedman, Mark Lebovitch, Bernstein, Litowitz, Berger & Grossmann, Olga Anna Posmyk, Stephen J. Fearon, Jr., Squitieri & Fearon LLP, Scott D. Egleston, Egleston Law Firm, Arvind B. Khurana, Jennifer J. Sosa, Lori G. Feldman, Sanford P. Dumain, Milberg LLP, Evan M. Janush, The Lanier Law Firm PLLC, Robert I. Harwood, Harwood Feffer LLP, Michael J. Klein, Stull Stull, New York, NY, Anthony Chu, Don K. Ledgard, Capretz & Associates, James T. Capretz, Attorney at Law, Newport Beach, CA, Mary K. Blasy, Scott and Scott, LLP, Dianne M. Nast, Roda and Nast PC, Lancaster, PA, Richard J. Arsenault, Neblett Beard et al., Alexandria, LA, Stanley M. Chesley, Waite Schneider Bayless Chesley Co LPA, Cincinnati, OH, Deborah R. Gross, Robert P. Frutkin, Law Offices of Bernard M. Gross PC, Bryan L. Clobes, Cafferty Faucher LLP, Philadelphia, PA, Kirk B. Hulett, Sarah P. Weber, Hulett Harper Stewart LLP, San Diego, CA, Albert M. Myers, Lewis Kahn, Michael A. Swick, Kahn Swick & Foti LLC, Madisonville, LA, Gregory Anthony Gelderman, III, Bernstein, Litowitz, Berger & Grossmann, LLP, Paul S. Balanon, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Jarrell Edward Godfrey, Jr., Jessica A. Denisi, Godfrey Firm, PLC, Lionel Howard Sutton, III, Lionel Sutton, III, Attorney at Law, Eric R. Nowak, Harrell and Nowak, New Orleans, LA, Vincent J. Esades, Heins, Mills & Olson, PLC, Minneapolis, MN, Ellen Meriwether, Cafferty Faucher, LLP, Amber M. Nesbitt, Kenneth A. Wexler, Wexler Wallace LLP, Robert D. Allison, Steven Paul Schneck, Charles Robert Watkins, Donaldson & Guin, LLC, Marvin Alan Miller, Matthew E. Van Tine, Miller Law LLC, William W. Thomas, Behn & Wyetzner, Chtd., Laura Elizabeth Towbin, Mitchell L. Marinello, Novack and Macey, LLP, Matthew E. Van Tine, Miller Law LLC, Chicago, IL, Gregory M. Egleston, Egleston Law Firm, Brooklyn, NY, Robert A. Izard, Jr., Izard Nobel LLP, West Hartford, CT, Kim S. Zeldin, Ronald S. Kravitz, Liner Yankelevitz Sunshine & Regenstreif LLP, San Francisco, CA, Patrice Lyn Bishop, Stull, Stull & Brody, Los Angeles, CA, Donald Amamgbo, Amamgbo & Associates, Culver City, CA, Reginald Von Terrell, The Terrell Law Group, Oakland, CA, Jacob S. Gill, Keith A. Ketterling, Steve D. Larson, Stoll Stoll et al., Portland,OR, Jennifer S. Wagner, Austin, TX, for Plaintiffs.

Eugene McClurg, pro se.

Frankie Ramirez, pro se.

Thomas W. Taylor, Andrews and Kurth, Houston, TX, Daryl A. Libow, Sullivan & Cromwell LLP, Morgan D. Hodgson, Paul J. Ondrasik, Jr., Ryan Thomas Jenny, Steptoe & Johnson LLP, Washington, DC, Diane Lee McGimsey, Los Angeles, CA, George Denegre, Jr., John C. Anjier, Russell Keith Jarrett, Liskow & Lewis, Carl J. Hebert, Edward F. Kohnke, IV, Preis & Roy, Evans Martin McLeod, Phelps Dunbar LL, Everett R. Fineran, Kerry J. Miller, Miles Paul Clements, Paul C. Thibodeaux, Frilot L.L.C., George M. Gilly, Phelps Dunbar LLP, Joseph E. Lee, III, Preis & Roy, PLC, New Orleans, LA, Kristopher S. Ritter, Kirkland & Ellis LLP, Chicago, IL, Lois O. Rosenbaum, Stoel Rives LLP, Portland, OR, Marc De Leeuw, Richard C. Pepperman, II, Sullivan & Cromwell, New York, NY, Richard J. Hymel, Robert Michael Kallam, Preis Roy, Lafayette, LA, for Defendants.

MEMORANDUM AND ORDER

KEITH P. ELLISON, District Judge.

On April 20, 2010, the Macondo well blew out, costing the lives of eleven rig workers, and setting off a chain of events that eventually sank the Deepwater Horizon rig operated by Defendant BP plc. The blowout spilled over four million barrels of oil into the Gulf of Mexico. In the months that followed, lawsuits raising a variety of claims, including securities fraud claims, were filed across the country. The Comptroller of the State of New York and the Attorney General of Ohio—representatives of a group of plaintiffs later identified as the New York and Ohio Plaintiffs—filed suit in the Southern District of New York. (Transfer Order, Doc. No. 1.) ¹ A group later identified as the Ludlow Plaintiffs filed an action in the Western District of Louisiana. ( Id.) By Order dated August 10, 2010, the Judicial Panel on Multidistrict Litigation transferred all cases involving shareholder derivative claims, securities claims, and ERISA actions to the Southern District of Texas. ( Id.) Claims involving personal injury, wrongful death, and property damage were centralized in a separate docket in the Eastern District of Louisiana. The claims of both the New York and Ohio Plaintiffs and the Ludlow Plaintiffs were included in the group transferred to the Southern District of Texas.

On December 28, 2010, this Court consolidated all of the securities class actions pending in the Court,² appointed the New York and Ohio Plaintiffs as lead plaintiffs, and appointed the Ludlow Plaintiffs as lead plaintiffs of a subclass.³ (Order, Doc. No. 79.) In its decision, this Court expressedits expectation that “the lead plaintiffs work together as needed to prevent inefficiencies” and its hope that the two lead plaintiffs would file a joint complaint, if possible. ( Id.) That did not happen. Instead, the two lead plaintiffs filed two separate and extremely lengthy consolidated amended complaints.

On February 14, 2011, the New York and Ohio Plaintiffs filed a Consolidated Class Action Complaint (hereinafter “Complaint”) against three corporate defendants, BP plc, BP America, Inc., and BP Exploration & Production, Inc., and against ten individual defendants (collectively “Defendants”). (Complaint (“Compl.”), Doc. No. 113.) The Ludlow Plaintiffs filed a separate complaint on February 11, 2011. (Doc. No. 112.) On March 4, 2011, this Court set a briefing schedule for Defendants' motions to dismiss after deciding that, by necessity, briefing in this case had to be directed separately to each complaint. (Doc. No. 120.)

On May 6, 2011, Defendants filed two separate motions to dismiss the New York and Ohio Plaintiffs, distinguishing between the claims of the purchasers of BP ordinary shares (“Ordinary Share Purchasers”) (Doc. No. 153) and the remaining claims of the purchasers of BP American Depositary Shares (“ADSs”) (“ADS Purchasers”) (Doc. No. 149).⁴ The Ordinary Share Purchasers and ADS Purchasers then filed separate responses to the motions to dismiss. (Doc. Nos. 175 & 186.) Defendants filed replies in support of their respective motions to dismiss on June 21, 2011. (Doc. Nos. 216 & 220.) After briefing concluded, the Court heard oral argument on the motions to dismiss on November 4, 2011.

Pending before the Court are Defendants' Motion to Dismiss the Claims of BP ADS Purchasers in the New York and Ohio Plaintiffs' Consolidated Class Action Complaint (Doc. No. 149) and Defendants' Motion to Dismiss the Claims of Purchasers of BP Ordinary Shares (Doc. No. 153). Having considered the parties' pleadings, arguments and the applicable law, the Court finds that Defendants' Motion to Dismiss the Claims of BP ADS Purchasers (Doc. No. 149) must be GRANTED IN PART and DENIED IN PART. Defendants' Motion to Dismiss the Claims of BP Ordinary Share Purchasers (Doc. No. 153) must be GRANTED in its entirety.

I. DEFENDANTS' MOTION TO DISMISS THE CLAIMS OF BP ADS PURCHASERS IS GRANTED IN PART AND DENIED IN PART

What follows is a description of the parties, a summary of the allegations in the Complaint, the standards applicable to the motion, and the Court's conclusions with respect to the adequacy of the allegations of false and misleading statements, materiality, and scienter.

A. The Parties

Lead Plaintiffs are Thomas P. DiNapoli, Comptroller of the State of New York, as Administrative Head of the New York State and Local Retirement Systems and sole Trustee of New York State Common Retirement Fund, and four Ohio systems. They are the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, the School Employees Retirement System of Ohio, and the Ohio Police & Fire Pension Fund, along with their statutory litigation counsel,Ohio Attorney General Mike DeWine (collectively, the “NY/OH Plaintiffs” or “Plaintiffs”). (Compl. ¶¶ 31–32.) The NY/OH Plaintiffs bring their consolidated class action on behalf of the following proposed plaintiff class: (1) all persons and entities who purchased or acquired BP ADSs (the “ADS Purchasers”) between January 16, 2007, and May 28, 2010 (the “Class Period”), and (2) all persons and entities who purchased or acquired BP ordinary shares in domestic transactions executed on foreign exchanges (the “Ordinary Share Purchasers”) during the Class Period.⁵ (Compl., at 1.)

Defendants include BP plc, BP America, Inc., and BP Exploration & Production, Inc. (collectively “BP” or “the Company”) and ten of BP's present and former officers and directors. BP plc is a U.K. corporation with its principal executive offices located in London, England. BP's ADSs trade on the New York Stock Exchange (“NYSE”), and BP is the largest non-U.S. company listed on the NYSE. (Compl. ¶ 33.) BP's ordinary shares are also listed on the NYSE in connection with BP's ADS program. BP America, Inc. and BP Exploration & Production, Inc. (“BP E & P”), both wholly-owned subsidiaries of BP, are Delaware corporations with their principal places of business in Houston, Texas. ( Id. ¶¶ 34–35.)

The ten individual defendants were directors and...