Ohio’s public pension funds are using an innovative tactic to recoup money they lost in the aftermath of the 2010 Gulf of Mexico oil spill, suing BP p.l.c. in state court after a U.S. district court judge ruled that federal law does not cover their foreign stock purchases.
Ohio Attorney General Mike DeWine brought the precedent-setting lawsuit in Cuyahoga County Court April 18 on behalf of the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, the School Employees Retirement System and the Ohio Police & Fire Pension Fund.
Berman DeValerio, along with Ohio counsel, represents the funds, as it does in In re BP p.l.c. Securities Litigation, the federal class-action lawsuit in which Ohio and New York pension funds serve as co-lead plaintiffs.
The new lawsuit asserts claims under Ohio statutory and common law against BP and certain officers, directors and subsidiaries. Specifically, the funds allege that Defendants made false and misleading statements and failed to disclose material information regarding BP’s operational and safety protocols, the company’s ability to respond to a major oil spill in the Gulf of Mexico, and the true scope of the oil spill following the Deepwater Horizon disaster.
“This lawsuit gives our Ohio clients an alternative method to recover the money BP defrauded from the state and its employees,” said Glen DeValerio, the partner overseeing the case for Berman DeValerio. “The fraud at the heart of this lawsuit took place largely on U.S. soil and deeply affected investors in Ohio and around the country. BP shouldn’t be able to avoid a large portion of its liability simply because some shares traded outside the United States.”
In February, the judge overseeing the federal lawsuit let stand class claims involving purchases of BP’s New York-traded American Depository Shares, but dismissed claims involving BP ordinary shares purchased on exchanges outside the United States.
In the ruling, U.S. District Judge Keith P. Ellison cited Morrison v. National Australia Bank, Ltd., a 2010 Supreme Court decision. For decades prior to the Morrison ruling, federal courts had weighed the “conduct” and “effects” of alleged frauds to determine if foreign issuers were liable under federal securities laws. The Supreme Court’s decision, however, has effectively barred all federal claims against foreign issuers on non-U.S. stock purchases, no matter how significantly U.S. investors were impacted by the fraud or where the fraudulent behavior took place.
In the wake of Morrison, many of Berman DeValerio’s clients are looking into ways to restore investor protections on stock purchased overseas.
*In August 2017, our firm name changed to Berman Tabacco. Case references and content published before that date may refer to the firm under our prior name, Berman DeValerio.