BP stock up 60 percent; Company responds to employee class action
HOUSTON (Legal Newsline) - While BP employees complain that the company's disregard for safety drove down the value of their stock plans, they watch their stock plans grow.
Shares that fell to $28.74 two months after the Deepwater Horizon explosion climbed to $46.77 on July 25, according to a brief BP filed in federal court on July 26.
BP's brief supported a previous motion to dismiss a class action of employees seeking to recover losses from Jan. 16, 2007, to June 24, 2010.
"In cherry picking the end date of the proposed class period to maximize their potential damages, plaintiffs ignore the significant recovery in BP's stock price that subsequently occurred," Thomas Taylor of Houston wrote.
"BP's viability as a going concern was never threatened and its stock was never in danger of becoming worthless," he wrote.
"BP's vast assets and revenues refute any notion that the expected losses from the Deepwater Horizon explosion and oil spill were a threat to the continued viability of the company," he wrote.
Taylor wrote that it has 29,000 employees and market capitalization of $138 billion.
He wrote that its operations remained robust even after it took a $40 billion charge against earnings, suspended its dividend and committed to sell $30 billion in assets to address cleanup costs.
He wrote that in this year's first quarter, operating revenues were about $85 billion.
He wrote that since June 24, 2010, BP's stock price has outperformed the American Oil Index, S&P 500, and Dow Jones Industrial Average.
He wrote that if the plans had rushed to divest BP stock after the explosion, they might have faced suits from participants who missed the subsequent price appreciation.
He wrote that company stock is a presumptively prudent investment for employees.
He wrote that employees freely directed portions of their accounts to the BP stock fund.
"The BP stock fund was not a default investment option for either participant or employer matching contributions," he wrote.
He wrote that employees allege breaches of fiduciary duties against entities and persons who didn't act as fiduciaries, but they didn't allege any breach against the fiduciary.
He wrote that an oversight committee expressly delegated fiduciary authority to State Street Global Advisors.
He identified the firm as a division of State Street Bank and Trust, trustee of the plans.
He wrote that State Street was a defendant in a number of original complaints, but that plaintiffs elected not to sue it when they filed a consolidated complaint.
Taylor practices at Andrews Kurth.
Paul Ondrasik, Morgan Hodgson and Ryan Jenny, all of Steptoe and Johnson in Washington, worked on the brief.
So did Daryl Libow, of Sullivan and Cromwell in Washington, and Richard Pepperman, Marc De Leeuw and David Possick, with the same firm in New York.
The motion to dismiss remains pending before U.S. District Judge Keith Ellison.
He presides over this and three other groups of shareholder suits that followed the explosion, by appointment of the U.S. Judicial Panel on Multi District Litigation.