Amended BP investor class action is rife with redaction

By Steve Korris | Jun 7, 2011


HOUSTON – Retired investors suing BP over the Deepwater Horizon explosion claim to know what caused it, but the keys to their theory remain secret.

Their lawyers redacted 13 paragraphs from an amended class action complaint they filed on May 27, in multi district litigation before U.S. Judge Keith Ellison.

The redactions interrupted their narrative at pivotal moments.

In paragraph 260, they described metal rams in a blowout prevention device that should
have cut through pipe inside the device to seal the well.

They redacted paragraph 261, five lines long, plus a paragraph of three lines without a paragraph number, indicating the quote came from a separate source.

They redacted paragraph 262, ten lines long.

The next paragraph started a new section alleging BP skimped on industry standards with
"long string" casing rather than a safer liner that BP's peers used.

Paragraph 271 argued that BP installed six components to centralize the flow of cement into clean columns when it should have installed 21.

Paragraph 272 stated that a report to President Obama found the decision to use six centralizing components illuminated flaws in management and design procedures.

They redacted paragraph 273, seven lines long.

Paragraph 274 stated, "The centralizers were vital to the proper installation of the long string casing, the proper installation of which itself is vital to properly temporarily abandoning the well."

It continued, "Despite this, BP used only six centralizers with the hope that gravity would complete the job."

They redacted paragraph 275, eight lines long, and paragraph 276, three lines long, plus nine lines from a separate source.

Their narrative resumed with installation of the casing a day before the explosion.

Near the end, their complaint provided a table of nine decisions that increased risk while potentially saving time.

They redacted the next paragraph, nine lines long.

The paragraph after that declared the disaster happened due to a chain of errors resulting from a culture that failed to prioritize safety and risk management.

Advancing from secrecy to rumor, they wrote "it was reported" that a broker advised clients to sell BP due to concerns over its deal with Russia's Roseneft.

They wrote "it was reported" that U.S. investigators were considering manslaughter charges against BP.

"These serious charges could extend to BP's management and further increase the company's existing liabilities," they wrote.

They alleged BP withheld material facts from shareholders and provided inaccurate and incomplete information to them.

"As a consequence, the participants did not exercise independent control over their investments in the BP Stock Fund," they wrote.

They redacted the next paragraph, seven lines long.

They redacted three paragraphs, 16 lines in all, about BP's savings plan investment oversight committee.

Their complaint asserted claims under the Employee Retirement Income Security Act against BP entities, 17 directors and executives, and the oversight committee.

Three investors from Florida, two from Illinois, two from Texas, one from California, and one from Maryland filed the complaint.

In 2007, they allege, BP Stock Fund comprised about $3.1 billion of about $9.5 billion in assets held by their combined plans.

"By the end of the class period, these amounts had fallen to approximately $1.25 billion of $7 billion in combined plan holdings," their lawyers wrote.

They wrote that prudent fiduciaries would have considered themselves bound to liquidate the fund and remove or restrict it from the plans they offered.

"This case is not about requiring fiduciaries to make unreasonable predictions based on speculation, but rather it is about requiring fiduciaries to make an objective analysis based on the actual state of company affairs," they wrote.

They proposed a class action and wrote that they believe there are tens of thousands of class members.

"Since the damages suffered by individual class members may be relatively small, the expense and burden of individual litigation make it virtually impossible for individual class members to seek redress for the wrongful conduct alleged," they wrote.

Thomas Ajamie and Mark Lanier, both of Houston, signed the complaint and added names of 17 other lawyers.

Ellison presides over shareholder suits by appointment of the U.S. Judicial Panel on Multi District Litigation.

In addition to the ERISA action, he presides over claims under securities laws.

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