Appeals Court Sides With BP in Securities Fraud Lawsuit

June 29, 2011

A U.S. appeals court sided with BP Plc in a securities fraud lawsuit arising from a 2006 Alaska oil spill, but the case isn’t over.

BP discovered two oil spills in Prudhoe Bay, Alaska, in 2006, and a corporate subsidiary later pled guilty to a single count of violating the Clean Water Act, according to court documents.

A proposed class of investors sued the company, alleging that BP knew about corrosion in pipelines but did not take corrective action.

The 9th U.S. Circuit Court of Appeals ruled that one of BP’s statements at issue in the case — made in a contract filed with the U.S. Securities and Exchange Commission — couldn’t be considered a misrepresentation of current fact.

The ruling reversed a lower court’s decision. However, the court did not delve into an amended lawsuit filed by the plaintiffs, which contains additional allegations against BP.

The 9th Circuit remanded the case to a U.S. district court in Seattle for more proceedings.

“We have lost a round but are far from losing the fight against a company whose indifference to the environment is long-standing,” said Thomas Dubbs, an attorney for the plaintiffs.

BP did not immediately respond to a request for comment.

The case in the 9th Circuit is Claude A. Reese, individually and on behalf of all others similarly situated v. BP Exploration (Alaska) Inc., 10-35128.

(Reporting by Dan Levine, editing by Gerald E. McCormick)

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