The U.S. District Court for the Southern District of Texas has tossed out a would-be class action securities lawsuit challenging BP plc’s (BP) cancellation of a 2010 first quarter dividend announcement after the Deepwater Horizon disaster. Per the court, the plaintiff did not demonstrate that BP or subsidiary BP American had minimum contact with the state of Oregon and failed to succeed in making out a prima facie case for specific jurisdiction over BP. Oregon rules were applied to this case, said the court, because the claim was originally submitted to the U.S. District for the District of Oregon.
The Deepwater Horizon rig was involved in a blast on April 20, 2010. Seven days later, BP said its Board of Directors announced that $0.84/ADS was the quarterly dividend for the year’s quarter and that this would be paid to “shareholders of record as of May 7, 2010” on June 2, 2010. The plaintiff contends that even though BP gave shareholders assurances that the dividend would be paid, due to pressure from the Obama Administration and the US Congress, on June 16 it announced that first quarter dividend was now canceled.
The plaintiff’s lawsuit makes various claims in an attempt to make BP pay the dividend. The court, however, has thrown out the case due to lack of jurisdiction. The district court said that the plaintiff failed to plead any facts suggesting what actions (if any) BP America executed in Oregon for BP or “at its behest.” The plaintiff therefore did not succeed in satisfying its burden of producing enough evidence to establish that BP is the corporate parent of a subsidiary with “continuous and systematic business contacts” that would approximate a “physical presence in Oregon.” The court also said that if even if the plaintiff were able to demonstrate that BP America had minimum contact with Oregon, the plaintiff did not plead an agency relationship between BP America and BP to let the court “impute to defendant” any theoretical contacts of BP America. Also, per the court, no facts exist to imply that BP had direct contacts with the state that resulted in this cause of action.
Suit Over BP’s Dividend Cancellation After Deepwater Disaster Is Dismissed, Bloomberg/BNA, July 9, 2012
Glenn v. BP plc, Justia, August 10, 2011
More Blog Posts:
As BP Oil Spill Reaches Crisis Mode, A Number of Wall Street Analysts Placed “Buy” Rating On the Company’s Plunging Shares, Stockbroker Fraud Blog, June 22, 2010
Remaining Defendants in $50M Amerifirst Securities Fraud are Sentenced in Texas, Stockbroker Fraud Blog, August 3, 2012
Stanford Ponzi Scam Investors File Class Action Lawsuit Suing The Securities and Exchange Commission, Stockbroker Fraud Blog, July 25, 2012
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