BP Faces ERISA Lawsuit

Columbus, OHLast year's oil spill may have cost BP a lot of profit, but investors and participants in BPs ERISA benefits plans say they lost a lot, too. Investors in various ERISA plans that invested with BP, such as ERISA pension funds, have filed a lawsuit against BP, saying the company committed securities fraud by making fraudulent statements about its commitment to safety.

According to an article at Bloomberg (businessweek.com; 02/15/11), investors have filed a lawsuit alleging BP Plc lied about its commitment to safety. Furthermore, they allege, BP inflated company shares in the years leading up to the Deepwater Horizon oil spill.

Included in the lawsuit are Ohio and New York state pension funds, which allege that even though the company claimed to have made a commitment to safety following a 2005 explosion at a Texas refinery, the company did not improve its safety. In fact, investors allege, BP marketed itself as a company committed to safety when it was actually cutting budgets and personnel.

As reported in The Washington Post (02/15/11), the lawsuits allege that BP terminated Curtis Jackson, at the time a senior manager for Gulf of Mexico operations, and Phil Dziubinski, a senior safety official. Dziubinski had previously warned BP about the risks of worker fatigue from extensive overtime. Finally, Kevin Lacy, BP's senior vice president for drilling operations in the Gulf of Mexico, reportedly resigned in 2009 because of disagreements with the company over its commitment to safety.

The lawsuit alleges that BP's alleged misstatements about its safety procedures inflated the company's stock prices, which resulted in losses when the truth about BP's safety precautions came out following the disaster in the Gulf of Mexico.

The plaintiffs seek class action or group status for all investors in BP's American depository receipts from January 16, 2007 to May 28, 2010. It further seeks recovery of losses. The Ohio pension funds reportedly have more than 620,000 members.

The lawsuit alleges that the Deepwater Horizon explosion and oil spill caused a massive decline in BP stock, resulting in pension fund losses of up to $200 million. In December 2010, New York and Ohio were reportedly named lead plaintiffs in the lawsuit.