LIU, LAW DEPT. ANNOUNCE MAJOR SHAREOWNER SUIT AGAINST BRITISH PETROLEUM
City Comptroller John C. Liu and the New York City Law Department announced on Friday that the New York City Pension Funds have filed a lawsuit against British Petroleum (NYSE: BP) seeking to recover investment losses caused by BP's fraudulent statements issued prior to, and after, the April 20, 2010 Deepwater Horizon disaster.
"BP failed to disclose to shareowners the serious risks involved in its offshore drilling operation," Comptroller Liu said. "After the spill began, it misleadingly attempted to minimize the extent of the damage and the cost to shareowners."
"In light of the Supreme Court's ruling in Morrison v. National Australia Bank, Ltd., the City Pension Funds are barred from seeking recovery from BP under federal securities laws for the vast majority of its losses," noted Inga Van Eysden, Chief of the New York City Law Department's Pensions Division. "We strongly believe the Funds deserve to be compensated for BP's fraudulent actions and are therefore pursuing this case."
The New York City Pension Funds' complaint, filed in the Southern District of New York, alleges that BP and its officers and directors failed to disclose the material facts regarding the dangers inherent in the offshore drilling operation, the extent of the leak, and the estimated cost of the cleanup.
The estimated transactional investment losses to City pension beneficiaries caused by BP's misconduct and fraudulent behavior exceed $39 million.
Background
On April 20, 2010, BP's Deepwater Horizon rig began leaking oil into the Gulf of Mexico. At first, BP officials said the rig was leaking a few thousand gallons a day. Weeks later, it acknowledged that over 206 million gallons of oil had poured into the Gulf.
A class action suit against BP was filed that year under federal securities law in the U.S. District Court for the Southern District of Texas. However, in a decision dated February 13, 2012, relying on the Supreme Court's holding in Morrison v. National Australia Bank, Ltd., 130 S.Ct. 2869 (2010), the Texas court dismissed all claims relating to BP shares purchased on the London Stock Exchange. As a result, that litigation provides no recourse for recovering the majority of the City Pension Funds' losses on ordinary shares that were purchased abroad. The current lawsuit primarily focuses on state law claims in an effort to recover those losses.
New York City's legal team includes Valerie Budzik and Richard Simon of the Comptroller's General Counsel's Office, and Inga Van Eysden and Keith Snow of the New York City Law Department's Pensions Division. The City Pension Funds are represented by outside counsel Pomerantz Grossman Hufford Dahlstrom & Gross LLP, whose legal team includes Marc Gross, Jason Cowart, and Matthew Tuccillo.
The New York City Law Department is one of the oldest, largest, and most dynamic law offices in the world, ranking among the largest law offices in New York City and one of the largest public law offices in the country. Tracing its roots back to the 1600s, the Department has an active caseload of 80,000 matters and transactions in 17 legal divisions.
The Pomerantz Firm, with offices in New York, Chicago, San Diego, and Weston, Florida is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust litigation, and was a pioneer in the field of securities class actions.
New York City Comptroller John C. Liu serves as the investment advisor to, custodian, and trustee of the New York City Pension Funds. The New York City Pension Funds are composed of the New York City Employees' Retirement System, Teachers' Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund, and the Board of Education Retirement System. The New York City Pension Funds held a combined 2,822,840 shares in British Petroleum valued at $19,301,743.45 as of April 15, 2013.
In addition to Comptroller Liu, the New York City Pension Funds trustees are:
New York City Employees' Retirement System: Janice Emery, Mayor's Representative (Chair); New York City Public Advocate Bill de Blasio; Borough Presidents: Scott Stringer (Manhattan), Helen Marshall (Queens), Marty Markowitz (Brooklyn), James Molinaro (Staten Island), and Ruben Diaz, Jr. (Bronx); Lillian Roberts, Executive Director, District Council 37, AFSCME; John Samuelsen, President Transport Workers Union Local 100; Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.
Teachers' Retirement System: Janice Emery, Mayor's Representative; Deputy Chancellor Kathleen Grimm, New York City Department of Education; and Sandra March, Melvyn Aaronson (Chair) and Mona Romain, all of the United Federation of Teachers.
New York City Police Pension Fund: Janice Emery, Mayor's Representative; New York City Finance Commissioner David Frankel; New York City Police Commissioner Raymond Kelly (Chair); Patrick Lynch, Patrolmen's Benevolent Association; Michael Palladino, Detectives Endowment Association; Edward D. Mullins, Sergeants Benevolent Association; Louis Turco, Lieutenants Benevolent Association; and, Roy T. Richter, Captains Endowment Association.
New York City Fire Department Pension Fund: Janice Emery, Mayor's Representative; New York City Fire Commissioner Salvatore Cassano (Chair); New York City Finance Commissioner David Frankel; Stephen Cassidy, President, James Slevin, Vice President, Robert Straub, Treasurer, and John Kelly, Brooklyn Representative and Chair, Uniformed Firefighters Association of Greater New York; Patrick Reynolds, Captains' Rep.; James Lemonda, Chiefs' Rep., and James J. McGowan, Lieutenants' Rep., Uniformed Fire Officers Association; and, Sean O'Connor, Marine Engineers Association.
Board of Education Retirement System: Schools Chancellor Dennis Walcott; Mayoral: Joseph Lewis, Jeanette Moy, Ian Shapiro, Tino Hernandez, Judy Bergtraum, Allison Rogovin, and Milton Williams; Patrick Sullivan (Manhattan BP), Kelvin Diamond (Brooklyn BP), Dmytro Fedkowskyj (Queens BP), Robert Powell (Bronx BP) and Diane Peruggia (Staten Island BP); and employee members Joseph D'Amico of the IUOE Local 891 and Milagros Rodriguez of District Council 37, Local 372.