COURT RULES SECURITIES CLAIMS AGAINST BP ARE NOT TIME BARRED

In a recent opinion, Judge Keith Ellison refused to dismiss securities claims against BP stemming from the gulf-coast oil spill. In re Bp P.L.C., No. 4:13-cv-1393, 2014 U.S. Dist. LEXIS 138920 (S.D. Tex. Sept. 30, 2014). This subset of plaintiffs alleges BP and its officers misstated the company’s readiness for an oil spill, which “slowly emerged” when the Deepwater Horizon rig exploded and BP’s stock plunged in 2010. The defendants moved to dismiss, arguing a two-year statute of limitations and five-year statute of repose barred the securities claims.

In response to both arguments, the plaintiffs raised American Pipe, which tolls limitations for putative class-action members until class certification is decided. Although these plaintiffs were originally putative class members, they “opt[ed] out of the putative class” by suing individually in April 2013, before Judge Ellison denied class certification months later. Thus, according to the defendants, the plaintiffs forfeited tolling by opting out of the putative class without “wait[ing] until class certification [was] denied.” But the court rejected that argument, holding that tolling applies until plaintiffs leave a putative class either because certification is denied or because they sue individually. Echoing the Second Circuit, Judge Ellison stressed that tolling exists “to protect class members from being forced to file individual suits in order to preserve their claims” not to “induce class members to forgo” individual suits.

Likewise, American Pipe tolled the five-year statute of repose. By joining the initial class action, the plaintiffs functionally “prefiled” their later individual lawsuits. “So long as the defendant has fair notice of the type and number of claims that could be asserted against it,” the court concluded, “then there is no unfair surprise when a class member assumes responsibility for its own individual claim during the course of the class action, or after class status has been denied.” On that basis, apart from dismissing claims against one individual defendant, the court denied the motion to dismiss.