The U.S. Court of Appeals for the Fifth Circuit has ruled in favor of BP plc in a stock-drop class action lawsuit in which Alston & Bird submitted an amicus brief in support of BP on behalf of the American Benefits Council.
The Fifth Circuit ruled that a district court erred in finding that participants in BP’s employee stock ownership plan (ESOP) plausibly stated a claim that BP breached its fiduciary duties in a case arising from the 2010 explosion of the BP-leased Deepwater Horizon offshore drilling rig and subsequent drop in BP’s stock price.
In making its determination, the appellate court found that the plaintiffs had failed to satisfy the heightened pleading standards established by the U.S. Supreme Court in its 2014 ruling in Fifth Third v. Dudenhoeffer, a case that has raised the bar to workers who challenge drops in publicly traded stock price under the Employee Retirement Income Security Act.
Writing for the majority, Circuit Judge Edith Brown Clement stated: “Under the Supreme Court's formulation, the plaintiff bears the significant burden of proposing an alternative course of action so clearly beneficial that a prudent fiduciary could not conclude that it would be more likely to harm the fund than to help it. Here, the stockholders have failed to do so.”
The court’s decision reverses an earlier ruling by the U.S. District Court for the Southern District of Texas and remands the case to the lower court for further proceedings.
Representing the American Benefits Council are partner Doug Hinson and senior associate Emily Seymour Costin (ERISA Litigation).
The case is Whitley v. BP, PLC , 2016 BL 316686, 5th Cir., No. 15-20282.
The Fifth Circuit ruled that a district court erred in finding that participants in BP’s employee stock ownership plan (ESOP) plausibly stated a claim that BP breached its fiduciary duties in a case arising from the 2010 explosion of the BP-leased Deepwater Horizon offshore drilling rig and subsequent drop in BP’s stock price.
In making its determination, the appellate court found that the plaintiffs had failed to satisfy the heightened pleading standards established by the U.S. Supreme Court in its 2014 ruling in Fifth Third v. Dudenhoeffer, a case that has raised the bar to workers who challenge drops in publicly traded stock price under the Employee Retirement Income Security Act.
Writing for the majority, Circuit Judge Edith Brown Clement stated: “Under the Supreme Court's formulation, the plaintiff bears the significant burden of proposing an alternative course of action so clearly beneficial that a prudent fiduciary could not conclude that it would be more likely to harm the fund than to help it. Here, the stockholders have failed to do so.”
The court’s decision reverses an earlier ruling by the U.S. District Court for the Southern District of Texas and remands the case to the lower court for further proceedings.
Representing the American Benefits Council are partner Doug Hinson and senior associate Emily Seymour Costin (ERISA Litigation).
The case is Whitley v. BP, PLC , 2016 BL 316686, 5th Cir., No. 15-20282.