The US Court of Appeals for the Ninth Circuit [official website] issued an opinion [ruling, PDF] on Thursday reinstating a shareholder class-action lawsuit against BP Alaska [corporate website] for securities fraud after the case had been dismissed by a lower federal court. The case had been dismissed for inadequate pleading in the lower court. On appeal, the Ninth Circuit found that plaintiffs had adequately pleaded some, but not all of their claims. The complaint stems from a 2006 oil spill in which roughly 200,000 gallons of oil were leaked from Alaskan pipelines, and another spill that occurred only five months later. The shareholders' claim alleges that BP knowingly or with deliberate recklessness made false and misleading statements regarding the corrosion rate of their pipelines and about their "world-class corrosion monitoring and leak-detection systems." The Court held that plaintiffs had adequately pleaded scienter regarding the first statement, but had failed to meet that burden on the second, requiring dismissal of that claim. BP Alaska has already pleaded guilty [Reuters report] to a misdemeanor regarding the spill and paid over $20 million in state and federal penalties.
Alaska sued [JURIST report] BP in 2007 for claims relating to the 2006 spill. Alaska requested compensation for direct environmental damage to state land and for the loss of significant state revenue, since a large portion of Alaskan tax money comes from oil companies and BP was forced to shut down regional production after the second 2006 spill. That announcement came days after BP pleaded guilty to having violated [JURIST report] the Clean Water Act [text, PDF] in what was at that time the largest oil spill in Alaskan history. The EPA began [JURIST report] a criminal investigation into BP's conduct related to the spill in April 2006, less than a month after the first spill