In Re: BP plc Securities Litigation

RESPONSE to [333] Supplement,,, Defendants' Notice of Supplemental Authority

S.D. Tex.March 23, 2012

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION In re: BP p.l.c. SECURITIES LITIGATION _____________________________________ In re: BP ERISA LITIGATION Civil Action No. 4:10-md-2185 Civil Action No. 4:10-cv-4214 Honorable Keith P. Ellison ERISA PLAINTIFFS’ RESPONSE TO DEFENDANTS’ NOTICE OF SUPPLEMENTAL AUTHORITY Defendants’ March 20, 2012 Notice of Supplemental Authority Supporting Their Motion to Dismiss (the “Notice”), and the decision referenced therein, Fulmer v. Klein, No. 3:09-CV- 2354-N, slip op. (N.D. Tex. Mar. 15, 2012) (“Fulmer II”), fails to provide additional support for Defendants’ Motion to Dismiss. Notably, Defendants previously submitted identical arguments regarding the earlier decision, Fulmer v. Klein, No. 3:09-CV-2354, 2011 U.S. Dist. LEXIS 36602 (N.D. Tex. Mar 16, 2011) (“Fulmer I”). Fulmer II simply reiterates the same reasoning from its predecessor. Moreover, Fulmer II supports several of Plaintiffs’ arguments in opposition to the Motion to Dismiss:  The Fifth Circuit has not opined on whether the presumption of prudence must be applied on a motion to dismiss;  Kirschbaum v. Reliant Energy, Inc., 526 F.3d 243 (5th Cir. 2008) (“Kirschbaum”) does not require that Plaintiffs show dire circumstances to overcome the presumption in Moench v. Robertson, 62 F.3d 553 (3d Cir. 1995) (“Moench”);  A company’s SEC filings that are incorporated by reference into fiduciary communications to participants are actionable under ERISA; and  Under special circumstances, defendants have an affirmative duty to disclose company information to plan participants. Case 4:10-md-02185 Document 336 Filed in TXSD on 03/23/12 Page 1 of 6 - 2 - Fulmer II, like Fulmer I, rejected the plaintiffs’ argument that the defendants breached their fiduciary duty to amend the plan because, according to the court, the plan language expressly required a plan amendment by the sponsor to remove company stock from the plan. Fulmer II at 10. In contrast, the BP Plans have no express requirement of an amendment for the Investment Committee to limit, freeze, or liquidate any of the investment options, including the BP Stock Fund. Rather, under Section 6.3 of the Plan, the Plan simply permits, rather than mandates, an investment in the BP Stock Fund. Under ERISA, once the stock became an imprudent investment, the Investment Committee not only had the ability, but it also had the duty to limit, freeze, or liquidate the BP stock Fulmer II confirms Plaintiffs’ position that in Kirschbaum, the Fifth Circuit did not address whether the Moench presumption should be applied on a motion to dismiss. Fulmer II at 15, n.13. This contradicts Defendants’ earlier position that Kirschbaum requires the Court to apply the presumption at the pleading stage. Although the Fulmer court (both I and II) chose to apply the Moench presumption on the motion to dismiss, its analysis of the Moench presumption does not compel dismissal in this case. Significantly, the Fulmer II court did not conclude that the only way to overcome the presumption is to allege that the employer-company was in a dire situation. Rather, the court simply acknowledged that under Kirschbaum, one way to overcome the presumption is to allege a dire situation, and it found that while the Fulmer plaintiffs’ allegations attempted to plead a dire situation, they had not made sufficient allegations. Fulmer II at 13. In other words, showing dire circumstances is only one way to overcome the Moench presumption, and the court must review each matter on a case-by-case basis. Under the Kirschbaum framework, Plaintiffs sufficiently have alleged “persuasive and analytically rigorous facts demonstrating that Case 4:10-md-02185 Document 336 Filed in TXSD on 03/23/12 Page 2 of 6 - 3 - reasonable fiduciaries would have considered themselves bound to divest.” Kirschbaum, 526 F.3d at 256. See Pl. Opp to MTD at 18-22. Finally, Fulmer II does not support dismissal of Plaintiffs’ disclosure claims. In Fulmer II, the court found that the plaintiffs did not sufficiently allege an omissions claim because the company’s summary plan description (“SPD”) did not incorporate public filings. Fulmer II at 8. In contrast, the BP’s SPD and the Investment Options Guide for the BP Plans, both fiduciary communications, incorporated by reference BP’s public filings, and encouraged and directed the Plans’ participants to read BP’s public filings to make informed investment decisions when investing in the BP Stock Fund. With respect to the affirmative misrepresentation claim, the Fulmer II court concluded that the allegations did not plead “special circumstances” that would give rise to an affirmative duty to disclose company information under ERISA. Fulmer II at 8-9. As previously briefed, Plaintiffs have pled the required special circumstances based on Defendants’ failure to disclose important information about BP’s systemic safety problems that had a significant impact on the Plans’ investment in the BP Stock Fund, as well affirmative disclosure obligations set forth in ERISA’s statutory and regulatory framework. Case 4:10-md-02185 Document 336 Filed in TXSD on 03/23/12 Page 3 of 6 - 4 - Dated: March 23, 2012 Respectfully submitted: /s/ Thomas R. Ajamie ___________________________________ Thomas Robert Ajamie Texas Bar No. 00952400 Dona Szak Texas Bar No. 19597500 John W. Clay Texas Bar No. 00796366 AJAMIE LLP 711 Louisiana, Suite 2150 Houston, TX 77002 Tel: (713) 860-1600 Fax: (713) 860-1699 Attorneys for Plaintiff David M. Humphries and Interim Co-Liaison Counsel /s/ W. Mark Lanier _________________________________ W. Mark Lanier Texas Bar No. 11934600 Evan M. Janush (pro hac vice) THE LANIER LAW FIRM 6810 FM 1960 West Houston, Texas 77069 Tel: (713) 659-5200 Fax: (713) 659-2204 Ronald S. Kravitz Texas Bar No. 00795147 Kim Zeldin (pro hac vice) LINER GRODE STEIN YANKELEVITZ SUNSHINE REGEINSTREIF & TAYLOR LLP 199 Fremont Street, 20th Floor San Francisco, CA 94105 Tel: (415) 489-7700 Fax: (415) 278-7701 Attorneys for Plaintiff David M. Humphries and Interim Co-Lead Counsel Evan M. Janush (pro hac vice) THE LANIER LAW FIRM 126 East 56th Street, 6th Floor New York, New York, 10022 Tel: (212) 860-1600 Fax: (713) 860-7699 Attorneys for Plaintiffs Charis Moule, Jerry T. McGuire and Maureen S. Riely and Interim Co- Liaison Counsel Case 4:10-md-02185 Document 336 Filed in TXSD on 03/23/12 Page 4 of 6 - 5 - Stephen J. Fearon, Jr. (pro hac vice) Joseph Golian (pro hac vice) Olga Anna Posmyk (pro hac vice) SQUITIERI & FEARON LLP 32 East 57th Street, 12th Floor New York, New York 10022 Tel: (212) 421-6492 Attorneys for Plaintiffs Ralph Whitley and Frankie Ramirez and Interim Counsel -- Executive Committee Sanford P. Dumain (pro hac vice) Lori G. Feldman (pro hac vice) Arvind B. Khurana (pro hac vice) MILBERG LLP One Pennsylvania Plaza New York, New York 10119 Tel: (212) 594-5300 Fax: (212) 868-1229 Attorneys for Plaintiffs Charis Moule, Jerry T. McGuire and Maureen S. Riely and Interim Co- Lead Counsel Gregory M. Egleston (pro hac vice) EGLESTON LAW FIRM 360 Furman Street, Suite 443 Brooklyn, NY 11201 (646) 227-1700 Attorneys for Plaintiff Ralph Whitley Robert I. Harwood (pro hac vice) Jeffrey M. Norton (pro hac vice) Tanya Korkhov (pro hac vice) HARWOOD FEFFER LLP 488 Madison Avenue, Suite 801 New York, NY 10022 (212) 935-7400 Edwin J. Mills Michael J. Klein STULL STULL & BRODY 6 East 45th Street New York, NY 10017 (212) 687-7230 Attorneys for Plaintiff Edward Mineman Attorneys for Plaintiffs Charis Moule, Jerry T. McGuire and Maureen S. Riely and Interim Counsel -- Executive Committee Robert A. Izard (pro hac vice) IZARD NOBEL LLP 29 South Main Street Suite 215 West Hartford, CT 06107 Tel: (860) 493-6292 Fax: (860) 493-6290 Attorneys for Plaintiff Arshadullah Syed Thomas J. McKenna (pro hac vice) GAINEY AND MCKENNA 295 Madison Avenue, 4th Floor New York, NY 10017 Tel: (212) 983-1300 Attorneys for Plaintiff Thomas P. Soesman Case 4:10-md-02185 Document 336 Filed in TXSD on 03/23/12 Page 5 of 6 - 6 - CERTIFICATE OF SERVICE I certify that the foregoing Response to Notice of Supplemental Authority was served through the Court’s CM/ECF system on March 23, 2012. /s/ Thomas R. Ajamie _________________________________ Thomas R. Ajamie Case 4:10-md-02185 Document 336 Filed in TXSD on 03/23/12 Page 6 of 6