BP PLC employees can sue managers of the company’s retirement plan over losses related to the 2010 Gulf of Mexico oil spill, a U.S. appeals court said.
The 5th U.S. Circuit Court of Appeals in New Orleans, citing a recent Supreme Court ruling, on Tuesday rejected U.S. District Judge Keith Ellison’s 2012 decision denying claims for millions of dollars in losses suffered by the plan.
The lawsuits questioned plan managers’ investment in BP’s shares, which dropped more than 40% after the worst offshore oil spill in U.S. history and still haven’t completely recovered in value.
State Street Global Advisors was manager of the BP stock fund, and parent State Street Bank & Trust was trustee of the employee savings plan. BP America had $7.5 billion in defined contribution assets as of Sept. 30.
The plan managers “knew or should have known, based on a variety of sources, that BP shares were not a prudent investment,” the workers alleged in their complaints.
Citing then-prevailing legal precedent, Mr. Ellison dismissed the claims because retirement plan managers who invest in company stock were entitled to a “presumption of prudence” shielding them from litigation.
Last month, the Supreme Court unanimously ruled in an unrelated case that company managers aren’t entitled to that presumption when dealing with savings plans covered by the Employee Retirement Income Security Act.
“ERISA fiduciaries managing a plan invested in company stock are subject to the same duty of prudence as any other ERISA fiduciary,” the three-judge appeals panel said Tuesday, citing the high-court order.
The panel sent the workers’ suits back to Mr. Ellison for reconsideration in light of the new standard.
“BP does not believe the plaintiffs satisfy these new standards and intends to renew its motion to dismiss in the district court,” Geoff Morrell, a spokesman for London-based BP, said in a statement.
Tom Ajamie, a lawyer for the workers, didn’t immediately return telephone or e-mail requests for comment.