Lone Anadarko exec statement survives in Deepwater Horizon securities fraud suit

Anadarko Petroleum Corp.’s shareholders may press securities fraud claims over one statement made by an executive who allegedly downplayed the company’s role in the Deepwater Horizon disaster, according to a federal judge in Houston who tossed the rest of their suit.

Judge Keith P. Ellison granted most of Anadarko’s motion to dismiss the combined shareholder suit from the U.S. District Court for the Southern District of Texas.

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He found the plaintiffs failed at “laying the blame for the Deepwater Horizon disaster at Anadarko’s feet” and did not prove the company deceived investors before or after the April 2010 accident. Eleven workers were killed when the Deepwater Horizon rig exploded and sank, and the blown-out Macondo well leaked 5 million barrels of oil into the Gulf of Mexico.

Anadarko, which owned a 25 percent stake in the well, has not admitted any liability for the explosion and spill but in 2011 agreed to a $4 billion settlement with the well’s majority owner, BP Exploration & Production Inc., according to media reports.

Judge Ellison reviewed 28 statements that plaintiffs pointed to as examples of misrepresentations about Anadarko’s handling of the Macondo well and found only one that could support a claim that would survive a motion to dismiss.

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He said the remainder failed to satisfy the heightened pleading requirements of the Private Securities Litigation Reform Act, which Congress passed to reduce securities fraud suits by forcing plaintiffs to back up their claims before moving on to discovery and trial.

The surviving statement was made by Anadarko Senior Vice President of Worldwide Exploration Robert Daniels concerning the company’s design and operation of the Macondo well.

Daniels said during an earnings conference call two weeks after the rig explosion that Anadarko had little input into the design of the well.

Unlike the other 27 statements, the plaintiffs were able to show how that statement was misleading and that Daniels probably knew it was false when he made it, according to the judge.

However, the judge said the plaintiffs still face an uphill battle in court because Daniels’ statement was “apparently an isolated occurrence, not repeated” by other Anadarko executives.

Judge Ellison said the plaintiffs will have to show that the statement was meant to deceive investors about material information, get shareholders to rely on it in making decisions about whether they would retain or sell their stock, and cause them to lose money as a result.

While he did not categorically bar the plaintiffs from attempting to amend their suit to cure its defects, the judge did not grant permission to replead either.

Instead, he gave the plaintiffs 30 days to present him with a list detailing exactly how they would update the complaint and what new information it would contain to support the charges.

Otherwise, the claims based on the other 27 statements would be dismissed permanently, he said.

In re Anadarko Petroleum Corp. Class Action Litigation, No. 12-0900, 2013 WL 3753972 (S.D. Tex. July 15, 2013).