Forum Non Conveniens Dismissal of BP Oil Spill Shareholder Suit

Last week Judge Ellison of the U.S. District Court for the Southern District of Texas issued an order dismissing on forum non conveniens grounds a shareholder derivative suit against BP arising out of the Deepwater Horizon explosion and oil spill. See In re BP Shareholder Derivative Litigation, 2011 WL 4345209, MDL No. 10-md-2185 (S.D. Tex. Sept. 15, 2011). From the opinion (citations omitted):

The Court concludes that England, as the focal point of this litigation, is the far more appropriate forum. Because this derivative lawsuit involves the internal governance of an English corporation, the convenience of the parties and the interests of justice favor England as a more convenient forum. This case is unique because it is a derivative lawsuit involving the internal affairs of a foreign corporation. Indeed, because Plaintiffs are just a handful of the thousands of potential shareholders that could sue the individual defendants on behalf of BP, their choice of forum is accorded less deference than the typical home forum plaintiff in a traditional two party lawsuit. Moreover, because this lawsuit calls for an inquiry into the knowledge and actions of BP's Board of Directors, the lion's share of the relevant documents and the majority of the individual defendants are located in England. Given the decreased deference accorded to Plaintiffs' choice of an American forum, the private interest factors weigh slightly in favor of dismissal.

It is the public interest factors, however, that most strongly favor England as the appropriate forum in which to proceed with this case. These factors persuade the Court that this action should be dismissed. The primary concern of this derivative litigation is the internal affairs of an English corporation, and the suit seeks to recover damages for the benefit of BP only. Accordingly, England has a greater interest in the resolution of this dispute. Moreover, English law governs this dispute and will determine whether the individual defendants breached their fiduciary duties and harmed BP in the process. Thus, English law would predominate and, if the case were to continue here, the Court would be faced with the formidable exercise of interpreting and applying a still nascent and evolving body of foreign law. The Court would be saddled with not only the ordinary task of adjudication, but also the additional administrative tasks characteristic of derivative actions articulated in Koster. Dismissing this case would relieve this Court of the substantial burdens of such undertakings. Finally, the citizens of Louisiana should not be burdened, as factfinders, with the exercise of applying complex English law to determine whether the individual defendants harmed an English company through unlawful acts and inadequate oversight. As these public interest considerations counsel strongly in favor of dismissal, Defendants' Motion is hereby GRANTED.

--A

(Hat Tip: Marc Poirier)