Case 2:08-cv-01008-MJP Document 174 Filed 10/14/11 Page 1 of 3 1 The Honorable Marsha J. Pechman 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 9 AT SEATTLE 10 ) CLAUDE A. REESE, et al., ) Case No. C08-1008 MJP 11 ) Plaintiffs, ) [PROPOSED] ORDER ON 12 ) PLAINTIFFS’ MOTION TO FILE A v. ) SECOND AMENDED 13 ) CONSOLIDATED CLASS ACTION ROBERT A. MALONE, et al., ) COMPLAINT FOR VIOLATIONS OF 14 ) THE FEDERAL SECURITIES LAWS Defendants. ) 15 ) 16 The Court, having received and reviewed Plaintiffs’ Motion to File A Second Amended 17 Consolidated Class Action Complaint For Violations of the Federal Securities Laws, makes the 18 following ruling: 19 The motion is hereby GRANTED. Plaintiffs may file the Second Amended 20 Consolidated Class Action Complaint For Violations of the Federal Securities Laws. 21 22 DATED this day of , 2011. 23 24 HONORABLE MARSHA J. PECHMAN United States District Court Judge 25 26 27 [PROPOSED] ORDER KIPLING LAW GROUP PLLC 3601 F REMONT AVE N, SUITE 414 SEATTLE , WASHINGTON 98103 (C08-1008 MJP) telephone (206) 545-0345 fax (206) 545-0350 Case 2:08-cv-01008-MJP Document 174 Filed 10/14/11 Page 2 of 3 1 Presented by: 2 s/ Javier Bleichmar Thomas A. Dubbs (admitted pro hac vice) 3 Javier Bleichmar (admitted pro hac vice) Erin H. Rump (admitted pro hac vice) 4 LABATON SUCHAROW LLP 140 Broadway 5 New York, NY 10005 212-907-0700 (tel) 6 212-818-0477 (fax) [email protected] 7 [email protected] 8 [email protected] 9 Robert D. Stewart, WSBA #8998 Timothy M. Moran, WSBA #24925 10 KIPLING LAW GROUP PLLC 3601 Fremont Avenue N., Suite 414 11 Seattle, WA 98103 206.545.0345 (tel) 12 206.545.0350 (fax) [email protected] 13 [email protected] 14 Counsel for Lead Plaintiffs 15 16 17 18 19 20 21 22 23 24 25 26 27 PLAINTIFFS’ MOTION TO FILE A 2 KIPLING LAW GROUP PLLC SECOND AMENDED CONSOLIDATED 3601 FREMONT AVE N, SUITE 414 CLASS ACTION COMPLAINT SEATTLE , WASHINGTON 98103 telephone (206) 545-0345 (C08-1008 MJP) fax (206) 545-0350 Case 2:08-cv-01008-MJP Document 174 Filed 10/14/11 Page 3 of 3 1 CERTIFICATE OF SERVICE 2 I hereby certify that on the 14th day of October, 2011, I electronically filed the foregoing 3 with the Clerk of the Court using the CM/ECF system which will send notification of such filing 4 to the following: 5 • Peter A Binkow • Timothy Michael Moran [email protected] [email protected] 6 • Javier Bleichmar [email protected] [email protected] 7 • Richard C Pepperman, II • Thomas A Dubbs [email protected] 8 [email protected] • Steven J Purcell 9 • Neal A Dublinsky [email protected] [email protected] 10 • Erin H. Rump • Elizabeth K Ehrlich [email protected] 11 [email protected] [email protected] • Jonathan Gardner • Robert D Stewart 12 [email protected] [email protected] [email protected] 13 • Stefanie J Sundel • David C Lundsgaard [email protected] 14 [email protected] [email protected] • John L Warden 15 [email protected] • Diane L McGimsey [email protected] 16 [email protected] s&[email protected] 17 18 DATED this 14th day of October, 2011. 19 s/ Javier Bleichmar 20 Thomas A. Dubbs (admitted pro hac vice) Javier Bleichmar (admitted pro hac vice) 21 Erin H. Rump (admitted pro hac vice) LABATON SUCHAROW LLP 22 140 Broadway New York, NY 10005 23 212-907-0700 (tel) 24 212-818-0477 (fax) [email protected] 25 [email protected] [email protected] 26 27 [PROPOSED] ORDER KIPLING LAW GROUP PLLC 3601 F REMONT AVE N, SUITE 414 SEATTLE , WASHINGTON 98103 (C08-1008 MJP) telephone (206) 545-0345 fax (206) 545-0350 Case 2:08-cv-01008-MJP Document 174-1 Filed 10/14/11 Page 1 of 73 1 THE HONORABLE MARSHA J. PECHMAN 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 10 ) No. C08-1008 MJP 11 ) CLAUDE A. REESE, Individually and on ) SECOND AMENDED CONSOLIDATED 12 Behalf of All Others Similarly Situated, ) CLASS ACTION COMPLAINT FOR ) VIOLATIONS OF THE FEDERAL 13 Plaintiff, ) SECURITIES LAWS ) 14 v. ) JURY TRIAL DEMANDED ) 15 JOHN BROWNE and ROBERT MALONE ) ) 16 Defendants. ) ) 17 ) ) 18 19 20 Thomas A. Dubbs (admitted Pro Hac Vice) Robert D. Stewart, WSBA #8998 21 Javier Bleichmar (admitted Pro Hac Vice) Timothy M. Moran, WSBA #24925 Erin H. Rump (admitted Pro Hac Vice) KIPLING LAW GROUP PLLC 22 LABATON SUCHAROW LLP 3601 Fremont Avenue N., Suite 414 140 Broadway Seattle, WA 98103 23 New York, New York 10005 Tel: 206.545.0345 Tel: 212.907.0700 Fax: 206.545.0350 24 Fax: 212.818.0477 25 Lead Counsel for Lead Plaintiffs Liaison Counsel for Lead Plaintiffs 26 27 28 October 14, 2011 SECOND AMENDED CONSOLIDATED CLASS ACTION COMPLAINT Case 2:08-cv-01008-MJP Document 174-1 Filed 10/14/11 Page 2 of 73 1 TABLE OF CONTENTS 2 Page 3 I. NATURE OF THE ACTION ............................................................................................1 4 II. JURISDICTION AND VENUE ........................................................................................4 5 III. THE PARTIES...................................................................................................................4 6 IV. BP’S ADR AND COMMON STOCK ARE LISTED AND REGISTERED IN THE UNITED STATES ....................................................................................................5 7 V. BACKGROUND ...............................................................................................................7 8 9 A. The Trans Alaska Pipeline And The Oil Transit Lines ..............................................7 10 B. Maintenance of Oil Pipelines – “Pigging” .................................................................8 11 VI. SUBSTANTIVE ALLEGATIONS ...................................................................................9 12 A. BPXA Knew Years Prior To The Spills That The Failed Oil Transit Lines Were Subject To Highly Corrosive Conditions................................................9 13 B. BP Suppressed An Independent Report Showing Ineffective 14 Corrosion Monitoring And Ignored Recommendations to Pig ................................11 15 C. BP’s Board Of Directors Knew Of The Widespread Corrosion At Prudhoe Bay In 2004................................................................................................14 16 D. BPXA Knew In September 2005 That The Corrosion Level In The 17 Pipeline That Failed In March 2006 Was “High” ....................................................15 18 E. BPXA Failed To Pig Despite Knowing Of Water And Sediment Buildup And Increased Corrosion, And Despite A Consensus And 19 Internal Documents Establishing That Pigging Must Be Part Of Any “Sound” or “World Class” Corrosion Monitoring System.......................................17 20 F. The March 2, 2006 Oil Spill.....................................................................................19 21 G. Defendants Intentionally, or With Deliberate Recklessness, Ignored 22 the Government’s Corrective Action Order Issued After The March 2 Oil Spill, Leading To The August Shutdown...........................................................20 23 1. The March 15, 2006 Corrective Action Order..................................................20 24 (a) The CAO Raised Serious Concerns......................................................20 25 (b) The WOA and EOA Pipelines Had Similar Characteristics 26 and Corrosive Conditions .....................................................................21 27 2. BP’s Board Was Informed That There Was A Risk of Additional Leaks In May 2006 ...........................................................................................23 28 SECOND AMENDED CONSOLIDATED CLASS ACTION COMPLAINT i Case 2:08-cv-01008-MJP Document 174-1 Filed 10/14/11 Page 3 of 73 1 3. Hayward Knew That BPXA Had Violated The CAO ......................................23 2 4. Amendment No. 1 To The CAO.......................................................................24 3 H. The August 7, 2006 Shutdown of Prudhoe Bay.......................................................25 4 I. Amendment No. 2 To The CAO ..............................................................................28 5 J. Congressional Hearings And Investigation..............................................................30 6 1. The Head Of The Corrosion Division Takes The Fifth ....................................31 7 2. PHMSA Testified That BP’s Conduct Was Mystifying and Violated The Industry Standard of Care ...........................................................31 8 3. The President of Alyeska Pipelines Testified That He Was 9 Unaware Of Any Oil Pipeline Comparable To The EOA and WOA Lines That Were Not Pigged ..................................................................32 10 4. The Senate Hearing...........................................................................................32 11 5. The Congressional Investigation.......................................................................33 12 K. Amendment No. 3 To The CAO ..............................................................................34 13 L. BPXA Pled Guilty To A Criminal Violation Resulting From The 14 Corrosion And Oil Spills In 2006.............................................................................34 15 M. DOJ Filed A Civil Lawsuit On March 31, 2009, Based On BPXA’s Violations of The CAO ............................................................................................35 16 1. The DOJ Complaint (Filed After Plaintiffs’ 2008 Complaint).........................35