Anadarko Executive’s Dismissal Of Securities Class Action

Weil secured the dismissal, with prejudice and without leave to amend, of a securities fraud claim brought in the U.S. District Court for the Southern District of Texas against Anadarko Petroleum Corporation’s former vice president of Environment, Health and Safety (EHS).

The claim was one of several brought under Section 10(b) of the Exchange Act and Rule 10-b by an Anadarko stockholder against the company and three of its senior executives. Weil represented the former VP of EHS, while Skadden, Arps, Slate, Meagher & Flom LLP represented Anadarko and the other two individual defendants.

The plaintiff attempted to base its lawsuit upon a fatal explosion of a home near an Anadarko well in Firestone, Colorado, in April 2017. On April 26, 2017, Anadarko announced that one of its wells might have been involved in the explosion, and on May 2, 2017, the Firestone-Frederick Fire Department reported a link between the Anadarko well and the explosion. Anadarko’s stock price dropped following each disclosure.

The plaintiff alleged that the defendants’ purported misrepresentations concerning Anadarko’s safety and regulatory compliance practices had artificially inflated Anadarko stock prices and that, when news of an Anadarko well’s link to the Firestone explosion broke, stock prices dropped and investors suffered losses. Specifically, the plaintiff alleged that the former VP of EHS had signed his name to an annual “Health, Safety, Environment and Sustainability Overview” that contained the statement, “Anadarko operates its global onshore and offshore operations in compliance with the applicable laws and associated regulations.” The plaintiff further alleged that the statement was false because Anadarko was violating various Colorado Oil and Gas Conservation Commission rules through certain of its operations in central Colorado. Finally, the plaintiff alleged that the former VP of EHS “knew” that the statement was false because he had access to documents and information suggesting that there were “issues” or “problems” associated with these operations.

In a 37-page memorandum and opinion granting the defendants’ motions to dismiss (issued after oral argument on March 1, 2019), Chief United States District Judge Lee Rosenthal agreed with Weil’s argument that the plaintiff’s complaint failed to plead scienter as to the former VP of EHS because, among other things, the plaintiff had failed to adequately allege (1) that the former VP of EHS had any motive to commit fraud beyond the generic and universally shared motive – not credited by the Fifth Circuit – that the company wanted to “raise capital in the normal course of business”; (2) that the former VP of EHS personally benefited from any purported misrepresentation; (3) that the former VP of EHS either knew of or recklessly disregarded any purported violation of Colorado oil and gas operations regulations; or (4) that the former VP of EHS – responsible for overseeing Anadarko’s global EHS initiatives and not for implementing local oil and gas operations regulations – had a duty to monitor Colorado oil and gas operations regulations that would give rise to liability under Rule 10-b. Judge Rosenthal further credited Weil’s argument that the plaintiff had improperly attempted to revise and augment the allegations of its complaint by means of its opposition to defendants’ motions to dismiss.

Co-defendants’ counsel also secured the dismissal with prejudice of the plaintiff’s claims against Anadarko and the other two individual defendants.

Weil’s team was led by Ray Guy (Picture), Head of Weil’s Dallas litigation practice, and included Dallas Complex Commercial Litigation associates Jennifer Brooks Crozier and Shelby Perry.

Involved fees earner: Jennifer Brooks Crozier – Weil, Gotshal & Manges; Ray Guy – Weil, Gotshal & Manges; Shelby Perry – Weil, Gotshal & Manges;

Law Firms: Weil, Gotshal & Manges;

Clients: former VP of EHS Anadarko;