Supreme Court ruling does not 'close door' on foreign lawsuits
GLOBAL - A recent US Supreme Court ruling will not bar European investors from suing for damages in the US, according to a partner at law firm Bernstein Litowitz Berger & Grossmann.
In the case of Morrison v National Australia Bank (NAB), the court last week ruled that 'f cubed' claims - whereby a foreign investor can sue a foreign company under securities laws if the stocks are acquired on an exchange outside of US jurisdiction - are no longer allowed.
European investors, however, can still join class action cases as long as their shares were bought inside the US, the law firm said.
Beata Gocyk-Farber, partner at New York-based Bernstein Litowitz Berger & Grossmann, said: "If they bought so-called ADRs or ADSs on the US stock exchange, then yes, they should be able to benefit from the class action and actively participate in the class action."
However, Gocyk-Farber conceded the options for companies that bought only some of their shares on a US exchange remained unclear.
She also said it was possible some investors could sue not only under securities fraud laws, but also on a more individual state level.
"There is a slightly open door," she said. "Every case is different, every state has different laws, other jurisdictional issues."
In light of the Morrisson v NAB ruling, the New York State Common Retirement fund has had to re-evaluate a planned class action lawsuit against BP.
Announced last week by State Comptroller Thomas DiNapoli, the $132bn (€108bn) fund is seeking damages for the loss it made following the Gulf of Mexico oil spill.
Robert Whalen, spokesman for DiNapoli, said: "We are compelled to re-evaluate the strategy, but we are moving forward."
He noted the recent Supreme Court ruling "called into question something that had been settled", but added the fund was still intent on seeking lead plaintiff status before the deadline later this month.
Whalen previously said that if the spill had been a case of "negligence or recklessness", the fund must be "made whole appropriately".
In the wake of last month's news that BP could cancel dividend payments, UK pressure group FairPensions warned pension funds to "put in place measures to guard against such risks in the future".
The oil giant has since announced it is to suspend payments for the rest of the year.