The court of appeals reversed a district court judgment and remanded the action for further proceedings. The court held that a company’s breach of a contractual promise of specific future conduct, even where the contract was filed in conjunction with Securities and Exchange Commission reporting requirements, did not establish an actionable misrepresentation for purposes of a private damages action for securities fraud.
In March and August of 2006, BP Exploration (Alaska) Inc. (BPXA) suffered separate individual pipeline leaks in its Prudhoe Bay operating areas. Both leaks resulted in substantial part from internal corrosion caused by bacterial colonies that had formed inside BPXA’s pipelines. BPXA pled guilty in late 2007 to a single count of violating the Clean Water Act. In its plea agreement, BPXA said that it believed that corrosion of its pipelines was a low probability but admitted that it was aware of sediment buildup before the spills and failed to clean the lines or otherwise act to prevent the leaks.
