It’s too bad BP’s Deepwater Horizon rig wasn’t as effective at controlling the flow of oil as the U.S. Supreme Court’s Morrison ruling is at containing securities class action claims.

A federal judge in Houston partially denied BP’s motion to dismiss a proposed shareholder class action stemming from the 2010 Deepwater Horizon disaster on Monday, concluding that the plaintiffs had adequately alleged that the oil giant misrepresented its safety preparations and readiness to respond to a spill in the Gulf of Mexico. But Judge Ketih Ellison gutted the proposed class, limiting the case to claims by purchasers of American Depositary Receipts after determining that the Supreme Court’s Morrison v. National Australia Bank decision barred U.S. claims by investors who bought ordinary shares in the United Kingdom.

We predicted that the ordinary shareholders’ claims would have trouble surviving Morrison v. NAB. And co-lead counsel at Yetter Coleman; Cohen Milstein Sellers & Toll; and Berman DeValerio couldn’t have been shocked by Judge Ellison’s application of the Supreme Court’s ruling. But it’s still a massive blow to the plaintiffs and their lawyers: Of the $229.4 million in losses claimed by the Ohio and New York pension funds appointed as lead plaintiffs, only about 10 percent represented investments in American Depository Receipts rather than ordinary shares. (Overall, more than $91 million in BP market capitalization was wiped out in the month after the April 2010 explosion, according to the plaintiffs.)

Still, the decision allows the plaintiffs’ core allegations against BP to move forward. The New York and Ohio funds alleged in their February 2011 consolidated complaint that BP had made fraudulent statements about its safety precautions in the Gulf and elsewhere over a three-and-a-half-year period. And looking at those statements, Judge Ellison concluded that the funds had a case.

Many of the statements were related to BP’s progress in implementing safety provisions following a 2005 explosion at a Texas refinery and adopting recommendations for improvement issued by an independent panel headed by former Secretary of State James Baker, a Baker Botts partner. The Texas explosion and the Baker panel established a “starting point” for BP’s progress, the judge found.

“Plaintiffs have alleged sufficient facts to call into question whether BP and its corporate officers and directors were in fact implementing the process safety reforms they represented,” Judge Ellison wrote.

Judge Ellison separately granted BP’s motion to dismiss claims by a subclass of plaintiffs represented by Cotchett Pitre & McCarthy, whose claims were limited to statements by BP about the safety of its Gulf of Mexico drilling operations. The judge also dismissed claims against several BP executives, though not former BP CEO Tony Hayward.

Neither BP counsel Daryl Libow of Sullivan & Cromwell nor a company spokesperson responded to requests for comment.

In an attempt to circumvent the Supreme Court’s holding in Morrison that U.S. securities laws don’t apply to foreign transactions, counsel for the ordinary BP shareholders argued that many of the investors were U.S. citizens, and that the foreign share purchases in many cases originated in the United States. They cited London Stock Exchange rules allowing trades to be initiated by U.S.-based market makers. But Judge Ellison wasn’t persuaded; after Morrison, he wrote, the deciding factor is “where the transaction occurred, i.e., whether it was a ‘domestic transaction.’”

Lawyers for the plaintiffs declined to comment on Judge Ellison’s ruling. Lisa Peterson Hackley, a spokeswoman for Ohio Attorney General Mike DeWine, said the plaintiffs “are reviewing the judge’s decision.”

New York State Comptroller Thomas P. DiNapoli called the decision “a victory” for the plaintiffs and said he was “grateful” that the case would move forward. “We believe that BP exaggerated its ability to prevent a catastrophic spill as well as its ability to respond to one should it occur,” DiNapoli said in a statement. “We look forward to holding BP accountable for its actions in court.”