Exxon case launches ‘novel and creative’ era of litigation

Source: Amanda Reilly, E&E reporter • Posted: Monday, May 9, 2016

Investigations and potential future litigation against Exxon Mobil Corp. over its alleged past misinformation about global warming are just the beginning of a new era of climate change legal pursuits, several attorneys predicted this week.

New legal maneuvers could feature the government, consumers, investors and insurance companies as plaintiffs, said the attorneys, who spoke at the Climate Action 2016 summit in Washington, D.C.

Alyssa Johl, a senior attorney at the Center for International Environmental Law, also expects to see cases accusing companies of false advertising and misrepresentation, and cases brought under state consumer protection statutes.

Johl said, “The guiding questions that come to light when you think about this is: What are the costs of climate change, who will pay them, and — really, the underlying question and most important question, which has been difficult to answer until now — is who is responsible for the harms associated with fossil fuel products?”

Prior court action on climate change has mostly involved government agencies and their actions to reduce greenhouse gases under various laws.

The goal of this new phase of legal action is to make companies accountable for their greenhouse gas emissions and associated damages, said Roger Martella, a former U.S. EPA general counsel who is now a partner at Sidley Austin LLP representing industry clients.

“You hear more of a discussion of accountability for greenhouse gas emissions — not just limiting companies’ greenhouse gas emissions, but who should be accountable,” Martella said.

“Instead of using kind of existing statutory laws,” he said, “we have very novel and creative legal theories being discussed and deployed.”

Whether courts will take a friendly view to the new legal theories under discussion remains uncertain. But new scientific discoveries about the effects of a warming planet may help climate plaintiffs make their cases, Johl said.

“It will be possible to attribute what amount of sea-level rise can be traced back to Exxon or to Chevron, or what level of warming can be traced back to Exxon or Chevron,” Johl said. “So this is the kind of work and the science that’s being done now that’s going to be so incredibly powerful as we move forward with the next generation of lawsuits.”

A group of state attorneys general is investigating Exxon’s past climate research following a series of news investigations that found the oil and gas giant had misled the public and investors about warming. Democrats in Congress have also asked the Justice Department and the Securities and Exchange Commission to launch their own probes.

The federal government’s successful legal action against tobacco companies for misinforming the public about the risks of smoking could pave the way for similar action against fossil fuel companies for climate risks, said Sharon Eubanks, a partner at Bordas and Bordas Attorneys PLLC.

Federal prosecutors brought litigation against tobacco giants under the Racketeer Influenced and Corrupt Organizations Act, or RICO (E&ENews PM, Feb. 10). Eubanks, a former Justice Department attorney involved in those actions, yesterday gave an example of the type of argument plaintiffs could use against fossil fuel companies.

“We know that evidence of global warming has been mounting for generations, and that major fossil fuel companies have been aware of the underlying climate science itself for decades,” Eubanks said. “Yet instead of acting, these companies embarked on a series of campaigns to deliberately deceive the public about the reality of climate change and to block any actions that might curb global warming emissions.”

While federal tobacco litigation established that RICO could be used to sue corporations, Eubanks said the requirements of state RICO laws may be easier for fossil fuel foes to meet.

Tip of the iceberg

RICO litigation against Exxon would likely be just the tip of the iceberg. Recent scientific efforts by organizations such as the Climate Accountability Institute and the Union of Concerned Scientists are making it easier to trace greenhouse gas emissions.

“We know that as climate science gets more precise and allows us to identify impacts with finer resolution and greater confidence,” Johl said, “our ability to identify plaintiffs with individual, particularized harms is growing.”

David Doniger, director of the Climate and Clean Air Program at the Natural Resources Defense Council, said the science of attributing impacts to emissions is improving at “light speed.”

Holding polluters accountable in a manner similar to the national Superfund program, under which the government can hold companies accountable for an entire site’s cleanup, “will become a real consideration,” Doniger said.

“It may be possible even to think of the problem of greenhouse gases as a Superfund problem, of loading the atmosphere up like a waste dump,” he said.

Potential litigation stemming form new scientific linkages would fall into several categories, Johl said. One set of cases will likely involve consumers as plaintiffs and include challenges against companies for alleged false advertising, misrepresentation and fraud, claims similar to those against Exxon. Others will likely involve investors as plaintiffs, she said.

“What we’re seeing now is mounting frustration and pressure from shareholders, not from civil society or campaigning organizations but from the shareholders themselves, to put pressure on fossil fuel companies,” Johl said, “and I think there is a recognition that shareholder resolutions are not the end of the road. You will be seeing other actions following soon.”

Johl said insurance companies may jump into the legal fray at some point. “I think the insurance companies are going to come back and say, ‘We’re not responsible. We’re not going to indemnify you for fraud. We’re not going to indemnify you for deception, and we’re not going to cover you for the costs associated for pollution that you knew about well before the rest of us.'”

‘Inevitable’

Martella said it is “inevitable” that climate activists will attempt these new types of legal pursuits and that judges generally believe climate change is a key issue.

“When it comes to addressing climate change, courts have sent us a strong signal over the last 10 years in litigation, both domestically and internationally. They think it’s very important,” Martella said. “Maybe not every judge, not every single court, but by and large, we should assume the courts, the judges believe that climate change is an extremely important policy issue.”

But he said it is unclear whether courts, which have shown much deference to government agencies on the issue of climate change, will be as amenable to cases that target specific companies.

“The question is going to be the extent to which courts are going to get more creative themselves,” Martella said.

Republicans have dismissed the recent investigations against Exxon as a political play.

“While the AGs have attempted to package this latest effort as a legal matter, this is nothing more than a misuse of power to score cheap political points,” Senate Environment and Public Works Committee Chairman Jim Inhofe (R-Okla.) said in an emailed statement.

But Johl pointed to the recent court victory by the group Our Children’s Trust, which believes the atmosphere is the public trust and that regulators must protect it from climate change for future generations, as a signal that courts may be more receptive to novel legal theories. In that case, which had children as plaintiffs, a state judge ordered Washington state regulators to issue a greenhouse gas emissions rule (E&ENews PM, April 29).

Environmental groups have historically taken a long view on legal action and will likely do so in the issue of climate change, Martella said.

“I do respect and not have to underestimate the fact that even if these theories seem creative or novel, over time, I think the groups are very strategic,” he said.

Doniger, who is frequently on the opposite side from Martella on environmental issues, said that if he were a corporate counsel, he’d advise companies to take a closer look at their greenhouse gas emissions.

“You might want to consider advising the company that your liability in these situations may depend on not only what you’ve done in the past,” Doniger said, “but may also depend in a sense on your attitude, if you’ve changed the course of your business from this point forward. You may be subject to more sympathy.”