Special Topics in Safety Management

CourtWatch: Should Big Oil Be Held Responsible for Contributing to Climate Change?

Vermont joins a long list of states that have sued energy companies with allegations that these companies mislead consumers about the impact their products have on global warming. The lawsuit, filed on September 14, 2021, “alleges past and ongoing violations of Vermont’s Consumer Protection Act for concealing crucial information and disseminating misleading statements and advertising about fossil fuels and climate change,” according to the Office of the Vermont Attorney General website

The lawsuit, filed in Vermont Superior Court, includes the following defendants:

  • Exxon Mobile
  • Royal Dutch Shell
  • Shell Oil
  • Motiva Enterprises
  • Sunoco
  • Energy Transfer
  • Citgo

“State and local governments across the nation are suing oil and gas companies, alleging, in essence, as the Fourth Circuit put it, that these defendants ‘substantially contributed to climate change by producing, promoting, and (misleadingly) marketing fossil fuel products long after learning the dangers associated with them,’” according to a Zelle LLP article in JD Supra. “Plaintiffs plead various causes of action under state law, such as public and private nuisance, failure to warn, and design defect. They seek monetary damages and other relief.”

Many analysts compare these battles with the ones fought against the tobacco industry that resulted in severe warnings being placed upon those products.

On September 27, 2021, California Attorney General Rob Bonta announced he “has joined four amicus briefs in support of state and local efforts to hold oil companies accountable.”

The cases are:

  1. Honolulu v. Sunoco (9th Circuit Court of Appeals)
  2. Rhode Island v. Shell (1st Circuit Court of Appeals)
  3. BP v. Baltimore (4th Circuit Court of Appeals)
  4. Minnesota v. American Petroleum Institute (8th Circuit Court of Appeals)

In all four cases, district courts have either remanded the case back to state court or decided the case should be heard in state court.

State vs. federal courts

Roughly 20 similar cases have been filed in various jurisdictions across the United States, according to The New York Times.

The cities and states seek to hold the companies liable under state laws. Meanwhile, defendants claim the deciding factor is whether their operations cause pollution that crosses state and county lines. If so, they contend, it is a matter for the federal courts.

State and local governments feel the state court venue is a friendlier route to achieve their goals.

“Proceeding in state or federal court can be critical to the outcome of these climate change lawsuits,” Zelle notes. “For example, a federal district court in California dismissed complaints filed by Oakland and San Francisco for failure to state a claim upon which relief can be granted. In contrast, state courts are more likely to allow these actions to move past the pleading stage and into discovery.”

Bonta argues in multistate coalition briefs that these cases belong in state court, as the right to remove cases is narrowly construed to protect states’ sovereign authority to enforce state laws.

To date, the 1st, 4th, 9th, and 10th Circuit Courts of Appeal have sent these cases back to state courts.

In a case brought by the City of Baltimore—BP P.L.C. v. Mayor and City Council of Baltimore—energy company defendants fought for removal to federal court on eight separate grounds.

“The Fourth Circuit held that under the applicable statute, 28 U.S.C. § 1447(d), it only had authority to review one of the eight asserted bases for removal; the seven other grounds were outside of the appellate court’s jurisdiction,” according to Zelle. “And, with respect to the single reviewable basis for removal, the so-called federal officer removal statute, the Fourth Circuit held that defendants failed to satisfy the requirements of that provision.”

SCOTUS steps in

Energy companies in the Baltimore case petitioned the U.S. Supreme Court (SCOTUS) for a writ of certiorari and were granted the request.

In their brief, petitioners “asked that the Court take one further step, and address those additional bases for removal itself, in particular the companies’ argument that plaintiffs’ claims arise under federal law and therefore the cases belong in federal court under 28 U.S.C. § 1331,” adds Zelle. “Baltimore objected to the [energy companies’] request for relief on the grounds that it was not part of the question presented to the Court and was not addressed by the Fourth Circuit.”

SCOTUS’s 7–1 decision, delivered on May 17, 2021, provided a small victory for the energy industry.

“The decision in the case did not deal with the merits of the lawsuit, which Baltimore filed to try to compel fossil fuel companies to help pay the costs of dealing with climate change,” says The New York Times. “Instead, the justices focused on narrow issues concerning the rules for appealing lower-court decisions that send cases to state courts.”

Traditionally, there are only very narrow exceptions that allow appellate courts to review decisions, sending cases back to state courts. And the appellate courts are presenting conflicting decisions in determining how broad their scope should be in reviewing those decisions.

The majority SCOTUS ruling quoted 28 U.S.C. §1443, a provision guaranteeing a federal forum for certain federal civil rights claims, as the first accrued exception granting more power to appellate courts to review these types of decisions.

“Barring appellate review of remand orders, the City says, serves the worthy goal of allowing the parties to get on with litigating the merits of their cases in state court,” Justice Neil Gorsuch wrote in the majority opinion. “Meanwhile, the City submits, allowing exceptions to this rule promises only to impair that efficiency interest.… [T]his Court’s task is to discern and apply the law’s plain meaning as faithfully as we can, not ‘to assess the consequences of each approach and adopt the one that produces the least mischief….’ The Fourth Circuit erred in holding that it was powerless to consider all of the defendants’ grounds for removal under §1447(d).… The judgment of the Fourth Circuit is vacated, and the case is remanded for further proceedings consistent with this opinion.”

“The lone dissenter, Justice Sonia Sotomayor, said that the fossil fuel companies had used what amounts to procedural sleight of hand to avoid the normal limits on review for a decision on appeal,” The New York Times adds. “The new decision, she warned, would open the federal appeals process to gamesmanship, allowing parties to make ‘near-frivolous arguments’ in order to open a back door for appeal.

“Justice Gorsuch dismissed such concerns, saying that the legislative branch could address any problems that might arise. ‘Congress is of course free to revise its work anytime,’ he wrote. ‘But that forum, not this one, is the proper place for such lawmaking.’”

Additional climate-related litigation against energy companies continues to be filed by city and state governments. Energy companies are paying out huge costs in litigation defense fees. Eventually, these cases will move into the discovery phase, in which legal fees will skyrocket. And, as with all litigation matters, eventually, a favorable judgment against the energy companies will be reached. These types of judgments usually come with billion-dollar price tags.

Additionally, it should come as no surprise to other types of industries whose products and/or processes contribute to greenhouse gas emissions when they, too, are sued to collect money for climate change-related damages. Such industries would be well advised to develop strategies to deal with these types of claims. It is clear that these types of suits are not going away.