Exxon’s quintet of dismissals

An update on the oil major’s climate activities and related law suits

ExxonMobil’s recent history has been largely made up of dismissals. First there was the dismissal of its lawsuit against the Attorneys General of New York and Massachusetts, which claimed they were violating its constitutional rights to free speech. Then there was the dismissal of a collection of lawsuits against it and other majors by a group of Californian counties, cities and towns seeking to claim that the company was liable for past and future damage as a result of flooding or other damage caused by climate change. Then another judge dismissed a similar suit brought by New York against the same oil majors. Both of these are being appealed. More recently, there was the dismissal by the SEC of a probe initiated under former SEC chair Mary Jo White in 2016 which investigated whether Exxon had lied to investors about its prior knowledge of climate change. Finally, a US district court denied Exxon’s motion to dismiss a class action case brought by Greater Pennsylvania Carpenters Pension Fund.
The lead plaintiff in the most recent case contended that Exxon and “certain of its current and former officers and directors” issued false and misleading statements that failed to disclose adverse information regarding some of its assets. During the class period, Exxon said it used a “proxy cost” of carbon in calculating the projected financial outlook of each of its investments and projects, but, allegedly it actually applied a significantly lower cost, or none at all. This allowed it to undertake “increasingly risky fossil fuel projects and to delay impairing and/or debooking such assets when oil and gas prices began to plummet worldwide in mid-2014” said Robbins Geller Rudman Dowd, the law firm representing the plaintiff. The judge denied Exxon’s motion to dismiss because he felt the plaintiffs had adequately alleged misstatements and omissions in the accounts.
The dismissal of the SEC investigation into its disclosures to investors and the public about the impact of climate change was not publicly announced by the SEC. Exxon said in a statement that it involved handing over to the Commission more than 4.2 million pages of records. “After a thorough investigation, including a review of these documents, the SEC issued its closure letter,” said company spokesman Scott Silvestri, according to the Wall Street Journal. Exxon did not respond to RI’s requests for confirmation about this statement.
Earlier, in July, a judge dismissed the lawsuit by New York City which sought to hold major oil companies liable for climate change caused by carbon emissions from burning fossil fuels. The suit had claims not just against Exxon, but also Chevron, BP, ConocoPhillips and Royal Dutch Shell. District Judge John KeenanManhattan said he had dismissed the case because climate change should be addressed through “federal regulation and foreign policy”, not in the US courts. This decision echoed the decisions in California and a number of other municipalities, discussed below.
Also in July, Exxon said it had ended its association with the American Legislative Exchange Council (ALEC), in one of a number of high profile ALEC exits in recent years. The exit was said to be over a spat concerning the group’s climate change denial stance, but Exxon was immediately accused of ‘green preening’ by some market observers.
In June, Judge William Alsup in the Northern District of California – after infamously requesting a climate change tutorial from both sides – also dismissed the Californian court cases against Exxon et al. Alsup described the plaintiffs case as “breathtaking” in its breadth and said that his authority had been displaced by the Clean Air Act… currently being gutted by the Trump administration.
“With respect to balancing the social utility against the gravity of the anticipated harm,” he said, “it is true that carbon dioxide released from fossil fuels has caused (and will continue to cause) global warming. But against that negative, we must weigh this positive: our industrial revolution and the development of our modern world has literally been fueled by oil and coal. Without these fuels, virtually all of our monumental progress would have been impossible. All of us have benefited.” Ultimately, he deferred to “the expertise of our environmental agencies, our diplomats, our Executive, and at least the Senate.”
But it has not all gone Exxon’s way. In March, a federal judge dismissed Exxon Mobil Corp’s lawsuit seeking to stop the Attorneys General of New York and Massachusetts from finding out whether the oil and gas company covered up its knowledge of climate change and lied to investors and the public about it. District Judge Valerie Caproni in Manhattan rejected as “implausible” Exxon’s argument that the AGs were pursuing “politically motivated, bad faith fraud investigations in order to violate its constitutional rights” of free speech. In addition, Caproni dismissed the lawsuit with prejudice, meaning Exxon cannot bring it again.
While that suit is ongoing, it is not going too well. The plaintiffs had requested files covering 26 facilities all over the world, but, according to Jonathan Zweig, a New York assistant attorney general, so far it has supplied five cash flow spreadsheets about properties in Antwerp, Belgium; Beaumont, Texas; Baton Rouge, Louisiana; and Alberta, Canada. But even these files arrived stripped of metadata which would give the origin of the data and its history. There were also dating problems with the files, as each was reportedly labelled as created on 1 January 1901 and last modified on 2 January 1901.