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ANALYSIS: Climate Change Litigation Plaintiffs Have Struck Oil

Nov. 16, 2020, 9:39 AM

A growing number of cities and states are suing oil majors and other oil industry participants for the damaging impacts of climate change. Rising seas, increasingly severe weather, and the escalating infrastructure costs to adapt have compelled these lawsuits, largely via state common law claims, from across the country.

Recent cases now number in the dozens, meaning this trend is no flash in the pan. Similar to other novel climate change cases, procedural questions of standing and jurisdiction may be the biggest obstacles for these cases to reach trial. One such question — whether state or federal court is the proper forum — in a lawsuit filed by the City of Baltimore has reached the U.S. Supreme Court and will be argued in the coming term. The outcome of this case is sure to impact the entire landscape of these mounting state-based climate cases.

Liability in State Court

The lawsuits recently brought by cities and states to allege liability for climate change involve a variety of state-based claims, including nuisance, trespass, failure to warn, damage to property, and various consumer protection and deceptive trade practices claims. The cases are coming from every corner of the country, from Delaware to Washington and from Maine to California. Cases have been filed by large cities, like San Francisco and New York, and smaller cities like Boulder, Colo., and Hoboken, N.J.

To illustrate what these cases look like, take for example the city of Charleston, S.C., where rising seas and vulnerability to severe weather events have made flooding an unwelcome but somewhat normal part of daily life there. The City of Charleston alleges that the defendants, which include oil majors like BP, Shell, Chevron, and Exxon Mobil as well as other members of oil and gas industry, have known for decades that their activities are a direct cause of global climate change. But instead of issuing warnings about any consequences, Charleston claims, the companies continued to produce fossil fuel products, to conceal the dangers posed by their products, to actively promote false and misleading information, and to seek to undermine public efforts to regulate greenhouse gas emissions.

Proving fault for climate change is no easy task (perhaps the understatement of the century), but the most important goal for plaintiffs at this point is to keep the cases in state court.

The Supreme Court Tackles a Threshold Question

The U.S. Supreme Court, whose ranks now include conservative justice Amy Coney Barrett, will soon address an important threshold question for these state-level climate cases in BP P.L.C. v. Mayor and City Council of Baltimore. The defendants argue that because many of the activities in question were done at the behest of, and to benefit, the federal government and its officers, federal court is therefore the proper forum, by way of the federal officer removal statute. The federal judiciary is widely seen as more industry- and business-friendly than the various state courts.

The precise issue presented is procedural: whether 28 USC §1447(d), in the context of removal for claims against federal officers, limits appellate review to just the federal officer determination of a district court decision, or whether appellate review can reach other issues in a district court’s order as well. The answer to this question will impact the ease with which any of these cases against oil majors can be removed to federal court, because it would allow the defendants another crack at appealing any district court order that had denied change of jurisdiction.

In part, the appellants’ petition for writ of certiorari points to a 2015 decision out of the Seventh Circuit to support their assertions relating to jurisdiction. In that case, the defendant-appellant (The Boeing Co.) unsuccessfully argued that it qualifies under the federal officer removal statute, and plaintiffs-appellees argued that the analysis should stop there. The court disagreed, extending its analysis to the entire remand order and ultimately finding other grounds on which to allow removal to federal court. The court acknowledged the potential for this approach to incentivize defendants to claim federal officer status as a hook just to reach the other issues, but disregarded this worry, saying frivolous removal could lead to sanctions or other negative consequences.

A circuit split exists as to this question. While the Fifth and Sixth Circuits share the Seventh Circuit’s view, the First, Second, Third, Fourth, Eighth, Ninth, Tenth, and Eleventh Circuits have held that only the federal-officer or civil-rights grounds for removal are subject to appellate review. Most recently, the First Circuit’s decision allowed Rhode Island’s case against oil majors to continue in state court.

The Same, But Different

The state- and city-initiated climate change cases share similarities with, but can be distinguished from, other high-profile climate change cases — among them Juliana v. United States, which was dismissed by the Ninth Circuit in January. In Juliana, a group of 21 children sued the U.S. government for violating their constitutional rights — specifically, a claimed right to a “climate system capable of sustaining human life.”

Ultimately, the court concluded that redress was beyond the constitutional power of the courts and must be addressed by the political branches. That determination is not necessarily the end of the road, as the plaintiffs have since requested en banc review by the court.

Interestingly, pushing the case further toward additional appellate review is not without risk. The Ninth Circuit’s decision was somewhat narrow, turning on the issues of standing and the scope of the judiciary’s power under Article III yet declining to reach the merits of the constitutional argument. A broader opinion in Juliana, by either the Ninth Circuit or eventually the Supreme Court, could close the door on future constitutional claims regarding climate change if the court were to rule against the young plaintiffs on the merits. It’s an interesting tension that highlights the sometimes-unintended downstream consequences that novel climate change litigation may cause.

2021 and Beyond

The transition into 2021 could become a profound turning point for climate change litigation and the finding of liability for the effects of global climate change. As illustrated by Juliana, the myriad other climate change cases working their way through various courts, and the state-based lawsuits that have recently ballooned in numbers, climate change litigation is multifaceted, multi-jurisdictional, procedurally complex, and likely to become only more so in the future.

For oil majors already seeing significant challenges from the global pandemic and economic downturn, the impacts could be seismic. Oil and gas companies, their stakeholders, and court watchers will be monitoring the various climate cases closely, but they’ll be paying especially close attention to BP P.L.C. v. Mayor and City Council of Baltimore, where a Supreme Court decision is likely to set the stage for what 2021 is going to look like and — depending on the result — may portend what’s to come long after.

Access additional analyses from our Bloomberg Law 2021 series here, including pieces covering trends in Litigation, Transactions & Markets, the Future of the Legal Industry, and ESG.

Bloomberg Law subscribers can find related content on our In Focus: ESG resource.

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