California Climate Cases Against Big Oil Go Before Judges (1)

Industry and local government lawyers squared off in another high-stakes climate case Wednesday, arguing over whether California cities and counties can wage their legal fight against the oil and gas industry in state court.

The crux of the debate before the U.S. Court of Appeals for the Ninth Circuit is whether lawsuits from San Francisco, Oakland, San Mateo County, and others raise sweeping claims that are beyond state courts’ jurisdiction, or raise quintessential local arguments that belong at that level.

“Those sorts of interstate claims, state law can’t apply,” industry lawyer Theodore J. Boutrous Jr., of Gibson Dunn & Crutcher LLP, told the court, referring to allegations linked to the companies’ greenhouse gas emissions.

Sher Edling LLP attorney Vic Sher, representing the California cities and counties, countered that the litigation involves traditional state-law issues, including product liability.

“The complaint rests on the defective nature of the product and the campaign of deception and denial over the last 50 years,” he said.

The courtroom showdown is the latest in a cross-country crusade of high-stakes climate litigation. Similar cases that seek to hold big oil companies financially responsible for the impacts of climate change are pending in Colorado, Maryland, Rhode Island, New York, and Washington state.

The Ninth Circuit is reviewing a pair of cases with different backgrounds. In one, a district court sided with the oil industry in 2018; in the other, a federal judge sent the cases to state court for municipalities to pursue their claims.

Sher and Boutrous are familiar adversaries in the climate litigation. They both appeared in the Richmond, Va.-based U.S. Court of Appeals for the Fourth Circuit just two months ago to argue over the proper jurisdiction for another climate liability case from Baltimore.

Several other climate liability cases are locked in similar disputes over whether lawsuits belong in federal or state court.

Earlier Proceedings

San Francisco, Oakland, San Mateo County, and five other local governments sued Chevron Corp., BP Plc, Exxon Mobil Corp., and other major oil companies in 2017, saying they should cover the costs of local infrastructure damage linked to sea level rise and other impacts of climate change. Greenhouse gases released during fossil fuel combustion are the main driver of rising global temperatures.

Industry lawyers bumped the cases to federal court, saying they involved national issues beyond the jurisdiction of a state judge.

When the California local governments asked to return the cases to state court, two federal district court judges split on the issue. One agreed that the plaintiff governments deserved an opportunity to make their arguments in state court. The other found the arguments too sweeping and dismissed the case entirely.

Wednesday’s oral arguments are also the first big climate-focused court hearing since 21 young plaintiffs lost their ambitious case, Juliana v. United States, that alleged the federal government violated the young people’s constitutional rights by promoting fossil fuel production and use.

The local governments’ cases involve very different claims, seeking money from the industry to pay for climate-related harms.

“If the panel agrees that the cases belong in state court, it would be the state judge, applying state laws, who decides whether we can proceed with this case to protect our residents, workers, and businesses from the costs and damage these fossil fuel companies knowingly imposed on our communities,” lawyers for San Francisco and Oakland said in a statement after the arguments.

Federal Officers?

The three-judge panel peppered both sides with questions during Wednesday’s oral arguments, first grappling with whether it had jurisdiction to hear the full suite of industry arguments.

At issue is part of the oil companies’ arguments for moving the cases from state to federal court. They invoked “federal officer jurisdiction,” which says cases involving U.S. officials generally belong in federal court.

Judges Sandra Segal Ikuta and Morgan Christen noted that Ninth Circuit precedent generally requires appellate judges reviewing a federal court transfer to focus on that issue, rather than considering other arguments for why a case should be in federal court. Christen wondered, however, if the court should take a closer look at that precedent.

The court also delved into the substance of the federal officer argument. Boutrous noted that the U.S. Navy has entered into formal contracts with oil companies for fossil fuels from federal tracts.

Judge Kenneth K. Lee questioned whether the existence of such contracts is enough to trigger federal jurisdiction.

Ikuta is an appointee of President George W. Bush; Christen is an appointee of President Barack Obama; and Lee is an appointee of President Donald Trump.

Sparring Over Breadth of Cases

Lawyers for both sides repeatedly returned to the core question: Just how broad are the local governments’ lawsuits?

Altshuler Berzon LLP attorney Michael Rubin, arguing for Oakland and San Francisco, noted that the cities are only asking industry to foot the bill for local harms linked to climate change.

A lawyer for the Trump administration, aligned with industry in the case, argued that the cities’ lawsuits were a backdoor attempt to regulate oil companies’ emissions.

Justice Department lawyer Jonathan Brightbill noted that both the Trump and Obama administrations maintained that the Clean Air Act displaces nuisance lawsuits focused on greenhouse gas emissions.

Paul, Weiss, Rifkind, Wharton & Garrison LLP Kannon Shanmugam also appeared during Wednesday’s arguments, representing out-of-state oil companies.

The cases are Cty. of Oakland v. BP Plc, 9th Cir., No. 18-16663 and Cty. of San Mateo v. Chevron Corp., 9th Cir., No. 18-15499, oral arguments 2/5/20.