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Climate Cases Face More Delay After Big Oil’s High Court Win

May 18, 2021, 8:45 AM

Exxon Mobil Corp. and other oil and gas companies gained fresh tools to block high-stakes climate litigation from advancing in states across the country after winning a procedural fight at the U.S. Supreme Court.

The justices on Monday ruled that a lower court should have reviewed an array of industry arguments for shifting a Baltimore climate case from state to federal judges.

The upshot for everyone involved in climate litigation: more procedural wrangling and further delay.

“It’s not far-reaching as a substantive matter, but this is par for the course for the industry in terms of its litigation tactics,” said Karen Sokol, a law professor at Loyola University New Orleans. Keeping the cases far from the discovery process in state court is “still a significant victory” for fossil fuel companies, Sokol added.

Exxon and other companies will now have a new opportunity to block state court proceedings and persuade the U.S. Court of Appeals for the Fourth Circuit that the issue belongs in federal court, which is considered a more favorable venue for corporate defendants.

‘Waiting Once More’

The ruling has immediate impacts for climate litigation filed by the state of Rhode Island and local governments in California and Colorado. Those cases proceeded the same way in federal court and were the subject of similar Supreme Court petitions by industry lawyers. The justices are expected to remand those cases to their respective circuit courts for broader review.

Other climate cases in earlier stages of venue battles are destined for extended appellate proceedings now that the justices have said circuit courts should consider a broader set of industry arguments for federal jurisdiction.

Prolonged appeals could cause further delays for trial court proceedings on the core legal questions in the cases. University of California, Berkeley, law professor Daniel Farber noted, however, that “some of the circuits may be able to dispose of the other removal arguments pretty quickly.”

Justice Sonia Sotomayor penned a solo dissent addressing the delays Baltimore has already faced in pursuing the oil industry for climate damages. She argued that the Supreme Court’s decision may allow industry defendants to game the system to pursue appeals and further prolong cases.

“Meanwhile, Baltimore, which has already waited nearly three years to begin litigation on the merits, is consigned to waiting once more,” she wrote.

On the Merits

Monday’s ruling from the Supreme Court doesn’t address the core question in most pending climate cases: whether fossil fuel companies should be on the hook for local-level impacts of climate change. It also doesn’t resolve the nagging state-versus-federal court debate.

Oil companies attempted to engage justices on the question of whether the case raises federal issues, but Justice Neil Gorsuch made clear in the majority opinion that the justices had avoided those claims.

Some justices signaled interest in the federal jurisdiction claims during oral arguments in January and appeared to find them persuasive, Sokol said, adding that the issue is likely to return to the high court.

The decision doesn’t give any indication on where the justices are leaning on the merits of the litigation, Selendy & Gay PLLC attorney Lena Konanova said.

“Justices Breyer and Kagan joined the majority opinion, which is notable for how carefully it avoids disclosing any perspective as to what forum should hear state law claims against fossil fuel companies for their role in rising global temperatures,” she said, referring to Justices Stephen Breyer and Elena Kagan, who are part of the court’s liberal wing. “For now, the debate will continue.”

Washington Legal Foundation senior litigation counsel John M. Masslon II, whose group supported the oil companies in the case, said the Baltimore case was only round one for the justices.

“Those cases will go back and then eventually there’s going to be a circuit split on the question of whether these climate change lawsuits present a federal question and that removal is appropriate,” he said. “I don’t see merits adjudication for some time.”

One case could speed up consideration of the issue. The Supreme Court is already weighing a petition on a separate set of California cases that asks the justices to determine whether state law claims filed by the cities of Oakland and San Francisco actually implicate federal common law and belong in federal court.

Consumer Protection

Cities and states filed a spate of new climate suits in the past year centered on local consumer protection laws, which they say fall even further outside the scope of federal jurisdiction, so it’s too soon to tell how the Supreme Court’s ruling will affect them.

Industry lawyers must put forth one of two narrow arguments to earn the right to appeal a district court order remanding a case to state court—remand orders are otherwise unappealable. They’ve typically relied on a claim that climate cases fall under “federal officer” jurisdiction because they involve oil production directed by the federal government.

Raising federal officer jurisdiction in the context of a consumer protection case might be more difficult because “it would be harder for the defendants to claim that in providing misleading information they were acting as federal agents,” Farber said.

Still, it’s unclear whether courts will make a distinction between nuisance and consumer protection arguments, Sokol said. Oil company defendants aren’t making that distinction in their push for federal jurisdiction in Baltimore’s case, and argue that any state claims are just “federal common law nuisance claims in disguise,” she said.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com

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