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Oil Giants Ready for Climate Strategy Shift in Top Court Pursuit

June 7, 2022, 9:30 AM

Exxon Mobil Corp., Chevron Corp., and other oil giants are adjusting their legal strategies in pursuit of another Supreme Court petition, the next step in a yearslong attempt to steer the climate liability cases away from potentially explosive trials in state courts.

Attorneys for industry defendants fighting misinformation lawsuits from US cities, states, and counties have until June 8 to file a petition to justices, which they confirmed in March oral arguments is their next step after a series of decisions to keep climate suits in state courts.

The US Court of Appeals for the Tenth Circuit decision in Colorado’s lawsuit will likely be the case oil giants throw to the high court this time around, using a conflicting victory in the Second Circuit, New York v. BP PLC, as their headlining claim.

“Exxon Mobil intends to seek Supreme Court review from the Tenth Circuit’s decision, and so in some sense, this Court will be weighing in on an issue on which in our view, there already is a circuit conflict,” energy industry attorney Kannon Shanmugam of Paul, Weiss Rifkind, Wharton & Garrison LLP said.

This will be the second time companies have called for justices to weigh in on technical aspects of the cases in pursuit of getting them tossed entirely in federal venues. The Supreme Court handed the companies a win in May 2021 that sent many of the lawsuits back to circuit courts for a closer look, but judges continued to send the cases back to state judges.

The new Supreme Court petition will likely be lead by the decision in New York v. BP PLC, but also could include national security concerns stemming from the energy crisis spurred by Russian’s invasion of Ukraine, according to Loyola University New Orleans law professor Karen Sokol, who has written amicus briefs on behalf of climate plaintiffs in Delaware.

“The industry is willing to fight this out on the procedural level, basically, forever,” she said.

Antonin Scalia Law School professor Donald Kochan believes these climate cases should be dismissed in both federal and state courts, but said that the industry strategy to preempt state-specific claims isn’t the right move, since state courts have the ability to decide for themselves whether cases impede energy activities nationally.

“But that is distinct from making an argument that the existence of these serious national, international, national security or geopolitical concerns constitute a basis for getting into federal court,” he said. “They simply don’t.”

No ‘Clean Vehicle’

Oil and gas companies argue that judges upholding remands back to state court—the rulings in four cases since the start of the year—creates a split with a Second Circuit decision to scrap the climate damages case from New York filed in 2018.

New York lost its case to hold oil and gas companies accountable for climate change damages in 2021, after an appellate panel held up the case dismissal from a lower Manhattan district court.

But some experts balk at the idea of New York’s case creating a circuit split, since the Second Circuit case was inherently different from other cases filed in state courts originally. New York filed its claims directly to federal district court, not within a local venue from the start like other similar lawsuits, so courts didn’t tackle removal from state court at all.

The courts may not have dealt with the removal issue, but they still “saw through” the state claims to underlying federal issues in a way that conflicts with other circuit decisions, according to Phil Goldberg, special counsel to the Manufacturers’ Accountability Project, a group that is highly critical of climate tort litigation. MAP is a part of the NAM Legal Center, the legal arm of the National Association of Manufacturers.

“The underlying legal issues that they’re dealing with were the same, because they were asked different questions that lead to different results,” Goldberg said of New York v. BP PLC. “They disagree on those foundational elements, and that’s what would be teased out in the Supreme Court petition for cert.”

The underlying reasons for the dismissal of New York’s climate case should be taken seriously in favor of oil company defendants if courts ever get to the merits of these cases, Kochan said.

“But there’s really little to be gained from those opinions for purposes of determining whether or not these other claims belong in federal court,” he added.

New York v. BP PLC isn’t a “clean vehicle” for the circuit split argument, according to NYU law professor and preemption expert Catherine Sharkey. She noted the decision relies on settled law that says the Clean Air Act displaces federal common law claims—but federal preemption of state lawsuits is a different issue entirely.

“There’s a kind of convoluted way in which one could read the Second Circuit decision as saying that all state court actions are preempted, but they did it with this kind of sleight of hand,” Sharkey said.

‘Dangerous’ Precedent

There is a chance oil companies could hinge part of their petition on whether lawsuits against the industry raise national security issues, given energy insecurity stemming from sanctions against Russia.

Global energy markets have been upended since Russia’s unprovoked invasion of Ukraine in February, leading to skyrocketing fuel prices and international pushes to rethink dependency on Russian gas. The geopolitical landscape could be a Supreme Court talking point for industry attorneys who have been pushing for years to classify the cases as issues of national importance.

But it would “be dangerous” to let the limits of federal and state court jurisdiction shift based on what’s happening internationally,” according to Kochan.

“They are the boundaries of federal jurisdiction, are set and immovable,” Kochan said. “The imminency or gravity of a crisis does not change whether or not they do or do not have such jurisdiction.”

To contact the reporter on this story: Jennifer Hijazi in Washington at jhijazi@bloombergindustry.com

To contact the editors responsible for this story: Zachary Sherwood at zsherwood@bloombergindustry.com; Renee Schoof at rschoof@bloombergindustry.com