Last Monday, the Supreme Court batted off ExxonMobil’s attempt to quash Massachusetts Attorney General Maura Healy’s investigation of the company’s outsized influence on the country’s climate change policies.
Exxon has long been one of the fiercest climate change deniers in the fossil fuel industry.
The company has also played a major role in feeding disinformation to the public and to a news media mired in he-said-she-said notions of journalistic balance.
In the wake of the Supreme Court’s rejection of its petition to hear the case, the company could now be poised to take a hard fall as Massachusetts and other states and jurisdictions investigate how the company reacted to the climate threat.
In 2016, Healey launched an effort to obtain several decades worth of materials on the company’s internal deliberations on climate to uncover what Exxon knew about the crisis as it crafted its policies. After the Supreme Judicial Court, the top Massachusetts court, backed up the attorney general after Exxon refused to comply with her demands, the company turned to the Supreme Court.
Exxon filed a petition to persuade the Court hear its case, arguing that Massachusetts did not have the standing to compel a corporation, which did not operate directly in the state to cooperate with state investigators.
“The claims that Exxon was making in that lawsuit were on the fringe. They were trying to block an investigation at the very start claiming that the investigation itself violated Exxon’s First Amendment rights to say what it wanted to say about climate change,” says Michael Gerrard, a Columbia law professor and director of the school’s Sabin Center for Climate Change Law.
“Exxon has been making that argument quite a bit, but no court has bought it,” he adds. “They made a similar argument in New York State and got nowhere.”
New York has taken a classic “what did they know and when did they know it” stance in its lawsuit on Exxon’s dealings with investors regarding the impact of climate change regulations. In a suit it brought in state court, New York has alleged that the company engaged in a “longstanding fraudulent scheme” designed to deceive its investors about how emerging climate change regulations would affect its business dealings.“Exxon in effect erected a Potemkin village to create the illusion that it had fully considered the risks of future climate change regulation and had factored those risks into its business operations,” New York’s brief charges. “In reality, Exxon knew that its representations were not supported by the facts and were contrary to its internal business practices. As a result of Exxon’s fraud, the company was exposed to far greater risk from climate change regulations than investors were led to believe.”
The New York State Supreme Court will hear the case later this year.
Exxon also faces a federal securities fraud class action lawsuit in Northern District of Texas. Plaintiffs including Greater Pennsylvania Carpenters Pension Fundallege that the value of their holdings dropped since the company did not properly take climate change impacts into account and made statements that affected share prices. In August, a federal judge rejected the company’s suit to have the case dismissed.
Exxon’s legal woes aren’t limited to lawsuits in American courts. Last month, members of the European Parliament announced a March hearing that will explore Exxon’s alleged role in climate change disinformation campaigns in the European Union.
In pursuing their case against Exxon, state attorneys general have turned to the playbooks honed in lawsuits states brought against the tobacco and asbestos industries. In the 1990s, more than 40 states sued the major tobacco companies for fraud based on their deceptive sale and marketing tactics, arguing that the companies had caused states to incur significant public health costs. Those cases were built on company documents that demonstrated tobacco officials knew for decades that tobacco was addictive and were aware of the links between smoking and cancer.
The Department of Justice used RICO, the racketeering statute, to pursue its own lawsuit against the tobacco industry. In 2006, U.S. District Judge Gladys Kessler issued a historic ruling that found that “over the course of more than 50 years, the defendants lied, misrepresented, and deceived the American public.”
Similarly, the deadly properties of asbestos have been understood since the beginning of the 20th century. By the 1930s, asbestos companies knew the effects of exposure to their product, too, and did little to protect workers or others exposed to the substance over the succeeding decades. What they did know was that documents made public through the court system would have a devastating effect on the industry.
As lawsuits wound their way through the courts in the 1980s, one asbestos litigation fund trustee noted that “there are so many embarrassing documents that people disagree as to which group of any ten documents is the worst." (Interestingly, Exxon was aware of deadly nature asbestos long before the threat was made public.)
According to Gerrard, there is a major difference, however, between the tobacco and asbestos cases and the questions that Exxon now faces. “It’s not clear whether Exxon had information about climate change that was not publicly known because they weren’t the only people studying climate change, obviously,” says Gerrard. “There was a lot of other science out there; that will certainly be a defense that comes up.”
New York and Massachusetts may be looking for other evidence of misconduct, including documents that could potentially indicate whether the company sought to mislead regulators or investors, Gerrard notes. It is telling, however, that Exxon exhausted all of its legal options all the way up to the Supreme Court to prevent Massachusetts from launching an investigation at all. Now, “they’ll have to disclose a lot of documents unless they pull another rabbit out of the hat,” he says.
Massachusetts served ExxonMobil with a “civil investigative demand,” requesting potentially thousands of documents dating back to the 1970s in order to investigate possible violations related to marketing and sale of consumer fossil fuel and other energy products, and to the sale of securities to investors.
Not only does Massachusetts want copies of Exxon’s research and studies, including those by particular company scientists, but investigators also want speeches and statements made by former secretary of state and Exxon CEO Rex Tillerson on climate issues; materials related to changes in design, construction, and operation made at Exxon facilities in response to climate change markers like sea-level rise, thinning ice, and storm intensity; and communications about climate change and related topics along with any funding that Exxon may have provided to conservative groups, including Americans for Prosperity, ALEC, the Heritage Foundation, and the Mercatus Center at George Mason University, all of which have served as mouthpieces for climate denial.
According to a spokeswoman for Healey, Exxon has decline to voluntarily furnish the Bay State with the documents that it has already turned over to the New York Attorney General for its probe, some of which may be documents that Massachusetts has also requested. (The company does not have to turn over any documents while any appeals are in progress; an appeal to an earlier Southern District of New York ruling is pending on the Second Circuit.) New York's lawsuit seeks redress under a state law that shields investors from deceptive corporate conduct, while Massachusetts plans to investigate possible violations of the state's consumer and investor protection laws.
This story has been updated.