My latest Legal Newsline story on Forbes.com:
Boulder, Colo., officials described it as a can’t-lose proposition when they voted to sue ExxonMobil and Suncor Energy for their alleged role in causing climate change. But now that federal judges on either coast have dismissed two of the most prominent climate lawsuits against the oil industry, however, risks to taxpayers may be going up.
“There will only be nominal costs associated with the lawsuit,” the City of Boulder and nearby counties said in their April 17 announcement of plans to sue. Nonprofit organizations EarthRights International and the Niskanen Center agreed to provide services on a pro bono basis, the plaintiffs said, while private lawyers would only be paid a 20% contingency fee if they won.
According to Boulder’s contract with outside lawyers obtained by Western Wire, however, the plaintiffs could be liable for defense costs or a penalty if the court determines the lawsuit is “frivolous, not reasonably based in law or fact, and/or brought solely to harass or coerce a settlement.”
Boulder’s lawsuit, like others around the country, is based upon the theory that the sale of fossil fuels constitutes a public nuisance. This approach has failed repeatedly over the years with products including guns, automobiles and now fossil fuels.
It appears particularly troubled in the area of global warming since the U.S. Supreme Court has ruled that lawsuits over greenhouse gases are preempted by the federal Clean Air Act, a conclusion shared by federal judges in New York and San Francisco who dismissed lawsuits by both those cities in recent weeks.
“In my opinion the litigation is frivolous, and this violates legal ethical norms in every jurisdiction,” said Michael Krauss, who teaches legal ethics and federal preemption at George Mason University’s Antonin Scalia Law School. “The plaintiffs will doubtless state that they were pushing for a legitimate extension of existing law — that’s the boilerplate defense — but I think that is untrue.”
Joshua Lipschutz, Gibson Dunn partner who represents Chevron in climate litigation, declined to say whether his clients will seek legal fees or sanctions against the remaining plaintiffs.
“What we viewed as baseless claims months ago have started to become essentially frivolous claims,” Lipschutz said, however. “At some point it seems time to say enough is enough and to view these as a waste of judicial resources.”
A spokesman for the City of Boulder referred questions to Marco Simons of EarthRights International. In an e-mailed comment he said: “The major risk to the city and other communities is the impacts of climate change; in the courts, the risk falls on the companies that profited by concealing their knowledge of climate science for more than 50 years.”
From the beginning, climate activists have described their lawsuits against fossil fuel companies as something more than traditional litigation seeking damages for an injury. The strategy was largely engineered by Matthew Pawa, now a partner with Hagens Berman, and a “playbook” – including increasing public opposition to the oil industry through litigation — was discussed at a 2012 conference in La Jolla, CA.
In a 2017 op-ed on Vox.com, David Bookbinder, a former Sierra Club lawyer now working for the Niskanen Center, said “lots of clever lawyers are busy thinking up new and exciting ways to screw with the fossil fuel companies.” And New York Mayor Bill DeBlasio described his city’s lawsuit, before it was dismissed by a federal judge on July 19, as designed to “bring the death knell to this industry that’s done so much harm.”
But defendants face an extremely high bar to recover costs under the so-called “American rule,” under which lawsuits are presumed to be brought in good faith and each side covers its costs regardless of the outcome.
There is also a strong U.S. tradition of using litigation to achieve policy goals that can’t be immediately obtained from other arms of government. Thurgood Marshall mounted a successful frontal assault on the entrenched system of legal segregation with a string of lawsuits that culminated in the landmark Supreme Court decision Brown v. Board of Education, for example.
The goal in such a campaign is to obtain conflicting decisions by federal circuit courts so the issue can advance to an appeals court and ultimately the U.S. Supreme Court, said Donald Kochan, a professor at Chapman University School of Law who focuses on property and environmental law.
“The fact that some courts have ruled against a theory doesn’t really change the matter, unless it is essentially the same claim by exactly the same plaintiffs against exactly the same defendants based on essentially the same facts,” Kochan said. “People regularly bring multiple cases in multiple courts to try and get to a higher court.”
The latest round of climate lawsuits differ in important ways from civil rights cases in the past, though. Most of the government plaintiffs are represented by a law firm – Hagens Berman Sobol Shapiro – that stands to collect around 20% of anything its clients win.
To navigate around prior court rulings, moreover, the plaintiffs have to explicitly state their lawsuits are only about money, even though the normal resolution in a public nuisance case is a court ruling requiring the defendant to eliminate the nuisance. The profit motive inherent in these cases might cause judges to look at them more skeptically.
The oil companies have started to ratchet up risk calculations for the other side. In April, ExxonMobil convinced a Texas judge to sign off on proposed findings of fact that another set of California municipalities suing over climate change failed to notify municipal bond investors of the dire consequences of global warming that they claim in their lawsuits.
“These contradictions raise the question of whether the California municipalities brought these lawsuits for an improper purpose,” Tarrant County District Judge R.H. Wallace, Jr. wrote.
Those California plaintiffs scored a minor success when U.S. District Judge Vince Chhabria remanded their climate lawsuits back to state court, rejecting the conclusions of his colleagues in San Francisco and New York that the claims centered on federal and not state law.
But Judge Chhabria stayed the action until the U.S. Court of Appeals for the Ninth Circuit determines which court has jurisdiction. In the meantime, U.S. District Judge William Alsup, who like Chhabria sits in San Francisco, determined similar lawsuits by San Francisco and Oakland belonged in federal court but dismissed them as presenting questions better resolved by the legislative and executive branches. On July 19, U.S. District Judge John Keenan dismissed a nearly identical lawsuit by the City of New York for the same reason.
Undeterred by New York’s loss the day before, Baltimore sued oil companies under identical theories on July 20. And the state of Rhode Island launched its own lawsuit, despite a decision by its own Supreme Court in a lawsuit over lead paint that would seem to preclude any public nuisance lawsuits against product sellers.
Rhode Island seems to have set up a double legal trap for itself: The state stands a good chance of losing if the oil companies convince the court the case involves federal common law, since that opens the door to the preemption argument that doomed lawsuits by New York and San Francisco. If the state convinces the judge its claims arise under state law, the lead paint decision would appear to doom it as well.