By Karen Savage
At hearings that could influence cases across the country, eight California municipalities told a federal three-judge panel on Wednesday that their climate liability lawsuits belong in state court.
Ninth Circuit Judges Sandra S. Ikuta, Morgan Christen, and Kenneth Kiyul Lee heard oral arguments in two separate hearings on jurisdictional issues in the cases, the first involving lawsuits against several fossil fuel companies brought by the cities of Imperial Beach, Richmond and Santa Cruz and the counties of Marin, San Mateo and Santa Cruz and the second regarding two cases filed by Oakland and San Francisco.
The communities are suing to get fossil fuel firms to pay the billions of dollars needed to protect California’s coastal cities from sea level rise and other effects of climate change. That bill could add up to $22 billion on seawalls alone by 2040, according to a study released last year by the Center for Climate Integrity.
While the municipalities argued their cases involve state public nuisance claims and should be heard in state court, the fossil fuel industry defendants argued that the cases involve federal issues and should be heard in federal court.
Across the country, fossil fuel companies including Chevron, Shell, ExxonMobil, and other oil majors, are facing lawsuits filed by municipalities seeking compensation for climate impacts that have already happened, as well as for infrastructure improvements needed to protect their residents from the intensifying effects of climate change. Most of these cases have been filed in state courts. Fossil fuel companies are fighting to have them heard in federal courts, where they think there’s a better chance of getting the suits dismissed.
Ann Carlson, co-director of the UCLA School of Law’s Emmett Institute on Climate Change and the Environment, said the Ninth Circuit’s decision on the jurisdiction of these cases could have a big impact on future efforts to hold the fossil fuel industry accountable for climate damages.
“The outcome of the hearings doesn't serve as precedent outside of lower courts in the Ninth Circuit, but the outcome could be influential in other courts that may look to the Ninth Circuit for its reasoning and ultimate decision,” said Carlson, who has provided pro-bono consulting for some of the California municipalities.“The legal question seems pretty straightforward to me -- the cases raise state law claims, not federal claims, and therefore the better argument is that they belong in state court.”
Wednesday’s first hearing involved the cities of Imperial Beach, Richmond, and Santa Cruz, which together with the counties of Marin, San Mateo, and Santa Cruz filed suits in 2017 against 37 fossil fuel companies, including oil and gas firms Chevron, Exxon, Shell, Citco, ConocoPhillips, and Peabody Energy, a coal producer. According to their complaint, the fossil fuel defendants are responsible for 20 percent of global carbon emissions between 1965 and 2015 and a significant portion of sea level rise.
A recent research effort titled the "Carbon Majors Report" has been breaking down how much particular companies' products and operations have contributed to historic carbon pollution.
The municipalities allege that through the “production, promotion, marketing, and use of fossil fuel products, simultaneous concealment of the known hazards of those products, and their championing of anti-regulation and anti-science campaigns,” the companies have contributed to climate change and sea level rise, which threaten their communities and will require billions of dollars in infrastructure spending to manage. They are asking the companies both to stop polluting and pay damages. They are also asking for the companies to give up any profits made as a result of their actions.
Theodore Boutrous, the lawyer defending the fossil fuel firms, argued that federal law took precedence over state law in the case, because the companies’ activities took place across multiple U.S. states and around the world, and involved carbon emissions going back over two centuries. Boutrous is with the firm of Gibson Dunn & Crutcher LLP.
He further contended that because the firms’ oil and gas drilling on U.S. federal lands and sales of those fuels resulted in royalty payments to the U.S. government, they were acting as agents of the federal government, and therefore can be sued only in federal court for matters relating to those activities.
The lawyer for the municipalities, Victor Sher of Sher Edling LLP, countered that the fossil fuel firms had acted independently to deceive the public for decades about the reality and risks of climate change, and thus could not be seen legally as representing the U.S. government, which had no “interest in lies and deceit.”
“There’s no evidence that the government knew about their sophisticated campaign of deceit and denial,” Sher told the court.
In his rebuttal, Boutrous countered that argument. “The federal government knew and Juliana documented it,” he said, referring to the Ninth Circuit court’s recent dismissal of the landmark constitutional climate case filed by 21 young people against the federal government.
While finding that the youth plaintiffs did not have standing to sue the U.S. government, the court stated in its decision that “the record conclusively established that the federal government has long understood the risks of fossil fuel use and increasing carbon dioxide emissions; and the record established that the government’s contribution to climate change was not simply a result of inaction.”
Still, the municipalities maintain their case for keeping the suit in state court is strong. “It is consistent with decisions in three other federal district courts across the country and grounded firmly in California state law traditions and precedents,” they said in a joint statement.
“It has been two years or more since our communities first filed these cases to hold fossil fuel companies accountable for the climate change-related damages they knowingly caused and the high costs our taxpayers are already incurring as a result. It is time for the defendants to be held accountable for their decades-long campaign of public deception about climate change and its consequences.”
Wednesday’s second hearing involved climate liability suits filed in 2017 by the cities of San Francisco and Oakland against ExxonMobil, BP, Chevron, ConocoPhillips, and Shell. The cities allege that for years the oil giants “produced massive quantities of fossil fuels,” yet “despite their internal warnings, an overwhelming scientific consensus on the unfolding imminent catastrophe, and actual gravely dangerous impacts from global warming,” the companies have continued that production.
The cities hope to force the companies to fund efforts to build sea walls and other projects to protect public and private property from sea level rise and other climate harms.
The fossil fuel defendants shifted these cases to federal court a month after they were filed, but unlike the multi-municipality suit, U.S. District Court Judge William Alsup ruled that because the firms operated globally, federal court was where they belonged.
Alsup later dismissed the suits, writing that climate change “deserves a solution on a more vast scale than can be supplied by a district judge or jury in a public nuisance case.”
UCLA’s Carlson said the Oakland and San Francisco cases involve many of the same jurisdictional issues, but puts more pressure on the appellate court.
“Judge Alsup's decision to dismiss the San Francisco case raises the stakes significantly, leaving the Ninth Circuit no choice but to decide whether his decision was correct,” Carlson said.
Altshuler Berzon LLP’s Michael Rubin, a lawyer representing both cities, told Wednesday’s judicial panel that the case involves a single claim on behalf of the people of California and uses state laws which allow the cities to bring public nuisance claims in state court.
“All that is sought is equitable abatement for localized harm,” Rubin said, adding that the cities are not seeking damages or restitution.
Rubin told the court that the cities are alleging that although the oil companies knew since at least the 1970s that the production and burning of fossil fuels were the leading causes of climate change, they continued to engage in large-scale advertising and promotional campaigns that withheld that information.
“They simply are focusing on what has been called a campaign of deception,” Rubin said, adding that the cities are not suing the companies over their emissions, but over the public nuisance created by their deception.
Boutrous again argued that the interstate and worldwide nature of the companies’ business activities made the case a federal matter.
Kannon Shanmugam, an attorney for Exxon, said allowing the case to go forward “would also have enormous consequences for anyone to whom climate change could be attributed,” including airplane manufactures and automakers.
Shanmugam is with the firm Paul, Weiss, Rifkind, Wharton & Garrison LLP.
Appearing for the U.S. government, Jonathan Brightbill backed up Shanmugam’s argument.
Just because the cities are not asking for compensation related to greenhouse gas emissions, said Brightbill, a principal deputy assistant attorney general with the Justice Department’s Environment and Natural Resources Division, doesn’t mean this suit and others won’t have the effect of regulating emissions,
“It will and does,” he said, ”and candidly, that’s what they’re trying to do here.”
The cities say the cases should have been remanded to state court where they were originally filed.
“The law and precedent supporting our position is strong, and such a ruling would be consistent with orders issued by four other federal judges,” said San Francisco city attorney Dennis Herrera and Oakland city attorney Barbara J. Parker in a joint statement. “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.”
The Ninth Circuit’s rulings, which are not expected for several months, could have a big impact on other lawsuits attempting to hold the fossil fuel industry accountable for decades of deceiving the public about climate change, as well as costs of adapting communities to rising sea levels and other impacts.
“I think the plaintiffs have the better argument here, but cases involving climate change liability have spooked many federal courts,” Carlson said. “So the question here will be whether the Ninth Circuit agrees that this is a state law issue that can and should be adjudicated in state court, or whether it too gets spooked by the magnitude of the climate change problem.”
The court could affirm the dismissal of the Oakland and San Francisco cases, prompting a possible appeal by the cities to the U.S. Supreme Court.
The court could also rule that the case belongs in federal court, but overturn the dismissal.
“If the Ninth Circuit overturns Judge Alsup's decision to dismiss the case but keeps it in federal court, then presumably plaintiffs can begin discovery,” Carlson said. “The oil companies will also undoubtedly file motions to try to dismiss or limit the case in other ways.”
But the fossil fuel firms are not likely to back down if the Ninth Circuit decides that one or more of the cases belong in state court.
“They will almost certainly file motions seeking to dismiss the cases on other grounds,” Carlson said, ”and they will do everything they can to limit the discovery plaintiffs will seek .hey have many tactics to make life difficult for the plaintiffs' lawyers and it's safe to say they will use every tactic available.”