'They're always wrong': NYC's hired guns cite overturned case as authority for climate change lawsuit

By Daniel Fisher | Jun 19, 2018

NEW YORK (Legal Newsline) - It was a surprising opening move, to say the least. Arguing for the City of New York in its climate lawsuit against five major oil companies, attorney Michael Pawa cited AEP v. Connecticut, a 2009 decision by the U.S. Court of Appeals for the Second Circuit, as “persuasive authority” in his clients’ favor.

There was one problem with Pawa’s strategy, and it was a big one. The U.S. Supreme Court reversed AEP v. Connecticut in 2011, declaring the regulation of greenhouse gases to be a matter for the Environmental Protection Agency to handle, not federal courts. U.S. District Judge John F. Keenan noted this inconvenient fact, but Pawa pressed on, saying there were elements of the Second Circuit decision the Supreme Court didn’t address.

“I agree with you the Supreme Court reversed for different reasons, but the result was the same,” said Keenan, a Ronald Reagan-appointee whose droopy jowls and bored expression disguise a slashing wit.

Pawa, a private lawyer working on a contingency fee for New York and several other cities, walked straight into more trouble when he insisted the city was suing ExxonMobil, Chevron and other oil companies for producing and selling fossil fuels, not greenhouse gas emissions. Pawa has no choice, since in AEP and other decisions, courts have effectively ruled out “public nuisance” lawsuits over CO2 emissions. 

Keenan pounced again, citing page 27 of New York’s complaint. “I’m reading from your complaint,” the judge said, thumbing through a copy in front of him. Climate change “comes primarily from fossil fuel emissions.”

“Isn’t that evidence this is an emissions case?” the judge asked. 

“Here, we’re dealing with products,” Pawa said, but Judge Keenan’s expression suggested he didn’t agree.

Citing an overruled court decision is just one of the problems Pawa and his colleagues at the Seattle law firm Hagens Berman face in trying to win billions of dollars in damages from the oil industry over global warming. The courts consistently have rejected such lawsuits – Pawa cited the Fifth Circuit’s decision in Comer v. Murphy Oil as “persuasive authority,” but it, too, was overruled – and the few chinks in the wall of precedent they are facing are likely to be closed in this latest round of cases.

In the dismissal hearing in New York on June 13, for example, Pawa pulled out a chart purporting to show how New York can press its claims under state law even if Judge Kennan follows Supreme Court precedent and rules the city’s federal claims are preempted by the Clean Air Act (federal courts are required to interpret state law if no federal statutes apply, with only narrow latitude to apply “federal common law” when a clearly federal issue such as interstate pollution has no relevant federal statute covering it). 

Pawa’s chart displayed a circle, with the state-law nuisance claims springing back to life once the federal claims are displaced.

Attorney Ted Boutrous with Gibson Dunn, arguing for Chevron, dismissed the chart as nonsensical. New York University Law School Professor Richard Epstein agreed. Even though the Supreme Court left the question of state nuisance claims open in AEP v. Connecticut, he said, no reasonable judge would allow state law to cover an area where federal common law is displaced.

“The problem with these guys is they’re always wrong,” Epstein said of the plaintiff lawyers who hope to profit from municipal public-nuisance claims. “The willingness they have to take liberties with the basic situation is incredible.”

Judge Keenan raised another glaring problem with New York’s nuisance lawsuit against the oil companies, a doctrine known as in pari delicto that can be summed up as unclean hands. If selling oil is a public nuisance, the judge asked, how about burning that oil and releasing CO2 emissions into the air? 

“If I go out the door and cross over to Foley Square you’re going to see police cars, right?” the judge asked. 

“Turns out these guys are polluters, every last one of them,” Epstein said. “You never, ever want to make legal responsibility depend upon people who have no control over how a product is used downstream.”

The plaintiffs in New York, California and King County, WA, also must explain why they are suing over an alleged public nuisance but explicitly refusing to ask the court to do anything about it. They are only seeking money to “mitigate” the nuisance – and pay their lawyers, who, in most agreements, stand to receive more than 20% of any settlement or judgment – and claim they have no intent to change how oil companies do business.

There are a sprinkling of cases supporting this unusual approach toward nuisance law, including successful lawsuits against ExxonMobil for selling gasoline containing MTBE, which had a tendency to leak from underground tanks and pollute groundwater. They also cite Boomer v. Atlantic Cement,  a 1970 decision by New York’s highest court, ordering a cement plant to pay for dust pollution even though it was operating legally. The court rejected stronger measures like ordering the cement plant to shut down or install dust-control equipment, dismissing them as “economically impractical.”

The oil companies say those cases can be easily distinguished, however, by the fact they involved strictly local effects of pollution. New York is suing over the global effects of billions of consumers burning fossil fuels and releasing CO2 emissions into the air, they say. 

New York, like San Francisco and Oakland, is also struggling to convince the judge to focus on alleged wrongdoing by the oil companies such as financing researchers who were skeptical about the human-induced global warming or downplaying the risks of rising sea levels while engineering their own drilling platforms to protect against it. This is a standard tactic in conventional tort litigation, to prove the defendant withheld material information from the plaintiffs. 

It can also be an element in nuisance cases, but of questionable value in this one. Svante Arrhenius, a Nobel-winning scientist, published calculations linking global warming to fossil-fuel use in 1896 and Congress first urged study on the topic in the 1970s. Supposed smoking-gun memos found in the files of the oil companies have largely turned out to be summations of publicly available research on global warming. 

“It’s not like having knowledge of a bomb that only you know will go off,” Epstein said. “All the controlling parties in this litigation have the same knowledge. It’s a chip that goes on every side of the scale.”

In fact, New York could have better knowledge about the risks of climate change than the companies it’s suing. As the owner of miles of coastline threatened by rising seal levels and billions of dollars in infrastructure it monitors daily, the city arguably knows more about global warming than just about anybody. It’s an ironic fact a Texas judge noted when he issued findings of fact that several California counties had withheld from municipal bond investors the very information about the effects of climate change they were claiming in their lawsuits.

“These contradictions raise the question of whether the California municipalities brought these lawsuits for an improper purpose,” the judge concluded. 

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Organizations in this Story

British Petroleum Chevron U.S.A. ConocoPhillips Exxon Mobil Gibson Dunn Hagens Berman Sobol Shapiro, LLP U.S. District Court for the Southern District of New York

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