SAN FRANCISCO (Legal Newsline) - The U.S. Court of Appeals for the Ninth Circuit has reversed a federal judge’s dismissal of climate change lawsuits against oil companies including ExxonMobil, BP and Chevron by the cities of Oakland and San Francisco, setting the stage for them to be tried in a more favorable California state court.
The decision by a three-judge panel of the Ninth Circuit follows similar rulings by federal courts remanding climate lawsuits to state courts in Maryland, Rhode Island and Colorado. The U.S. Supreme Court last fall rejected appeals of those decisions.
The 30-page decision was written by Judge Sandra Ikuta, a George W. Bush nominee to the Ninth Circuit, and joined by judges Morgen Christen and Kenneth Lee. In it, the panel said Judge William Alsup erred last June when he dismissed the climate lawsuits because they failed to state a claim that could be resolved by the judiciary.
Alsup’s decision was a blow to the politically connected private law firms that are pursuing climate lawsuits on behalf of cities and counties around the country and will earn tens of millions of dollars in fees if they win their multibillion-dollar claims.
Since Alsup's ruling, climate change plaintiffs have scored several significant victories, including winning remand to state court of lawsuits by the cities of Baltimore, Providence, R.I., and Boulder, Colo. Opponents of climate litigation say it represents an attempt by environmentalists and profit-seeking private lawyers to use the courts to achieve goals they cannot accomplish through the political process.
“We are reviewing the court’s decisions and evaluating next steps,” said ExxonMobil in a prepared statement.
The Ninth Circuit didn’t return the Oakland and San Francisco cases directly to state court, instead giving Judge Alsup another chance to determine whether his court has jurisdiction to hear the lawsuits. If he doesn’t find jurisdiction, the panel ruled, the cases must return to state court. One possibility the judge raised, of using federal maritime, is precluded because the oil companies didn’t raise it in prior filings, the appeals court ruled.
Government plaintiffs understandably prefer having their own state judiciary hear lawsuits against out-of-state defendants. In the first opioid lawsuit to go to trial, the state of Oklahoma last August won a $572 million verdict against Johnson & Johnson, since reduced by more than $100 million due to the judge’s mathematical error. That decision is under appeal to the Oklahoma Supreme Court.
The Ninth Circuit’s decision hinges upon the complicated interplay of federal and state law and the fact that under the U.S. Constitution, federal courts have limited jurisdiction. Oakland and San Francisco originally sued in September 2017, pleading state common-law nuisance claims and seeking billions of dollars to pay for “abatement” in the form of measures to combat rising sea levels. The oil companies removed the cases to federal court, saying the claims raised questions of federal law like the Clean Air Act and federal energy policy favoring oil drilling and marketing.
The cities amended their suits to add a federal nuisance claim but the judge dismissed them, saying “federal courts should exercise great caution” before adjudicating claims that implicate federal policy and foreign relations. He also said his court lacked personal jurisdiction over the oil companies.
The Ninth Circuit panel reversed, saying the climate lawsuits fail to fit narrow exceptions to the “well-pleaded complaint rule,” which gives plaintiffs wide latitude to draft their suits to avoid triggering federal jurisdiction. While the federal Clean Air Act governs air pollution including carbon dioxide emissions, the U.S. Supreme Court has thus far avoided ruling on whether it precludes state nuisance lawsuits written to avoid the federal law.
As for the cities’ addition of federal nuisance claims, the Ninth Circuit ruled those are displaced by the Clean Air Act by its 2012 Kivalina decision, eliminating another potential source of federal jurisdiction. The plaintiffs are careful to claim they are suing over marketing practices and statements by the oil companies downplaying global warming, not CO2 emissions themselves.
“The question whether the Energy Companies can be held liable for public nuisance based on production and promotion of the use of fossil fuels and be required to spend billions of dollars on abatement is no doubt an important policy question, but it does not raise a substantial question of federal law for the purpose of determining whether there is jurisdiction,” the Ninth Circuit panel ruled. Because the federal district court never had jurisdiction in the first place, the panel ruled, its dismissal of the lawsuits doesn’t prevent them from being heard in state court.
The oil companies are likely to seek a full en banc reconsideration of the decision. If that fails, they will likely appeal to the Supreme Court, which may be interested in determining once and for all whether lawsuits based on state public nuisance claims are precluded by federal pollution law and energy policy.
The Supreme Court helped propel climate-change litigation with its 2007 decision in Massachusetts v. EPA, establishing the Environmental Protection Agency’s statutory authority to regulate CO2 as a pollutant. But the high court seemed to close the door on most such litigation four years later in AEP v. Connecticut, ruling the Clean Air Act preempts federal lawsuits over greenhouse gas emissions.
Since then, private lawyers led by the San Francisco firm Sher Edling have honed their tactics, crafting lawsuits based entirely upon state nuisance claims in an effort to stay out of federal court. Not all their efforts have been successful. Earlier this year, the Ninth Circuit dismissed the Juliana lawsuit on behalf of a group of Washington children, saying that unlike government plaintiffs, they didn’t have standing to sue.
It remains to be seen how the Second Circuit will rule on the same issues posed in the appeal of the dismissal of New York City's climate change case.