SAN FRANCISCO (Legal Newsline) - A federal appeals court decision allowing climate lawsuits to proceed against several major oil companies could be the trigger for U.S. Supreme Court review of using state public nuisance law to drive energy policy.
A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit last week overturned a lower court’s dismissal of lawsuits by the cities of Oakland and San Francisco against BP, ExxonMobil, Chevron and other oil companies, saying the cases are based upon California law and should be heard in state court. The decision by Judge Sandra Ikuta, a George W. Bush appointee, acknowledges it is an “an important policy question” as to whether state courts can order international oil companies to pay billions of dollars in damages over global warming, but concluded existing law and doctrine don’t prohibit it.
That leads Phil Goldberg, co-chair of the public policy practice group at Shook Hardy & Bacon in Washington, to wonder whether the panel’s decision was tailored to allow further review by a full en banc sitting of the Ninth Circuit or the Supreme Court. The Supreme Court left open the question of whether state public nuisance law can be used against greenhouse gas emissions in its 2011 decision AEP v. Connecticut.
“The panel in this case expressly acknowledging this an important policy question is an indication of where they think these cases may end up, but they don’t feel they have the doctrine on their side and the only place that can come from is the Supreme Court,” said Goldberg, whose clients include the National Association of Manufacturers, which opposes climate nuisance litigation.
The Ninth Circuit panel’s decision focused upon the “well-pleaded complaint rule,” which says that plaintiffs can write their complaints in such a way as to avoid triggering federal court jurisdiction over their case. There are exceptions to this rule, such as when a lawsuit raises a “substantial federal question,” but the panel said they don't apply to the Oakland and San Francisco suits because they don’t require the interpretation of a federal statute or federal law to be resolved.
Goldberg said that’s an error the Supreme Court needs to correct. The high court rejected federal lawsuits over greenhouse gases in AEP v. Connecticut, saying they were preempted by the Clean Air Act. But the Supreme Court declined in that decision to say whether similar lawsuits under state law were allowed, since no state-law claims were involved.
“The fundamental flaw in the idea that a plaintiff can just get into state court by pleading a state claim is it doesn’t look at the implications of that suit and the remedies they are asking for,” Goldberg said. “At the end of the day, what the other side is trying to do here is drive federal energy policy, but do it thru a state court claim.”
Several more cases are percolating through the appeals process that could lead to Supreme Court resolution of this question. Last year, the high court refused to halt a Fourth Circuit decision remanding Baltimore’s climate lawsuit to state court in Maryland. The oil companies filed a petition for certiorari, or Supreme Court review, on March 31. They are supported by a dozen states, including Texas, Alaska, Kansas and Mississippi.
Oil companies have also appealed to the First Circuit a district court’s order to remand the City of Providence’s climate suit to state court in Rhode Island. And on May 6, the Tenth Circuit heard arguments over the remand of Boulder, Colorado’s climate suit to state court.
Most of the climate lawsuits involve private lawyers operating under contingency-fee agreements that would pay them hundreds of millions of dollars if they win billion-dollar judgments or settlements. The strategy of suing oil companies over climate change was hatched at a 2012 conference in La Jolla, California, where environmentalists and lawyers including Matthew Pawa, now a partner with Hagens Berman, developed a “playbook” based on state lawsuits against the tobacco industry in the 1990s.
Critics of the strategy say it represents another example of private lawyers aligning with politicians to potentially earn huge fees pursuing public litigation, like the $14 billion law firms including Hagens Berman will get from the tobacco settlement. And unlike cigarettes, the production and sale of oil and gas are explicitly encouraged under numerous state and federal laws, with government being both a major user of hydrocarbon fuels and emitter of greenhouse gases.
Climate lawsuits based on state nuisance law also implicate foreign policy, because they necessarily involve questions of whether the greenhouse gas emissions deemed a “nuisance” originated in the U.S. or overseas. Climate plaintiffs have tried to draft their lawsuits to claim the nuisance isn’t emissions, but how oil companies misled the public about the risks of burning oil and gas. But the science of human-induced global warming has been widely known and discussed since the late 19th century and has been a topic of Congressional debate at least since the 1960s, undercutting the theory oil-company executives were capable of hiding such information from the public.
Groups opposed to public nuisance litigation hoped the Supreme Court would accept an appeal of a California court’s decision holding paint manufacturers liable for selling lead paint until the 1950s. But the high court refused to intervene in the long-running case, which the California Supreme Court also declined to resolve.
“I was hoping that case would have been the showdown, because it could have clarified the key constitutional protections for companies being sued over the sale of a legal product,” Goldberg said. “But these cases will eventually end up at the Supreme Court. We all want to make sure we deal with climate change through the right means, and these state-court cases aren’t it.”