Two lawsuits recently filed by the cities of San Francisco and Oakland in California state court seek to hold fossil fuel companies liable for billions of dollars in alleged property damage – both historical and prospective – caused by rising sea levels, increased storm strength and other purported effects of climate change. The complaints assert California-law nuisance claims against five major energy companies – Chevron, ConocoPhillips, ExxonMobil, BP and Royal Dutch Shell – and seek to compel the defendants to pay billions into an abatement fund to be used to construct sea walls and other climate change mitigation infrastructure. See People of the State of California v. BP plc, et al. No. CGC-17-561370, 2017 WL 4161895 (Cal. Super. Ct. filed Sept. 19, 2017) ("San Francisco"); People of the State of California v. BP plc, et al., No. RG17875889, 2017 WL 4168934 (Cal. Super. Ct. filed Sept. 19, 2017) ("Oakland").
The Oakland and San Francisco complaints are similar to complaints filed in July by three California coastal communities, San Mateo and Marin Counties, and the city of Imperial Beach, also in California state court. See The County of San Mateo, et al. v. Chevron Corp., et al., No. 17CIV03222, 2017 WL 3048970 (Cal. Super. Ct. filed July 17, 2017) ("San Mateo"). The plaintiffs in these lawsuits sued a number of major energy companies (36 in total) that were allegedly responsible for roughly 20% of global carbon emissions since the 1960s. Like the Oakland and San Francisco complaints, the San Mateo complaints allege that the fossil fuel company defendants funded scientific studies and public relations campaigns to create uncertainty about the existence, causes and risks of climate change – despite the defendants' own internal understanding and acknowledgement of climate change and the effects of climate change from carbon emissions from fossil fuels. The San Mateo complaints seek damages for the historical and prospective damage that climate change allegedly has caused in these coastal California communities.
A growing trend
These complaints are part of a growing trend by plaintiffs' lawyers and environmental activists to turn to the judiciary in certain states, like California, with a strong political commitment to addressing the effects of climate change on the environment. In addition to this spate of recent lawsuits filed by various California cities and municipalities, attorneys general of New York and Massachusetts have issued wide-ranging investigatory subpoenas upon ExxonMobil. These subpoenas seek documents related to Exxon's internal understanding of carbon emissions and climate change, and any alleged efforts Exxon took to promote contradictory studies and information with the purpose of misleading the public.
One common thread to the various climate change investigations and litigations over the last few years is that they are being pursued in "blue states" such as California, New York and Massachusetts, at the same time that President Trump and the Republican controlled Congress have taken, or explored taking, various steps to roll-back climate change initiatives championed by the Obama Administration. These federal rollbacks include President Trump's stated intention to withdraw US participation from the Paris Agreement, the current EPA decision to review (and possibly scale back) the enforcement of the Clean Air Act as it relates to certain climate change issues, and a general lack of enthusiasm by federal agencies, including the Department of Justice, to pursue litigation or more aggressive regulation relating to the effects of climate change.
Will these recent California tort claims succeed or fail?
In our view, they will fail and fail early on at the motion to dismiss stage of the litigation. In fact, no US lawsuit asserting nuisance or other tort claims predicated on climate change theories of liability and entitlement to remedial relief has proceeded beyond the motion to dismiss phase, and there is little reason to think that Oakland/San Francisco and the San Mateo complaints will fare any better. The San Mateo defendants have removed the complaint to federal court, where they will move to dismiss; the defendants in the Oakland/San Francisco litigations will likely do the same. The defendants in these cases will be able to assert a number of compelling defenses, which we generally describe and identify below. In our view, the following defenses, alone or in tandem, likely will prove fatal to these California claims.
Lack of standing
As a prerequisite to asserting a cause of action in federal court, a plaintiff must show that it has suffered a concrete and particularized injury, that this injury is fairly traceable to the defendant's alleged conduct, and that the injury can be redressed by a favorable decision by the court. Several prior attempts seeking to hold fossil fuel companies liable for the effects of climate change have foundered on this ground. For example, in Washington Environmental Council v. Bellon, 732 F.3d 1131 (9th Cir. 2013) ("Bellon"), the Ninth Circuit Court of Appeals held that the plaintiffs did not have standing to bring suit to compel a state agency to regulate the emissions linked to five oil refineries. The court held that there was an insufficient causal nexus between the defendants' emissions and any injuries that might occur in Washington state as a result of climate change. Similarly, the same court held in Native Village of Kivalina v. ExxonMobil, 696 F.3d 849 (9th Cir. 2012) ("Kivalina"), that the plaintiffs – natives of a coastal town in Alaska that was allegedly facing higher risk of storm damage as a result of climate change – lacked standing to bring a nuisance suit arising from Exxon's carbon emissions because climate change has been going on for at least decades and is caused by carbon emissions from a multitude of sources. In other words, because climate change is a sprawling phenomenon with multiple potential causes and effects, in order to prove standing a plaintiff needs to allege concrete and particularized injuries that directly flow from a particular defendant or defendants' alleged tortious conduct and emissions. Without such a causal nexus, plaintiffs lack standing to pursue climate change claims.
Courts have also dismissed claims for lack of standing on the grounds that the alleged injuries (which can include prospective or anticipated rises in sea levels and storm intensity as is being alleged in the recent California filings) are not sufficiently concrete and particularized. In Kivalina, for example, the court held that the plaintiff's claimed injuries (allegedly caused by rising sea levels) could not support standing because they were not bounded in time and not linked to any specific conduct by the defendant in the litigation.
Other federal courts have also held that plaintiffs do not have standing to assert claims against fossil fuel companies on the basis of future injuries that may be caused by climate change. In Conservation Law Foundation v. ExxonMobil, No. 16-11950-MLW (D. Mass.), an enforcement suit under the Clean Water Act and Solid Waste Disposal Act, a trial court in the District of Massachusetts recently held that while the plaintiffs did have standing to assert that the defendants were not in current compliance with their environmental permits, plaintiffs did not have standing to assert injuries that could be caused by rising sea levels and other effects of climate change that would occur "far in the future."
Federal preemption based on federal common law and Clean Air Act
One of the grounds for removal to federal court asserted by the defendants in the San Mateo case is that the plaintiffs' claims are preempted by federal law. This argument is supported by the Supreme Court's 2011 decision in American Electric Power Co. v. Connecticut, 564 U.S. 410 (2011) ("AEP"), where the court held that federal nuisance claims that seek to reduce carbon emissions are displaced by the Federal Clean Air Act. The Ninth Circuit in Kivalina followed AEP to reach the same conclusion. See 696 F.3d at 857-58.
While the Supreme Court has yet to extend this federal displacement ruling to bar on preemption grounds claims brought under state nuisance laws, such as San Mateo and Oakland/San Francisco, a district opinion relied on AEP to conclude that such state law claims are also preempted by federal law. See Comer v. Murphy Oil USA, Inc. 839 F.Supp.2d 849, 865 (S.D. Miss. 2012). This conclusion is in line with the federal, or, more accurately – the global scope of climate change.
Indeed, as the San Mateo defendants argued in their removal petition, the plaintiffs' attribution theory of causation would necessarily require an over-arching analysis of carbon emissions across the United States, as well as all other nations across the world. The preeminence of federal law over such questions of interstate and foreign commerce and policy suggests that federal law preempts federal common law and state law nuisance claims that seek to abate carbon emissions and address any injuries caused by climate change. This is so that climate change policy can be developed by the democratically accountable branches of government in a coordinated way at the federal level, rather than via individual tort claims pursued under various theories of state tort law.
The San Mateo defendants also argue that the complaint implicates a number of federal questions that cannot be resolved under state law, including nationwide climate change and carbon emission policies and the federal regulatory framework governing carbon emissions. The removal petitions also raise numerous constitutional questions, such as whether state law can hold corporations liable for promoting an allegedly deceptive campaign to mislead the public as to climate change; whether the state nuisance claims will regulate interstate and foreign commerce; and whether due process permits plaintiffs to use state law to hold the defendants liable for the effects of climate change, given that it is the combustion of fossil fuels, rather than the extraction and marketing of those fuels, that creates the carbon emissions that cause climate change.
Political question doctrine
The defendants in San Mateo and Oakland/San Francisco also may assert as a related defense the political question doctrine, which requires federal courts to abstain from deciding a case in a way that would impinge on the authority of another branch of government. The political question doctrine is rarely invoked, especially when a plaintiff has adequately shown that it has standing to sue. As such, the doctrine is not often discussed in the context of climate change litigation.
In the few cases in which the doctrine has been asserted as a defense, however, at least one district court has held that claims arising from alleged injuries caused by climate change are precluded by the political question doctrine because resolution of the claims would require the court to make an initial policy decision to climate change. See People of the State of Calif. v. General Motors, Corp., No. C06–05755 MJJ, 2007 WL 2726871 (N.D. Cal. Sept. 17, 2007). Conversely, the Second Circuit, Connecticut v. American Electric Power Co., 582 F.3d 309 (2d Cir. 2009), and Fifth Circuit, Comer v. Murphy Oil USA, 585 F.3d 855 (5th Cir. 2009), have reached the opposite conclusion, with the Fifth Circuit holding that tort claims rarely present political questions because the common law of torts provides sufficient rules for the adjudication of a case without interfering with the prerogatives of the other branches of government.
Lack of proximate causation
If these recent California complaints were to survive the above arguments for their dismissal at the motion to dismiss stage (an outcome we see as unlikely), it will be extremely difficult for the plaintiffs to prove that the defendants caused, or will cause, the alleged injuries. As in any tort suit, plaintiffs seeking to hold fossil fuel companies liable for the effects of climate change must show that the defendants' conduct was a proximate cause of the alleged injuries. The problem these plaintiffs will face in proving causation is similar to the problems faced by the plaintiffs in Kivalina and Bellon, where courts dismissed claims for lack of standing due to the fact that climate change is a process that has been occurring for decades as the result of countless emission sources. Indeed, given the inherently indefinite nature of the causal mechanism between carbon emissions from countless sources over a multi-decade period and particular issues alleged by a particular plaintiff that are quite localized in nature (e.g., rising sea levels off the coast of Northern California), how can a plaintiff show that the emissions of a group of fossil fuel companies selected as defendants in a particular litigation were the reasonably foreseeable cause of any particular plaintiff's alleged injury?
The plaintiffs in San Mateo appear to have attempted to solve this causation problem by alleging that the named defendants are "directly responsible" for approximately 20% of global emissions between 1965 and 2015, by virtue of their "extraction, promotion, marketing, and sale of fossil fuel products." However, this theory raises several questions such as the following:
- Does proving that the defendants were responsible for 20% of the global carbon emissions mean that the defendants should be fully liable (or 20% liable) to the plaintiffs for the plaintiff's alleged injuries caused by climate change?
- Why are the defendants "directly responsible" for these emissions while the end users of their fossil fuels bear no responsibility for carbon emissions, including private and commercial drivers of cars and trucks; the automobile and airline industries; coal and natural gas power plants; and various other individuals, companies and governments who use fossil fuels to meet their energy needs?
- Exactly what is the tortious conduct of these defendants plaintiffs are alleging that caused plaintiffs' injuries? Was it the extraction and sale of fossil fuels, their promotion, or defendants' alleged denials or failures to disclose the effects of fossil fuel production on climate change?
- Are the plaintiffs arguing that regulators would have banned or severely curtailed the sale of fossil fuels – the energy foundation of our economy since the industrial revolution – had defendants not allegedly denied the effects of climate change?
- Are plaintiffs arguing that regulators and the scientific community at large did not also know for decades about the potential links between carbon emissions and climate change?
- Can the plaintiffs prove that the defendants' conduct, including their alleged deception as to the causes and effects of climate change, led to higher emissions than otherwise would have been the case?
- For example, if the defendants had curtailed, or even halted altogether, their efforts to extract, promote, market and sell fossil fuels, what effect would that cessation have had on global emission levels, if any? Would various other private and government entities that are also providers of fossil fuels (not named as defendants in these cases) have increased their own sales as a result?
- With respect to the particular injuries being alleged of rising sea levels in California coastal communities, how will plaintiffs demonstrate that these rising sea levels are due to climate change in general, let alone the particular emissions of the defendants named in these lawsuits, as opposed to other geological factors?
Plaintiffs will have to satisfactorily answer difficult causation questions such as the above in order to prove tort liability and entitlement to remedial relief if the cases were to proceed past the motion to dismiss stage of the litigation. Moreover, many of these same causal questions, as explained above, will merit consideration as part of the analysis of more threshold legal issues to be decided at the motion to dismiss stage, such as lack of standing and federal preemption.
The San Mateo and Oakland/San Francisco complaints face major stumbling blocks at the motion to dismiss phase, and are likely to suffer similar fates as did the plaintiffs in Bellon and Kivalina.
While courts have generally been inhospitable territory for climate change-related litigation, these cases will be monitored by all sides to see if they can survive into the discovery or judgment phases. Any success by the plaintiffs would increase the prospects of similar suits by other coastal cities and municipalities in California and in other US states. By contrast, the failure of these California claims to proceed past the motion to dismiss stage of litigation could temper enthusiasm for additional lawsuits in this area, at least if the primary goal of these suits is to obtain remedial relief.
On the other hand, if a principal goal is to use litigation as an instrument of promoting the political and public policy agenda of those funding or pursuing these lawsuits (e.g., by looking to raise public awareness and galvanize public support for stronger climate change regulation), then future climate change-related claims may still be brought, even if the prospects of winning these cases in the litigations themselves remain extremely remote.
The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2019