The Latest On The “Stupidest Litigation” In The Country

From The MANHATTAN CONTRARIAIN

April 04, 2021/ Francis Menton

Perhaps you are amazed at the millions of people who have bought into the idea that the gradually increasing level of a trace atmospheric gas (CO2, currently about 0.04% of the atmosphere) is going to bring about world climate doom a hundred or so years from now.  You may be even more amazed at the similarly large numbers of people who seem to think that the salvation from this doom is to be found in bringing lawsuits against various companies that produce fossil fuels and getting some court somewhere to order that the companies do . . .  what exactly?  And that is going to avert the climate doom . . . how exactly?  

I can’t answer those questions.  But the posing of the questions has led me, as a service to readers, to try to follow some of these ridiculous lawsuits, which I have dubbed the “stupidest litigations” in the country.  So far there have been three nominations for the “stupidest litigation” award:

• The first nomination, made in December 2017, went to the litigation titled Kelsey Cascadia Rose Juliana v. United States. In that case, a group of adolescents in the Pacific Northwest sought an injunction to require the federal government to decree an end to all use of fossil fuels, in order to “save the planet.”
• A second nomination, in October 2019, went to the suit brought by New York’s Attorney General against Exxon, claiming that Exxon defrauded its own investors by downplaying the risks of climate change to its business. The remedy sought was damages in the range of a billion or so dollars.
• And there was a third nomination, which went to the various lawsuits brought by cities, counties and states around the country against certain major oil companies (not just Exxon), seeking to hold those companies liable for monetary damages said to be associated with prospective physical damage from things like sea level rise, alleged to result from fossil fuel emissions.

If you have been following this blog, you already know what happened to the litigations that received the first and second nominations.  The Kelsey Cascadia Rose Juliana case died in January 2020, when a panel of the Ninth Circuit reversed the Oregon District Court and held the matter non-justiciable.  The New York AG’s case against Exxon died in December 2019 when a judge of the New York State Supreme Court (trial-level court) ruled on the merits after trial that Exxon had not defrauded its shareholders; the AG did not appeal the decision.

But how about nominee number three?  This story is much more complicated.  It’s not just one case, but many. These cases allege common law “nuisance” claims, said to arise under the state law of whatever state the particular plaintiff county or city (or state itself) finds itself in.  Almost all of these cases have been brought in state courts.  For several years these cases have seemed to be on a roll, avoiding dismissals and getting sent for trial in the various state courts where, as we all know, anything could happen.  However, on Thursday (April 1), the federal Second Circuit Court of Appeals issued a decision that only applies directly to one case, but for reasons I will describe has potentially dealt a serious blow to all of the cases.  The story will likely take years to play out.  But you will enjoy this if you are a fan of litigation back-and-forth.

First, note that these city/county/state cases against the major oil companies are all part of a nationwide campaign orchestrated by a small group of environmental activist lawyers, the lead of them being a guy named Matthew Pawa, who practices in the Boston area in Massachusetts.  The Second Circuit decision contains a list of various cases in the group, which is not comprehensive, but includes among listed plaintiff jurisdictions the Cities of Oakland and San Francisco and County of San Mateo, California; the State of Massachusetts; the State of Rhode Island; the County of Boulder, Colorado; and the City of Baltimore, Maryland.

For all the cases in that list, the litigation trajectory has been basically the same.  The plaintiff city, county or state brought the case in state court.  The defendant oil companies then sought to “remove” the case to federal court.  The ground for removal has been that, even though the complaints say that they are based on state law of “nuisance,” in fact the claims are governed by federal law, either federal common law and/or the Clean Air Act, and therefore the cases should properly be heard in federal court.  Most of the federal District Courts to which the cases have been removed, and all of the federal Courts of Appeal to which appeals have been taken, have so far held the cases non-removable, and sent them back to the state courts.  That is not the end of the matter, because the oil companies have sought to have the Supreme Court review the question of “removability.”  The Second Circuit opinion notes that in four of the cases, petitions for certiorari to the Supreme Court have been filed, and in one of those (the Baltimore case) the petition has been granted.

The “removability” question is one that would usually be of interest only to specialists in federal court procedures; but here it could have big consequences.  Generally, the federal statute allows a case brought in state court to be removed if the federal courts would “have original jurisdiction.” The most common example of that is that the complaint asserts a federal claim.  Here, nothing on the face of the city, county or state complaints states a federal claim or otherwise indicates any basis for federal court jurisdiction; instead, the complaints allege only state law “nuisance” claims.  But the defendants assert that they have a defense that the state laws of “nuisance” are inapplicable, and are pre-empted by either federal common law and/or the federal Clean Air Act and associated EPA regulations.  So the question is, can a case be removed to federal court not on the basis of anything in the plaintiff’s complaint, but rather on the basis of a defense that the defendant says it is going to assert, but has not actually yet asserted at the time of the removal?  I guess we will hear from the Supreme Court on that one a year or so from now.

But meanwhile, the case that went to the Second Circuit was brought by the City of New York, and it was brought in a federal court, the Southern District of New York.  Like the other cases in the group, the New York City case asserts claims under the state law of “nuisance.”  Why did they bring the case in federal court, when everybody else brought their case in state court?  I don’t know.  As with all the other cases, the name of Mr. Pawa appears as one of the counsel on New York City’s complaint.  But for some reason he did not follow his usual playbook here.  Based on the Second Circuit decision, bringing this one case in federal court may turn out to have been a big mistake.

Because the New York City case was brought in federal court, the issue of “removability” does not arise.  Therefore, the Second Circuit goes straight to the more important issue, which is, does the New York State law of “nuisance” apply in the face of the comprehensive federal regime for regulating air quality under the Clean Air Act and any associated federal common law?  The Second Circuit finds that New York State “nuisance” law is pre-empted by the federal scheme, and therefore there is no state cause of action.  The court affirms the dismissal of the lawsuit by the District Court.  Key quote:

Such a sprawling case is simply beyond the limits of state law.  To start, a substantial damages award like the one requested by the City would effectively regulate the Producers’ behavior far beyond New York’s borders.  Since “[g]reenhouse gases once emitted ‘become well mixed in the atmosphere,’” . . . “emissions in [New York or] New Jersey may contribute no more to flooding in New York than emissions in China,” . . .   Any actions the Producers take to mitigate their liability, then, must undoubtedly take effect across every state (and country).  And all without asking what the laws of those other states (or countries) require.  Because it therefore “implicat[es] the conflicting rights of [s]tates [and] our relations with foreign nations,” this case poses the quintessential example of when federal common law is most needed. . . .  

What has thus occurred is that the Second Circuit has laid down a marker that every state court that gets one of these cases will now need to deal with.  The First, Fourth, Ninth and Tenth Circuits have all found the state “nuisance” claims non-removable; and the Supreme Court may agree.  But even though the cases may go to trial in state court, that does not mean that state rather than federal law should be applied.  The various state courts that get these cases will now need to deal with the Second Circuit’s decision in some way, either following it, or trying to come up with some reason why it is wrong.  And if the state courts apply the federal law as set forth by the Second Circuit, they will have to dismiss the cases.  If some state court decides to apply its own “nuisance” law in the face of the Second Circuit’s ruling, that decision will very likely then find its way back to the Supreme Court.

This is far from over.  Undoubtedly, the next step will be that New York City will file its own certiorari petition to the Supreme Court.  However, stepping back a little, does anybody really think that assessing a few billions or tens of billions of dollars of damages against a handful of the big oil companies is going to “save the planet”?

Read the full article here.