When those accused of promoting climate change are prosecuted for securities fraud, especially global oil companies, it’s a safe bet that they’ll render the process as difficult as catching the wind. As in, to make it almost impossible.
ExxonMobil, for example, faces many lawsuits in federal and state jurisdictions around the country, which in general try to compel the company to pay the costs for responding to climate change, estimated by many to be enormous.
Climate change advocates, and even some government agencies, believe that the courts are an effective tool for reversing the epidemic of greenhouse gas pollution. Environmental advocates claim that the ExxonMobil knew, more than a decade ago, that forthcoming climate protection policies and regulations would affect its business, by reducing the demand for its products and by increasing the costs of bringing those products to market.
The State of New York, and their elected attorney general, claimed that as a matter of state securities fraud law, with its relatively low burden of proof , the oil giant had lied to its investors about the future viability of big oil as a profitable investment, which had the effect of misleading its investors and distorting its share price.
The government had to prove that ExxonMobil made “material” misrepresentations to its investors about the impact of climate change regulations, and that those investors would have considered those misrepresentations important in light of all of the information that was available to them about climate change.
ExxonMobil pursued a strong defense, as was expected, and the trial was rough at times for the New York Attorney General, to the point where the state even withdrew two counts of fraud from the case on the last day of the trial.
In his decision, which found ExxonMobil not liable for any of the state’s accusations of fraud, Justice Barry Ostrager found that no evidence that was offered by the State to prove that ExxonMobil made “material” misrepresentations in any of its public disclosures, and that none of the company’s public disclosures were misleading to investors. Justice Ostrager further held that the state’s expert witnesses were discredited both by ExxonMobil’s own witnesses, and by the company’s cross-examination.
In the end, the court was careful to note that its decision “in no way absolved ExxonMobil from responsibility for contributing to climate change through the emission of greenhouse gases in the production of fossil fuel products.” To the court, the case wasn’t about climate change itself, but instead turned on the finer points of proving securities fraud.
For climate change opponents, lesson learned, perhaps; big oil has too much to lose in paying the costs of reducing greenhouse gas pollution, and getting a court to hold industry responsible, under any theory, will be no less difficult than catching the wind itself. Whether contaminated with greenhouse gases or not.
State of New York, by Letitia James, Attorney General, v. ExxonMobil Corporation, Decision After Trial, Hon. Barry R. Ostrager, J., Supreme Court of the State of New York, New York County, Part 61, Index No. 452044/2018
Exxon Wins New York Climate Change Fraud Case, NYPR Network, All Things Considered, 12/10/19