What did Exxon Mobil know and when did it know it? Those two questions are at the heart of the lawsuit against the fossil fuel giant by the State of New York, which believes Exxon knew plenty about the dangers of its business model for decades but hid that knowledge from regulators and investors. In essence, the New York suit claims Exxon misled its own investors, to their financial detriment.
New York expects to call some of those investors to testify when the trial — now scheduled to begin on October 23 — kicks off. There is an old expression in the law that says, “Time always works to someone’s advantage.” In this case, the longer Exxon can delay the proceedings, the longer it can continue polluting the environment with its products.
That may be part of the reason why the company has written to several key investors to ask if they plan to testify. If the answer is yes, Exxon says it will serve them with subpoenas forcing them to produce all their books, records, memorandums and papers. One investor says the letter from the company claims the subpoena will ask for “all documents concerning your oil and gas holdings.”
Make no mistake. The law is a meat grinder that can chew people up and spit them out, forcing them to spend enormous amounts of money on legal fees and put their personal life and business dealings on hold until a matter is settled.
Of all the potential witnesses the state has said it may call, only 7 have gotten “the letter” from the company. Those who have indicated they will not testify at trial have not yet felt the wrath of the Exxon legal team.
There are two things wrong with this scenario. First producing all those documents will take time. Digesting them will inevitably lead to requests for more documents which will take even more time. Delay, delay, delay. That’s what $1,000 an hour corporate lawyers do best.
The second problem is that the letter from Exxon to the witnesses is very similar to a loan shark sending a goon with a baseball bat to visit a debtor and break his legs if he doesn’t come up with the cash post haste. It is an obvious threat to bust the balls of those witnesses and perhaps convince them they really don’t need to testify after all.
One of the targeted witnesses is Danielle Fugere, president of As You Sow, an advocacy group dedicated to increasing corporate sustainability through shareholder engagement. In addition to other financial records, Exxon also asked for copies of communications with the attorney general’s office discussing the case or climate change and any communications she may have had with a whole list of lawyers, academics, advocacy groups, and foundations that have supported climate change lawsuits against the oil and gas industry.
Is This Legal?
Is any of this legal? Attorneys for the New York Attorney General have filed a request with the judge assigned to hear the case, Barry Ostrager, asking him to order Exxon to halt its requests for documents, according to Inside Climate News.
Aaron Caplan, a law professor at Loyola Law School in Los Angeles and expert in legal ethics, said the letter from Exxon included in the court filing was unusually aggressive and tested ethical bounds, though he said Exxon could argue that it is simply being thorough in its defense. “It tiptoes right up to the line of impropriety,” he said. “And whether it crosses that line is up to interpretation.”
He adds that the wording of Exxon’s letter to the witnesses would have been less questionable had Exxon simply issued subpoenas without the suggestion that the matter would disappear if witnesses chose not to testify. “You can see where it could be interpreted as Exxon using a carrot and stick approach. If you’re not going to be a witness, we don’t need anything from you.”
Annika Martin, a New York attorney who has fought BP in court over the Deepwater Horizon oil spill, says Exxon’s letter appears to be “aggressive and carefully calculated not to step over the line. It’s pretty unorthodox to send a letter like that. I can’t pin it on any rule it violates, but it is pretty clear what the intention is.”
Two Sets Of Books
The crux of the New York lawsuit is an admission by the company that it essentially kept two sets of books for how it estimated the the costs it could face as governments try to cut greenhouse gas emissions. One set of books was made public; the other was kept strictly confidential and used internally to assess the value of its investments.
The State of New York claims the double bookkeeping was a scam meant to mislead investors by making it appear the company was being far more conservative about those future costs than it really was and thereby exposing them to greater risks. The company has said the two sets of books were used for separate, legitimate purposes, and that it never misled anyone. The fact that it zealously guarded the second set of books from public view suggests otherwise.
If the request for documents is not limited or disallowed by the judge, it is unlikely the trial will begin on time and the attorneys for the company will feel they have successfully completed their mission on behalf of their client, regardless of the morality of their actions.
The result of the New York lawsuit, if there ever is one after all the appeals are heard and decided, could mark the beginning of the end for Exxon and they know it. That’s why they are using every weapon at their disposal to bludgeon potential witnesses into submission. If that is appropriate behavior, it will prove once again that America has a legal system but lacks a justice system. The search for truth will be severely compromised if the courts sanction such shady practices.