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ExxonMobil Won A Case Brought By The State Of New York. Does That Mean It Is Off The Hook?

ExxonMobil won in state court in New York this month, but that doesn’t mean it is off the hook when it comes to paying for the harm caused by its business activities.

A judge in New York recently ruled that the state failed to prove its case in a legal action brought in 2018 against ExxonMobil. In 2015, Inside Climate News and the Los Angeles Times reported that ExxonMobil knew about the harm carbon dioxide emissions caused as far back as 1977 but had made a corporate decision to keep that knowledge from becoming public. The news created a stir, but what to do about it?  That was the question.

ExxonMobilIn 2018, Eric Schneiderman, the attorney general for New York, decided the best way to proceed was to sue ExxonMobil for violation of what is known as the Martin Act, a state anti-fraud statute, claiming it had misled investors about the value of its stock by keeping two sets of records, one for internal use and another for public purposes. As a result, the suit alleged, Exxon “create[d] the illusion that it had fully considered the risks of climate change regulation and it had factored those risks into its business operations.” That “exposed the company to greater risk from climate change regulation than investors were led to believe.”

Schneiderman’s theory was that instead of trying to prove that ExxonMobil was responsible for climate change, it would be easier to win a case that was narrowly focused on the alleged fraudulent conduct. It’s the same sort of thinking that put Al Capone in prison for tax evasion instead of proving all the murder and mayhem committed at his behest.

Leading up to the trial, ExxonMobil was forced to turn over millions of internal documents to the prosecution. And while those documents may someday be used to pin the climate change rap on the world’s largest energy company, they were insufficient to convince New York judge Barry Ostrager that any of that information would have been considered important by investors when making decisions about buying and selling stock, according to a report by The Nation.

A Narrow Ruling

The judge seemed almost apologetic about his ruling. “Nothing in this opinion is intended to absolve ExxonMobil from responsibility for contributing to climate change in the production of its fossil fuel products. But ExxonMobil is in the business of producing energy and this is a securities fraud case, not a climate change case.”

Michael Burger, the executive director of the Sabin Center for Climate Change Law at Columbia University, described the ruling as “a narrow decision on a specific claim about a particular set of non-required statements Exxon made a few years ago.”

Other Suits Are Pending

While the company is trumpeting its victory in court, it is far from off the hook. Attorneys general in Massachusetts and Rhode Island have sued the company for directly causing climate change and the the city of Baltimore is seeking compensation to help it build defenses against powerful storms and rising sea levels. Many of those suits claim that Exxon and its oil industry pals have created what amounts to a public nuisance.

The US Supreme Court has yet to weigh in directly on whether or not ExxonMobil and other major oil companies should be financially liable for the harm they have caused, but it has permitted the Baltimore suit and the landmark federal suit brought on behalf of young people by Our Children’s Trust to go forward.

“The nuisance cases have the potential to wreak far more havoc on oil companies because the potential for liability reaches into the billions of dollars,” Ann Carlson, a professor of environmental law at UCLA tells The Nation. “And if one or more jurisdictions prevail, we are likely to see many other cities, counties, and states file similar suits to recover damages for climate change impacts that are already occurring and that will occur in the future.”

She thinks the ruling in New York will have little to no bearing on those suits. “The nuisance cases involve oil company knowledge about climate change, deception about that knowledge, and damage caused by the extraction and burning of fossil fuels. The New York case was based on an entirely different theory and set of facts about how to assess climate change risk in valuing oil company investments.”

What About Criminal Liability?

What has not happened up to this point is any sort of criminal prosecution for poisoning the Earth and its inhabitants with carbon emissions, putting us all at risk of poor health and shortened life spans. In the book Oliver Twist by Charles Dickens, one of the characters, Mr. Bumble, says, “The law is a ass — a idiot.” Anyone who has had the pleasure of observing the legal process at close range would probably agree.

In the US, it is an article of faith the corporations never are charged with crimes. It’s not that they can’t be. The US Supreme Court, in its infinite wisdom, has decreed that corporations are people just like you and me. The only difference is, they don’t have to pay taxes, can’t be deported, can say whatever they want no matter how harmful or hurtful to others, and they never, ever get charged with crimes.

Oh, they may pay fines now and again, but the amounts paid are usually a mere pittance compared to the profits resulting from their bad behavior. A few million in penalties is a small price to pay when the profits are measured in billions. If things get bad enough, they just take a bankruptcy bath, re-emerge as a new corporation with a new name, and pick right back up where they left off, minus such irritants as paying their creditors or honoring their pension and heath care obligations. It’s a sweet deal for those in the C Suites who enjoy virtual immunity to do whatever they please without consequences, other than what impact their decisions may have the value of the company’s stock.

Maybe someday the gigantic merchants of death like Exxon Mobil and its oil patch buddies will be held responsible for their actions, but it probably won’t be within the lifetime of many of us. And in the final analysis, courts may be able to address such issues, but the executive and legislative branches of government are the ones who could do so most effectively and should be leading the way to a sustainable future. Their unwillingness to act will doom everyone on Earth to an untimely death and they are perfectly fine with that. Politics may be too important to be left to politicians.

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Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new."


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