Everything So Far Has Failed: Why Exxon Mobil Is Being Taken to Court Over Climate Change

A New York trial marks the first in a wave of court cases seeking to hold the fossil fuel industry to account for the climate emergency.

Rex Tillerson, former chief executive officer of Exxon Mobil Corp., center, departs from state court in New York, U.S., on Wednesday, Oct. 30, 2019. Tillerson testified Wednesday in New York's securities-fraud trial over the oil giant's climate-change disclosures, adding an element of drama to proceedings that have had few fireworks so far. Photographer: Peter Foley/Bloomberg via Getty Images
Rex Tillerson, center, former chief executive officer of Exxon Mobil Corp., departs from state court in New York on Oct. 30, 2019. Photo: Peter Foley/Bloomberg via Getty Images

The New York State Supreme Court building is a granite-faced behemoth with wide steps, towering columns, and an ornate rotunda. It is a place where critical legal battles have been fought for nearly a century. Yet, as proceedings began in a modest second-floor courtroom on a gray, unseasonably warm afternoon late last month, the storied building somehow felt outmatched by the gravity of the matter at hand.

Two legal teams were crammed shoulder to shoulder around wooden tables. Spectators and curious out-of-state attorneys filled the benches behind them. Reporters hunched over their laptops. A tattooed court officer strolled the periphery of the room looking for rule-breakers. If you squinted, it could be any of the many high-profile trials that come through New York City and not — as many hope it will be — a historic test of whether the industry responsible for setting humanity on a path to immolation can be held to account before it’s too late.

“The failure of the international community to strongly grapple with climate change and the rollbacks under the Trump administration are leaving advocates of strong climate action desperate for whatever tools they can use.”

The case was the People of the State of New York v. Exxon Mobil Corp., which concluded last week. It is part of a wave of litigation directed at the titans of the fossil fuel industry making its way through courts across the country. “It’s only the second climate-change case ever to go to trial in the United States,” Michael Gerrard, a Columbia Law School professor and one of the world’s leading experts on climate liability litigation, told The Intercept. “And it’s the first where the plaintiffs were able to obtain discovery from any of the fossil-fuel companies.” Should New York Attorney General Letitia James succeed in the case, Exxon Mobil could be on the hook for up to $1.6 billion in damages.

“The failure of the international community to strongly grapple with climate change and the rollbacks under the Trump administration are leaving advocates of strong climate action desperate for whatever tools they can use, so many are resorting to the courts,” Gerrard explained. The Sabin Center for Climate Change Law, which Gerrard runs and is aimed at training future climate litigation lawyers, has tallied the filing of 1,000 climate change lawsuits in the U.S., but the trend, he said, is not confined to the U.S. “We’re seeing an upswing in climate litigation,” Gerrard said, “not only in the U.S., but globally.”

On paper, the Exxon Mobil case in New York was not about the climate crisis — at least not directly. Instead, the suit was about representations Exxon made to its shareholders about potential future costs related to the crisis. Those representations, the attorney general’s office claimed, were false and amounted to an enormous case of securities fraud. “We are not telling Exxon how to run its business,” prosecutor Kevin Wallace told Justice Barry Ostrager in his opening statement. “It was and is always free to change its business practices, but it has to be honest with investors.” Wallace stressed that “the company failed to manage the risks in the way it promised. The costs of that failure are staggering. Investors are now entitled to the truth and their recompense.”

It was the careful framing of a prosecutor angling to win a case, but there was clearly more to the trial than that, a deeper explanation for the electric feeling running through Ostrager’s courtroom. There was a reason for the long line of people trying to get into the room that afternoon, and it was not some newfound, mass public interest in complex securities fraud litigation. People were drawn in because a seemingly untouchable corporation at the top of the industry responsible for the climate emergency was facing potentially serious damage in a publicly observable fashion. And it was not the only one.

As reporters stood in line waiting for opening arguments to begin in New York, news broke that the Supreme Court had rejected a plea from more than two dozen multinational energy companies, Exxon Mobil included, to block a state-level lawsuit filed by the city of Baltimore — one of more than a dozen filed by state and local governments across the country. The suit is one of several “public nuisance” cases with the potential to open the fossil fuel industry up to liability for its climate impacts in individual localities and communities. The following day, as witnesses in New York began to testify, the Massachusetts attorney general’s office filed its own lawsuit against Exxon Mobil — an even more sweeping case than the one unfolding in lower Manhattan.

There’s an interconnected history running through the widespread litigation. “There was a prior round of these cases around 2008 and 2012 and they were all ultimately dismissed,” Gerrard explained — cases like American Electric Power Co. v. Connecticut, Kivalina v. ExxonMobil Corp, and Comer v. Murphy Oil USA. “So, there was a hiatus of five years before the new suits began again under different theories.” Those theories benefited from the groundbreaking work of journalists at InsideClimate News, the Los Angeles Times, and the Columbia School of Journalism, who published a series of stories in late 2015 based on a trove of internal company documents and dozens of interviews describing how Exxon “conducted cutting-edge climate research decades ago and then, without revealing all that it had learned, worked at the forefront of climate denial, manufacturing doubt about the scientific consensus that its own scientists had confirmed.”

A month after the stories broke, then-New York Attorney General Eric Schneiderman subpoenaed Exxon Mobil for “extensive financial records, emails and other documents.” Soon after, the attorneys general of Massachusetts and the Virgin Islands announced that they would be joining New York in investigating the company. “It’s too early to say what we’re going to find,” Schneiderman said at a March 2016 press conference about the investigation, which included support from attorneys general from across the country. “We intend to work as aggressively as possible, but also as carefully as possible.”

Exxon’s pushback was immediate and intense. The oil giant said the inquiries were “politically motivated and based on discredited reporting by activist organizations.” The company made efforts to block the probes. And the pressure had an effect: Three months after announcing that his office was joining with New York and Massachusetts, the attorney general for the Virgin Islands withdrew his subpoena for nearly four decades’ worth of Exxon documents.

Among the measures Exxon took in response to the investigations was to hire Ted Wells, one of the nation’s most prominent white-collar defense attorneys, whose clients have ranged from I. Lewis “Scooter” Libby — the former adviser to Vice President Dick Cheney — to financial giants such as Citigroup, Bank of America, and JP Morgan.

Ted Wells, Jr., center, the lead attorney for Exxon, leaves Manhattan Supreme court after opening arguments in a lawsuit against Exxon, Tuesday, Oct. 22, 2019, in New York.  The lawsuit brought on by New York's attorney general, claims the Texas energy giant kept two sets of books — one accounting for climate change regulations and the other underestimating the costs — to make the company appear more valuable to investors. (AP Photo/Mary Altaffer)

Ted Wells, center, lead attorney for Exxon, leaves New York Supreme Court after opening arguments in a lawsuit against Exxon on Oct. 22, 2019, in New York City.

Photo: Mary Altaffer/AP

Tall and bald, with a voice that carries, Wells zeroed on Schneiderman’s 2016 press conference in his opening statement in New York, describing it as the extension of an “agenda to vilify ExxonMobil falsely.” “Your Honor, I know at the end of the day, you will base your decision on the four-corners of the complaint, but I think the question in everybody’s mind is the elephant in the room: Why would they do something like this?” Wells told the court. “They did it because they didn’t stay in their lane of objectivity and fairness. They got confused. Eric Schneiderman took them into the wrong lane. And I hope they get back ultimately into the right lane.”

When the news of the state lawsuits first emerged, there was an expectation that the New York case would be the broadest, Gerrard explained, with the pattern of public misrepresentation revealed through investigative journalism at its center. Instead, the attorney general’s office opted to pursue a narrower securities fraud case, with its most powerful legal tools rooted in the Martin Act, an anti-fraud law that grants prosecutors sweeping authorities to investigate publicly traded companies. Described by Climate Liability News as “the strictest anti-fraud law in the nation,” the Martin Act does not require prosecutors to establish proof of fraudulent intent. The law was the basis for a New York attorney general investigation in the early 2000s that led to $1.4 billion in fines extracted from some of the financial sector’s biggest banks.

Instead of New York, the Massachusetts Exxon Mobil case has to date offered the nearest example of a broad targeting of the fossil fuel company that many had expected. Attorney General Maura Healey’s 211-page complaint accused Exxon of “systematically and intentionally” misleading “Massachusetts investors and consumers about climate change.” Citing the journalism that revealed Exxon’s “pattern of deception” in 2015, the complaint went on to argue that the “gravity of ExxonMobil’s historic and continuing unlawful actions cannot be overstated; the world lost 40 critical years to develop and deploy new technologies that would allow an orderly transition away from fossil fuels. ExxonMobil’s deception deprived investors and consumers of the central facts so essential to their investment and purchasing choices: the knowledge that continued investment in ExxonMobil’s fossil fuel business and production and use of ExxonMobil’s fossil fuel products would bring about cataclysmic outcomes for humankind, many of the world’s species, and the global economy.”

The New York and Massachusetts cases are the high-profile face of “a multi-pronged attack on the fossil-fuel industry,” Gerrard said. He added, though, that “it’s far too early to predict how all of this will play out.” Gerrard declined to speculate on which of the various legal challenges companies like Exxon might be most worried about: “They’re very vigorously defending all of them.”

To Bill McKibben, the environmentalist author and founder of 350.org, the current moment feels like the start of a new chapter. “We’re at the very beginning of what will be a long, official reckoning for one of the really astonishing crimes of our time,” McKibben told The Intercept. “The underlying offenses started a very long time ago, the very end of the 1980s and the 1990s, with the decision to build this architecture of deceit and denial around whether climate change was real — a question that the oil companies knew full well the answer to.”

“We’re at the very beginning of what will be a long, official reckoning for one of the really astonishing crimes of our time.”

While reliance on the courts can be a tricky thing for activists — “because they’re out of your control in the end” — McKibben highlighted one case in particular as deserving of “special credit” in this moment of heightened legal action: Juliana v. United States.

Known as the “climate kids” lawsuit, the case was filed in 2015 on behalf of 21 youth plaintiffs. Juliana differs from the other major climate cases playing out in New York, Massachusetts, and elsewhere: It sets its sights on the government, arguing that through its actions to permit, authorize, and subsidize the fossil industry — while at the same time understanding the catastrophic harm that industry was causing — the government violated the plaintiffs’ constitutional rights and failed to protect them under the doctrine known as public trust.

The legal rationale behind the litigation was developed Mary Christina Wood, a law professor at the University of Oregon, whose theory of “Atmospheric Trust Litigation” argues that the legal canon of public trust — the idea that the government must protect critical environmental systems for the public good — should also apply to the atmosphere. Thus, the government would be required to pursue actions that will protect, rather endanger, the environmental well-being of future generations.

On November 10, 2016, two days after Trump’s election, Ann Aiken, a federal judge in Oregon, denied a government motion to dismiss the case. “I have no doubt that the right to a climate system capable of sustaining human life is fundamental to a free and ordered society,” Aiken said. Since Juliana’s filing, plaintiffs have filed similar lawsuits in courts across the country. Three state-level cases have been dismissed, leading to appeals.

Whether Juliana will succeed is uncertain. The case is currently tied up in the courts, with the government continuing to fight for its dismissal. Environmental activists are watching the litigation as closely as any in recent memory. If it does succeed, implications for the fossil fuel industry could be historic.

“It’s done an enormous amount to educate,” McKibben said. “And it’s gotten further than I think a lot of people thought it would when it first began. Great credit to them.”

NEW YORK, NY - OCTOBER 22: Environmental activists rally for accountability for fossil fuel companies outside of New York Supreme Court on October 22, 2019 in New York City. Tuesday is the first day of a trial where New York's attorney general is taking on ExxonMobil in a landmark case that accuses the oil corporation of misleading investors about the companys financial risks due to climate change. (Photo by Drew Angerer/Getty Images)

Environmental activists rally for accountability for fossil fuel companies outside of the New York Supreme Court on Oct. 22, 2019, in New York City.

Photo: Drew Angerer/Getty Images

From the beginning, the climate cases have drawn comparisons to the Big Tobacco litigation of the 1990s. It’s easy to see why: Both involve major corporations systematically lying to the public about the danger of their products and attorneys general acting in response. At Schneiderman’s 2016 press conference, former Vice President Al Gore himself drew the comparison, saying that “the analogy may hold up rather precisely.” The two historic cases even share a character: Wells, the attorney for Exxon, defended Phillip Morris when the company was accused of running its own multidecade deception campaign.

Understandable though they are, Gerrard cautions that the analogies between the Big Tobacco cases and the current climate cases have their limits. “The plaintiffs in the climate cases constantly compare them to the tobacco cases and they hope that they will turn out the same way,” he explained. “The major difference is that society does not need tobacco in order to operate, whereas fossil fuels are a basis for modern civilization.” To get around that fact and combat the climate crisis in a meaningful way, Gerrard argues that society must move to a decarbonized economy, one where the fossil fuel is no longer a basis for civilization — and to do that will require efforts that go beyond the courts.

The state rested its case in the New York Exxon Mobil trial late last week. In doing so, prosecutors dropped two of their four fraud charges. The claim under the powerful Martin Act was not one of them. Wells, the Exxon attorney, described the “meritless” case as a “cruel joke.” A verdict is expected in December.

The most high-profile witness to take the stand during the multiweek affair was former Exxon CEO Rex Tillerson, who oversaw the company for a decade before embarking on a one-year stint as secretary of state under President Donald Trump.

If Tillerson was unnerved by the questions from the attorney general’s office, he didn’t show it. Dressed in a navy blue suit and a red tie, the longtime oil man explained how Exxon takes climate change seriously and had in fact spent years researching the issue. He left out the parts about the company keeping its critical findings secret while waging a disinformation war to undermine outside climate science that was coming to the same conclusions.

In recent years, Tillerson told the judge, Exxon has laid claim to the “largest and most diverse resource base in the industry,” with a total of 92 billion barrels of elemental materials under its control — 25 billion in proven reserves, 28 billion in the design or development stage, and 39 billion in the evaluation stage. When it came to the climate crisis and how it would impact Exxon’s overall strategy, its day-to-day operations, and its obligations to shareholders, Tillerson said, “We tried to be responsible.”

At the same time, he acknowledged, “We are in the depletion business.”

“The climate crisis is so enormous, and the change so vast, that we need huge progress on every front.”

What will become of that business — knowing what the public knows now about the role it played in shaping the present and the future — is the underlying question running through the climate litigation in the courts right now.

“The climate crisis is so enormous, and the change so vast, that we need huge progress on every front,” McKibben said. In a recent article for the New Yorker, the veteran climate writer argued that sustained focus on the financial community that sustains fossil fuel industry — specifically the banking, asset management, and insurance sectors — should be one of those fronts. Those struggles, McKibben contended, cannot be disentangled from the fights playing out in the courts. “It’s clear that CITI and Chase and BofA and Wells Fargo” — major financial institutions — “are lending hundreds of billions of dollars to these guys, knowing full well what they do in the world. That seems outrageous,” he said. “We need big political change. We need the judicial system hard at work. I think, fervently, that we need real, powerful engagement with the financial community — engagement being shorthand for attack on the financial community that is bankrolling all of this stuff.” McKibben quickly clarified himself, with a laugh: “Nonviolent attack. But a spirited one nonetheless.”

A largely unspoken implication ran through much of Tillerson’s testimony in Ostrager’s crowded New York courtroom: the idea that in the decades to come there will be a role for companies like Exxon to play, one that’s positive and not a direct and active contributor to the crisis, as it has been for the last 40 years. McKibben has his doubts. “I’m not at all sure that they’re ever going to be part of the solution, but if they are, it will be precisely because they were hammered as hard as you could possibly hammer them,” he said. “Their political power needs to be broken before there’s any chance that they’ll be a force for even modest good.”

“Breaking their political power,” he said, “is a sine qua non for progress on any front.”

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