Northern California Record

Friday, February 21, 2020

Manufacturers' group calls ExxonMobil's move toward counter-suing a 'win'

By Ann Maher | Jan 11, 2018

General court 4

A group that backs the interests of energy producers calls ExxonMobil's recent move toward counter-suing parties involved in California climate change litigation a "win" for manufacturers.

ExxonMobil filed a petition in Texas state court on Monday seeking to depose 16 lawyers and public officials involved in filing lawsuits that blame energy companies for an impending flooding disaster while not disclosing those alleged threats to possible investors in their bond offerings.

“The petition filed by ExxonMobil is a move in defense of all manufacturers against lawsuits made in bad faith and choreographed by politically motivated plaintiffs’ attorneys and public officials," stated Linda Kelly, senior vice president and general counsel of the National Association of Manufacturers (NAM) and lead on the NAM’s Manufacturers’ Accountability Project (MAP).

In 2017, the counties of Marin, Santa Cruz and San Mateo and the cities of San Francisco, Oakland, Santa Cruz and Imperial Beach filed suit against dozens of energy companies, including ExxonMobil and 17 other Texas-based businesses, over climate change. The company also has previously been targeted by the attorneys general of Massachusetts and New York.

In its petition filed in Tarrant County, Texas, ExxonMobil argues that the lawsuits were not filed based on a "bona fide belief" that actual damages were done or tortious conduct was committed by the energy companies, but rather to coerce the companies into adopting specific climate change policies.

The filing also says that statements made to potential investors contradict allegations made by the municipalities when they sued the energy industry.

A recent MAP blog post points to statements made by San Mateo County in its lawsuit alleging there is a 93 percent chance that jurisdiction will experience “a devastating three-foot flood before the year 2050,” and that sea level rise could “inundate thousands of acres of County land.”

"But the County’s financial filings indicate that officials may not believe their own words," the post states. "Despite being 93 percent certain that the County will experience massive floods in the future, they told investors they were 'unable to predict whether sea level rise or other impacts of climate change or flooding from a major storm will occur, when they may occur, whether they will have a material adverse effect on the business operations or financial condition of the County and the local economy.'"

The county's financial filings show its officials "may not believe their own words," the post states.

It also cites a legal opinion that municipal securities issuers can face suit or civil or criminal penalties if material misstatements or omissions are made in disclosure statements to investors.

"In this case, if the municipalities truly believe in the future harm they describe in their lawsuits, then it seems that they may have withheld information from their own investors," the post states.

Notable among the group of 16 individuals ExxonMobil seeks to depose is Matt Pawa, a Hagens Berman attorney instrumental in creating a “playbook” discussed at a conference in La Jolla, CA, in 2012 and carried out by the state attorneys general of New York and Massachusetts and the California local governments, Exxon says. Pawa represents San Francisco and Oakland in their lawsuits.

Kelly said in the statement for NAM that it is "unsurprising" that familiar names such as Pawa's appear in a number of the local government suits against the energy companies, and that in several instances the same officials signed off on both bond and legal filings.

“The level of potential coordination is suspect and the conflicting representations the parties appear to have made suggest two possible conclusions: either the claims against energy manufacturers are frivolous, or the municipalities have made misleading, and perhaps fraudulent, statements to investors," Kelly stated. "Either way, the integrity of the lawsuits and the government officials and lawyers behind them has been called into question."

MAP's blog post stated this week "marks a win for energy manufacturers—and a crucial step in exposing the dishonest coordination behind some of the biggest abuses of the U.S. legal system."

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Organizations in this Story

National Association of ManufacturersExxon Mobil