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Sunday, May 19, 2024 | Back issues
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Big Oil Has a Big Win From Supreme Court

The Monday decision gives oil companies more sway in climate litigation, allowing them to steer lawsuits out of state courts and into the federal system.

WASHINGTON (CN) — In a big win for oil giants, the U.S. Supreme Court ruled 7-1 on Monday that federal court is the right venue for a case with the oil companies Exxon Mobil, BP and Chevron in Baltimore City. 

“The Fourth Circuit erred in holding that it was powerless to consider all of the defendants’ grounds for removal,” Justice Neil Gorsuch wrote for the majority, joined by Chief Justice John Roberts as well as Justices Clarence Thomas, Stephen Breyer, Elena Kagan, Brett Kavanaugh and Amy Coney Barrett.

While the oil industry had sought a broader ruling that all climate-liability lawsuits belong in federal court, the justices did not go as far as that Monday. Still the decision could have broad implications. Allowing the oil companies to move their lawsuit into the federal system could allow energy giants in other climate damages cases around the nation to have greater chance of success.

Baltimore initiated the case in 2018, one of many recent lawsuits that seek to hold energy giants accountable for costs associated with climate change. Being a port city, Baltimore argued that it is especially vulnerable to sea level rise from climate change.

Chevron, Exxon Mobil and BP moved their suit to a federal district court in Maryland, claiming the city was seeking to hold them accountable based on their actions as federal officers — and pointed to their federal leases for oil production as reason for the venue change. 

A federal judge disagreed and remanded the case to state court. Such decisions ordinarily can’t be appealed, but the oil giants did so anyway, relying on an exception for federal officer arguments. Even so, the U.S. Court of Appeals for the Fourth Circuit sided with Baltimore to keep the case in state court.

Representing the oil companies on appeal to the high court, Paul Weiss attorney Kannon Shanmugam argued that Baltimore’s argument to restrict that removal ignores statutory language of Section 14469(a), which deals with federal removal statutes.

The justices instead reached the very limited finding that the Fourth Circuit's ruling was too narrow and largely ignored the full range of issues that the district court had rejected. Gorsuch instructed the Fourth Circuit to reconsider these points on remand.

Reacting in an email Monday, Sara Gross, chief solicitor at Baltimore City Law Department, said they expect the appeals court will still to rule in their favor when that time comes.

“Judge Hollander has already rejected every single one of the fossil fuel defendants’ arguments, as have federal district court judges in ten other climate damage and deception cases around the country,” said Gross, referencing the June 2019 opinion from U.S. District Judge Ellen Hollander.

Justice Samuel Alito didn’t participate in the case, as he has previously disclosed investments in energy companies, while Justice Sonia Sotomayor dissented.

“If the district court concludes that the case was improperly removed, it issues an order remanding the case back to state court,” Sotomayor wrote. “For more than a century, the rule has been that such remand orders are generally not subject to appellate review.”

Sotomayor said the majority decision allows defendants to “shoehorn” arguments into their case for removal.

“In other words, it lets the exception swallow the rule.”

Categories / Appeals, Business, Energy, Environment, Government

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