DALLAS (CN) – ExxonMobil and U.S. Secretary of State Rex Tillerson asked a Dallas federal judge on Tuesday to dismiss a shareholder class action against them, arguing investors are piggybacking claims by several blue-state attorneys general that the oil giant concealed what it knew about climate change.
The Irving-based oil company says the plaintiffs in the case are seeking a “free ride on the soiled coattails” of New York Attorney General Eric Schneiderman’s investigation into its knowledge of climate change and global warming.
In a 32-page motion to dismiss, ExxonMobil accuses the investors of copying “the baseless insinuations and irresponsible allegations” by Schneiderman’s office.
“None of that recycled material is entitled to any weight,” the motion to dismiss with prejudice states. “After years of transparent publicity seeking, pandering to well-financed special interests, and repeated shifts in focus, the NYAG has not established any wrongdoing before a court of law. All that has come of the NYAG’s efforts is a stinging rebuke from state attorneys general in twelve other states filed in this court and in a federal court in New York.”
Lead plaintiff Pedro Ramirez sued ExxonMobil and Tillerson in November 2016, claiming violations of the Securities Exchange Act and SEC rules. Tillerson served as ExxonMobil’s chief executive from 2006 to 2016, before he left to join President Donald Trump’s administration.
The lawsuit claims ExxonMobil made “materially false and misleading” public statements when it failed to disclose internal reports that “recognized the environmental risks caused by global warming and climate change.” Ramirez claims the oil giant also used an inaccurate “price of carbon” – the cost of carbon tax or cap-and-trade regulations – to overstate the value of its reserves.
ExxonMobil flatly denies the allegations, retorting that Ramirez is attempting “to manufacture a securities fraud claim out of its baseless allegation that ExxonMobil pulled a ‘bait-and-switch’” when it disclosed it used a proxy cost of carbon up to $80 per ton to account for the potential impact of the government’s climate policies.
“Under plaintiff’s flawed theory, the use of a lower cost figure overstated the value of ExxonMobil’s assets and the amount of its reserves,” the motion states. “But the reality is that ExxonMobil fully disclosed the risks of climate change to its business, and in no way misrepresented the methodologies it used to analyze those risks. There was no shell game.”
ExxonMobil further contends the plaintiffs failed to adequately plead there was any fraudulent intent and that the company repurchased billions of dollars worth of its own stock during the class period and none of the defendants sold their shares.
Ramirez’s lawsuit came on the heels of attorneys general in Massachusetts and the U.S. Virgin Islands launching their own investigations into ExxonMobil’s knowledge of climate change and global warming.
ExxonMobil sued U.S. Virgin Islands Attorney General Claude Walker in Tarrant County Court in April 2016 to block his subpoena for several decades worth of documents, calling it an unconstitutional fishing expedition. Walker agreed to drop the subpoena two months later.
The company also sued Massachusetts Attorney General Maura Healey in Fort Worth federal court in June 2016, seeking to block a similar subpoena. The trial judge ruled four months later that Healey must show there is no political bias in her request.
Several conservative attorneys general have come to ExxonMobil’s aid in the dispute. Texas and 10 other states filed an amicus brief last September in the company’s suit against Healey, saying the investigations were an “unconstitutional use of investigative powers” by liberal authorities.
A study by Harvard researchers released last month found that ExxonMobil has knowingly misled the public for nearly 40 years about the dangers of climate change, based on an analysis of company communications.
Company spokesman Scott Silvestri said at the time that the findings are “inaccurate and preposterous.”