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Tuesday, June 25, 2024 | Back issues
Courthouse News Service Courthouse News Service

Federal judge dismisses Exxon’s lawsuit against climate activist shareholders

U.S. District Court Judge Mark T. Pittman found that the shareholders' promises to not submit similar proposals in the future made ExxonMobil's lawsuit against them moot.

FORT WORTH, Texas (CN) — A federal judge in Texas Monday dismissed ExxonMobil’s lawsuit against climate activist shareholders, striking down the oil giant’s attempt to tighten its grip on a proposal relating to its greenhouse gas emissions.

The conflict began earlier this year when U.S.-based investment firm Arjuna Capital and Dutch-based nonprofit Follow This filed proposals that would have accelerated the Exxon's reduction of greenhouse gas emissions. Exxon retaliated by suing the shareholders in federal court.

Despite Arjuna and Follow This’s retraction of the proposal and promise not to submit similar ones in the future, Exxon pressed ahead with its suit.

But hours after a hearing Monday over the viability of Exxon’s case, U.S. District Judge Mark T. Pittman dismissed the case, finding that the issue is now moot. 

The Donald Trump appointee wrote in a six-page order dismissing the suit that while he is sympathetic to Exxon’s predicament, his hands are “​​tied by the Constitution.”

“Exxon can only sue Arjuna if there’s an ‘actual, ongoing controversy’ between them,” wrote Pittman. "While one remained despite Arjuna’s withdrawal of the 2024 Proposal, none survives its current covenant.”

Exxon argued that while the controversy that led to it filing its lawsuit has since fizzled out, nothing is stopping the activist shareholders from returning to a board meeting with other proposals targeted at steering one of the world's largest multinational oil companies away from fossil fuels. 

Pittman was unconvinced that such a threat existed.

“The representations of Arjuna’s lawyer at today’s hearing assuage those concerns and are enforceable,” wrote Pittman. “Yet even before those statements, Exxon’s position was too attenuated to confer standing. That is because hypotheses about the actions of other entities with whom Arjuna is ideologically aligned are 'conjectural' and 'hypothetical.'"

The parties in the dispute did not immediately respond to Courthouse News’ request for comment on the order Monday evening.

Late last month, Exxon conducted its annual shareholder meeting and while Arjuna and Follow This’s proposal was absent from the slate of shareholder proposals, the fallout from the litigation was present. Before the meeting, some shareholders announced that they would vote against all or some of the candidates for the 12-member board of directors as an act of protest over Exxon’s decision to continue with its lawsuit against the activist shareholders, which many saw as an attack on shareholder democracy.  

The New York State Common Retirement Fund, Norway’s sovereign wealth fund and the California Public Employees’ Retirement System, the nation’s largest private pension fund, were some of the shareholders that voted in protest during the meeting. 

Exxon CEO Darren Woods also took the opportunity during the meeting to indirectly address the lawsuit, saying it was his view that a “coalition of activists masquerading as shareholders” were abusing a system that was intended to give investors access to directors at the company. 

For shareholder democracy to thrive, abuses of the process must be addressed,” said Woods. 

Exxon has not indicated whether it plans to appeal Pittman’s order.

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Categories / Business, Courts, Energy, Environment

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