Panel Hears Jurisdiction Squabble in Big Oil Climate Suits

(CN) – The Ninth Circuit waded into a thorny jurisdictional dispute Wednesday over whether federal or state law governs a spate of city and county lawsuits against oil and gas giants like BP and Chevron.

In 2017, Oakland and San Francisco filed twin lawsuits demanding billions of dollars from the big oil and gas companies to abate the public nuisance of global warming, caused by an alleged 50-year disinformation campaign designed to deny and discredit climate change science.

U.S. District Judge William Alsup refused to send the cases back to the state courts where they were first filed, finding that given the international reach of the companies’ alleged transgressions, the federal court was better suited to preside over the cases.

He dismissed several months later in June 2018, writing, “The dangers raised in the complaints are very real. But those dangers are worldwide. Their causes are worldwide. The benefits of fossil fuels are worldwide. The problem deserves a solution on a more vast scale than can be supplied by a district judge or jury in a public nuisance case.” Alsup said the task was more suited to the legislative and executive branches.

In various separate lawsuits that same year, San Mateo, Santa Cruz and Marin counties and the cities of Richmond and Imperial Beach also accused BP, Chevron, ConocoPhillips, ExxonMobil and Royal Dutch Shell of deceiving the public about the dangers of fossil fuels.

In 2018, U.S. District Judge Vincent Chhabria remanded each city and county’s lawsuit to their respective state courts, reflecting a difference of opinion with Alsup over which law should prevail.

On Wednesday, environmental public interest attorney Victor Sher implored three Ninth Circuit judges to keep the cases remanded by Chhabria in state court.

U.S. Circuit Judges Sandra Ikuta, Morgan Christen and Kenneth Lee – a recent Donald Trump appointee – formed Wednesday’s panel.

Sher argued that the cases should never have been removed to federal court to begin with, since the oil companies were not acting under the direction of the federal government.

“Their case for removal founders on the lack of evidence between the claims of the case and any federal officer and direction. The complaint rests on the defective nature of the product and the campaign of deception and denial over the last 50 years. There is no evidence that the government even knew about the issue of climate change and ordered any kind of production or activity regardless,” Sher said citing a case where the Dow Chemical Company supplied the government with Agent Orange, which the government knew was harmful to humans.

“Fifty years ago there was much less information about the impacts of fossil fuel products,” Ikuta, a George W. Bush appointee, said.  “So why would it have to be the case – that absent knowledge by the U.S. government about this issue there couldn’t be the sort of connection between the contractor and the government?”

Sher replied, “Because you have to show that causal connection, otherwise you couldn’t invoke federal officer removal.”

Christen, a Barack Obama appointee, chimed in, “They’d have to show federal officer control over the kind of campaign you allege in the complaint? Or knowledge of the harm?

Sher answered, “At least knowledge it, or knowledge of the harm.  There’s no federal interest in lies and deceit. There’s no evidence the government knew about the campaign of denial and deceit.”

Representing the oil companies, attorney Theodore Boutrous urged the panel to reject Chhabria’s view and keep the cases in federal court. “This is a federal case because of the interstate nature of the case,” he said.

"But their specific claim is the sea level is rising and causing them damage within their jurisdiction,” Ikuta said.

“That’s correct. They’re claiming they suffered harm in California, but based on this global activity,” Boutrous replied.

Kannon K. Shanmugam, who represents ExxonMobil, said Alsup was correct to dismiss claims against BP, ConocoPhillips, Exxon, and Royal Dutch Shell, because the court lacked personal jurisdiction. To overturn this ruling, he said, the panel would have to relax a liability standard that requires a causal link between the companies’ activities in California and the alleged public nuisance.

In loosening that standard, Shanmugam said, “You would not only be establishing a principle of effectively universal jurisdiction for these claims, which would have enormous consequence for these defendants, it would also have enormous consequences for anyone to whom climate change could attributed – airplane manufacturers, airlines, car manufacturers, users of vehicles – and that would be a remarkably broad proposition.”

On rebuttal, attorney Michael Rubin, who represents Oakland and San Francisco, said Alsup applied the wrong standard in evaluating causation.

"He was focusing on the extent to which the instate conduct caused the harm,” Rubin said. Oakland and San Francisco claim BP, ConocoPhillips, Exxon, and Royal Dutch Shell caused the two cities harm by managing the operations of their in-house subsidiaries, including their deceptive marketing and promotional campaigns.

But rather than rule on that issue, Rubin said the panel should simply remand the cases to their individual state courts. “It’s appropriate to let the state court decide,” he said.

Follow @MariaDinzeo

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