Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Monday, February 26, 2024 | Back issues
Courthouse News Service Courthouse News Service

Shareholders Want Billions From ExxonMobil

DALLAS (CN) — In a federal class action Monday, stockholders claimed that ExxonMobil "erased billions of dollars" in stock value by misrepresenting the accounting of its oil and gas reserves, by failing to disclose that threats of global warming might leave many of the reserves stranded.

Lead plaintiff Pedro Ramirez Jr. says the Irving-based oil giant violated the Securities Exchange Act and SEC rules. He claims that during the proposed class period of Feb. 19 to Oct. 27, ExxonMobil "repeatedly highlighted the strength of its business model and its transparency and reporting integrity" of its oil and gas reserves and their value.

"Exxon's public statements were materially false and misleading when made as they failed to disclose that Exxon's own internally generated reports concerning climate change recognized the environmental risks caused by global warming and climate change," the 26-page complaint states.

"That, given the risks associated with global warming and climate change, the company would not be able to extract the existing hydrocarbon reserves Exxon claimed to have and, therefore, a material portion of Exxon's reserves were stranded and should have been written down."

Represented by four law firms in three states, Ramirez claims ExxonMobil also used an inaccurate "price of carbon" — the cost of carbon tax or cap-and-trade regulations —to overstate the value of its reserves.

He claims the stock price dropped by more than 13 percent when several news sources reported this summer that several state attorneys general were investigating ExxonMobil, "erasing billions of dollars in market capitalization."

He claims that billions more in stock value was lost when ExxonMobil released its quarterly financial results on Oct. 28 and acknowledged that it might have to write down 20 percent of its oil and gas assets that were not profitable to produce under current prices.

Lead counsel is Joe Kendall in Dallas.

ExxonMobil spokesman Alan T. Jeffers told Courthouse News the lawsuit is "frivolous" and "completely without merit."

"We will defend ourselves and are confident our financial reporting and communications with investors fully comply with all legal and accounting requirements," Jeffers said Tuesday. "This lawsuit misstates our financial reporting and repeats the same tired allegations pushed by activists and inaccurate media reports that claim we reached definitive conclusions about climate change decades before the world's experts and while climate science was in an early stage of development. This is simply not credible."

The lawsuit comes several months after Massachusetts and U.S. Virgin Islands authorities launched separate investigations into ExxonMobil's knowledge of climate change and global warming.

ExxonMobil sued U.S. Virgin Islands Attorney General Walker in Tarrant County Court in April to block his subpoena for several decades worth of documents, calling it an unconstitutional fishing expedition. Walker agreed to drop the subpoena in June.

ExxonMobil sued Massachusetts Attorney General Maura Healey in Fort Worth Federal Court in June, seeking to block a similar subpoena. The trial judge ruled in October that Healey must show there is no political bias in her request.

The investigations came after several attorneys general appeared together publicly to announce investigations into whether ExxonMobil broke the law by misrepresenting its knowledge of climate change in marketing materials and investor communications.

ExxonMobil called Healey's request "a weak pretext for an unlawful exercise of government power to further political objectives," and said the applicable law in the investigation has a statute of limitations of four years.

Ramirez seeks class certification, compensatory damages and costs of suit.

His co-counsel includes Balon Bradley in Dallas; Robbins Geller Rudman & Dowd in San Diego, Calif., and Melville, N.Y.' and Abraham, Fruchter & Twersky in New York City.

Follow @davejourno
Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.