New York takes another tack in climate-change suit against Exxon Mobil
Photo courtesy of Exxon Mobil.
The state of New York has filed a suit that alleges Exxon Mobil misled investors about risks posed to its business by climate-change regulations.
The suit, filed Wednesday in New York state court, alleges securities fraud under the state’s Martin Act and fraud, report the New York Law Journal, the New York Times, the Wall Street Journal, Politico, NBC News and a press release. New York’s pension funds for state employees and teachers include Exxon shares with a value of $1.5 billion.
The New York Times described the action as “a fairly straightforward shareholder fraud suit, the kind that New York attorneys general have long brought and successfully prosecuted under state law.”
Other suits filed by state and local governments seek to recover the costs of dealing with climate change. According to the Times, the suits “rely on creative and relatively untested legal theories” and some have been dismissed, including one filed by New York City. Another pending suit was filed on behalf of youths claiming a right to a climate capable of sustaining human life. Chief Justice John G. Roberts Jr. has temporarily stayed the litigation to await arguments on whether the case should proceed.
New York’s new suit claims Exxon used one estimate of costs for the risks of future regulation in disclosures to investors while using a lower number for internal matters. The suit says the fraud was sanctioned at the highest levels, and former chairman Rex Tillerson knew for years that the representations were misleading. Tillerson is a former secretary of state in the Trump administration.
The suit seeks disgorgement of money made in connection with the alleged misrepresentations and restitution of funds received from investors as a result of fraud. It also seeks an injunction barring future wrongdoing.
Columbia Law School professor John Coffee Jr. told NBC that most cases under New York’s Martin Act focus on whether companies accurately report earnings and liabilities.
“This new case is a claim that the company knew the dangers from climate change and the liabilities it would incur, and that those greater costs were not acknowledged or were underestimated publicly,” Coffee said. “That’s novel. I would describe this kind of case as unproven. We don’t know whether the courts will accept the materiality of that evidence.”
The suit follows a three-year investigation by the New York Attorney General’s office in which Exxon sought to block subpoenas.
Exxon Mobil spokesman Scott Silvestri said the suit is without merit. “These baseless allegations are a product of closed-door lobbying by special interests, political opportunism and the attorney general’s inability to admit that a three-year investigation has uncovered no wrongdoing,” he said.