This week, Judge Karen Green denied Exxon Mobil’s motion to dismiss claims brought by Massachusetts under its Consumer Protection Act. The complaint alleges that Exxon Mobil both mislead Massachusetts investors in its marketing to them of Exxon Mobil securities and mislead Massachusetts consumers in its marketing of its products to those consumers. Judge Green rejected Exxon Mobil’s arguments that it was not subject to jurisdiction in Massachusetts with respect to these claims. She also rejected Exxon Mobil’s arguments that the complaint failed to state a claim.
On a motion to dismiss, Judge Green’s careful opinion is almost certainly right. However, that doesn’t really answer the question whether this case – and the type of claims asserted by Massachusetts – are a significant new front in the climate litigation wars or whether they will ultimately be a sideshow.
On the plus side for Massachusetts, cases focused on state consumer protection law avoid most of the risks faced by litigation going to the heart of individual defendants’ responsibility for causing climate change – and they are clearly creatures of state law that belong in state court.
I won’t go into the details here, but the Commonwealth’s allegations supporting its count alleging that Exxon Mobil misled Massachusetts investors has some moderately juicy stuff regarding what Exxon Mobil representatives said in meetings with specific institutional investors in Massachusetts. Those allegations, if proven, could certainly support a jury finding of an intent to mislead investors. I will note that, if I were Exxon Mobil’s counsel, I’d focus on the argument that, whether it was misleading investors regarding whether its fossil assets will ultimately be “stranded,” depend, not on whether climate change is real, but on whether governments are going to stringently regulate fossil fuels. Based on evidence to date, Exxon Mobil – unfortunately – can make a reasonable argument that the evidence still supports a conclusion that they will not.
Moreover, the question remains whether such statements involved “trade or commerce,” which includes “the advertising, the offering for sale, … the sale, … or distribution of … any security.” That doesn’t seem like a slam dunk to me.
The allegations concerning misleading statements to consumers raises a different set of issues, including whether Exxon Mobil’s statements were mere “puffery” (with the Court persuasively noting that this determination can almost never be made on a motion to dismiss), and whether there’s any reason to believe that any of the statements “directly influence[d] a consumer’s decision to purchase Exxon products.”
Is this the next wave of climate litigation? Will it move the needle? At this point, I’m firmly in the “don’t know” camp. The costs of litigation aren’t going to be big enough to affect Exxon Mobil, even if replicated in every blue state in the country. Someone’s going to have to win one of these cases and obtain a significant award to make a difference. That’s where I return to my prior discussion concerning whether tobacco litigation is a relevant analogy for these cases. As I noted, those cases seemed completely unwinnable – until they weren’t. And then, before we knew it, they were a tsunami.
I still think that these cases are an uphill battle – but they could also be that tsunami.