Connecticut v. Exxon Mobil Corp.

The federal district court for the District of Connecticut granted the State of Connecticut’s motion to remand its lawsuit against Exxon Mobil Corporation (Exxon) in which the State asserts claims under the Connecticut Unfair Trade Practices Act (CUTPA) arising from Exxon’s alleged false or misleading statements about connections between its products and climate change, as well as alleged interference with the marketplace for renewable energy and alleged “greenwashing.” Citing the well-pleaded complaint rule, the court characterized Connecticut’s claims as alleging that Exxon “lied to Connecticut consumers and that these lies affected the behavior of those consumers”; the court said that “[t]he fact that the alleged lies were about the impacts of fossil fuels on the Earth’s climate does not empower the court to rewrite the Complaint and substitute other claims” such as the common law nuisance and trespass claims asserted against fossil fuel companies in other cases. The court then concluded that none of the exceptions to the well-pleaded complaint rule applied. First, the court found that Exxon failed to show that federal common law justified removal, even if it might provide a defense. Second, the court concluded that CUTPA claims did not “necessarily raise” federal issues, as would be required for the Grable exception to the well-pleaded complaint rule. In addition, the court found that neither the federal officer removal statute, the Outer Continental Shelf Lands Act, federal enclave jurisdiction, nor diversity jurisdiction provided grounds for removal. The court denied, however, Connecticut’s motion for costs and fees, noting that several issues raised by Exxon were novel in the Second Circuit and that many relevant portions of district court rulings in other circuits had not been subject to appellate review until the Supreme Court’s recent decision in the Baltimore case.

A Connecticut Superior Court denied Exxon Mobil Corporation’s (Exxon’s) motion to strike the State of Connecticut’s claims that Exxon violated the Connecticut Unfair Trade Practices Act (CUTPA) by engaging in a decades-long “systematic campaign of deception” regarding the connection between its products and climate change and by more recently engaging in a “greenwashing” campaign regarding the environmental benefits of its activities. First, the court concluded that federal law did not preclude Connecticut’s claims. Although the court adopted the Second Circuit Court of Appeals’ holding in <a href="https://www.climatecasechart.com/documents/second-circuit-rejected-new-york-citys-state-law-climate-claims-against-oil-companies_5cff">City of New York v. Chevron Corp.</a> that federal common law or the Clean Air Act would continue to govern regulation of interstate and international emissions, and therefore the production, sale, and use of fossil fuel products, the court found that Connecticut’s complaint did not seek that type of regulation but instead “seeks to regulate only the defendant’s marketing conduct related to those products.” Second, the court found that the complaint stated legally sufficient claims of unfair and deceptive actions or practices under CUTPA. The court noted that the law regarding the geographic reach of CUTPA was “unsettled” but concluded that it was not necessary to resolve the issue at this stage of the litigation because the complaint sufficiently alleged that some of the alleged tortious conduct (such as Exxon’s publication of “advertorials”) occurred in Connecticut. In addition, the court found that the complaint sufficiently alleged that Exxon’s statements “were intended to and did promote the sale of [its] products” and therefore were made “in the conduct of any trade or commerce” under CUTPA. The court also found that additional development of the factual record was required to determine certain issues relevant to whether Exxon’s statements fell within CUTPA’s scope. For example, the court found that “[a]dditional context” was needed to determine whether Exxon’s statements regarding climate change and fossil fuels’ role in producing climate change could be interpreted as statements of fact. Other issues that the court said it could not resolve on a motion to strike included (1) whether the complaint’s allegations were sufficient to give rise to a duty for Exxon to disclose information regarding aspects of its business that ran counter to statements it made about its efforts to reduce its carbon footprint and (2) whether the alleged greenwashing statements were likely to mislead a reasonable consumer. Third, the court found that it could not determine at this stage of the litigation whether Exxon’s statements constituted commercial speech or protected noncommercial speech under the First Amendment or whether some or all of Exxon’s alleged misconduct constituted protected petitioning activity under the Noerr-Pennington doctrine. Fourth, the court rejected Exxon’s contention that Connecticut’s request for an order requiring Exxon to fund a “corrective education campaign” to remedy alleged disinformation violated the First Amendment. The court also found that additional development of the factual record would be necessary to support Exxon’s argument that allowing Connecticut to pursue civil penalties and disgorgement of profits for more than five decades of allegedly unlawful conduct would violate due process.

The Second Circuit Court of Appeals affirmed an order remanding to state court the State of Connecticut’s lawsuit alleging that Exxon Mobil Corporation (Exxon) violated the Connecticut Unfair Trade Practices Act (CUTPA) by misleading and deceiving consumers about Exxon’s fossil fuel products’ impacts on climate. The Second Circuit first rejected Exxon’s arguments that there were exceptions to the well-pleaded complaint rule beyond the three established exceptions for cases (1) where a federal statute explicitly provides for removal of state law claims, (2) where federal law completely preempts state law claims, and (3) where a state law right necessarily turns on a question of federal law. The Second Circuit said its precedent “squarely foreclosed” Exxon’s argument that the “artful pleading doctrine” provided a “broad, flexible exception … that extends beyond the bounds” of those three exceptions; the Second Circuit said the artful pleading doctrine was “simply a label for the first two of the three exceptions to the well-pleaded complaint rule.” The Second Circuit also rejected the argument that there was a fourth exception to the well-pleaded complaint rule for claims that may arise under federal common law. The Second Circuit further concluded that the third exception to the well-pleaded complaint rule did not apply because Connecticut’s deception and unfairness claims under CUTPA did not necessarily raise a federal issue because they could be resolved without reaching the federal common law of transboundary pollution. In addition, the Second Circuit found that Exxon did not establish that removal was authorized under the federal-officer removal statute or the Outer Continental Shelf Lands Act.