City of New York v. Exxon Mobil Corp.

The federal district court for the Southern District of New York granted New York City’s motion to remand to state court its action against fossil fuel industry defendants under the City’s Consumer Protection Law. The City alleges that the defendants violated the Consumer Protection Law by misleading consumers about their products’ impact on climate and falsely representing that they are “environmentally responsible companies developing innovative green technologies and products.” The court rejected the companies’ six grounds for removal. First, the court ruled that even if federal common law could serve as a basis for the complete preemption exception to the well-pleaded complaint rule in the absence of a federal statute, federal common law could not preempt the City’s “garden-variety false advertising claims,” which the court said did not implicate either federal interests in regulating environmental pollution or the U.S.’s foreign affairs. Second, the court found that the federal officer removal statute did not apply for the same reason that the Second Circuit concluded it did not apply in <a href="https://climatecasechart.com/case/state-v-exxon-mobil-corp/">Connecticut v. Exxon Mobil Corp.</a>: “there is no causal nexus between Defendants’ work for the federal government and Defendants’ allegedly false and misleading advertisements.” Third, the court rejected federal enclave jurisdiction either based on extraction, production, or sale of fossil fuels on federal enclaves (which was not the subject of the complaint) or based on the “ridiculous” theory that the defendants’ allegedly misleading advertisements reach federal enclaves. Fourth, the court found that the defendants did not meet their heavy burden of proving that Exxon Mobil Corporation was fraudulently joined and therefore could not establish diversity jurisdiction. Fifth, the court rejected the contention that the City’s suit could be removed under the Class Action Fairness Act (CAFA), finding that a Consumer Protection Law cause of action can be brought only by the City and therefore “bears absolutely no similarity to a class action.” Sixth, the court rejected the contention that the City’s claims necessarily implicated First Amendment elements and was removable pursuant to the Grable exception to the well-pleaded complaint rule. The court granted the City’s request for costs and fees regarding five of the six bases for removal: three grounds for removal that the Second Circuit rejected in Connecticut (complete preemption, federal officer, and Grable) and federal enclaves and CAFA, which the court described as “objectively absurd” arguments. The court did not award costs and fees in connection with the defendants’ diversity jurisdiction argument, finding that it was not unreasonable for the defendants to make that argument.

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On November 12, 2021, the federal district court for the Southern District of New York stayed New York City’s consumer protection law climate change case against oil and gas companies and the American Petroleum Institute pending the Second Circuit’s decision in Connecticut v. Exxon Mobil Corp. The district court noted that the Second Circuit had stayed the remand order in Connecticut’s suit, which the court characterized as “a case similar to this action.”

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In response to the court's order to show cause, the City submitted a letter noting that its motion to remand was fully briefed and ready to be decided. The City said it believed the Second Circuit in Connecticut v. Exxon Mobil Corp. would benefit from the district court’s analysis of the removal issues in this case, but that the City understood that the district court might prefer to wait for further guidance in Connecticut before proceeding.

On October 6, 2021, the federal district court for the Southern District of New York issued an order to show cause directing New York City to show cause why the City’s action against Exxon Mobil Corporation and other defendants under the City’s consumer protection law should not be stayed pending the Second Circuit’s decision in Exxon’s pending appeal of the remand order in Connecticut’s case.

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New York City filed a motion to remand in its suit asserting violations of the City’s consumer protection law. The City contended that the defendants failed to establish that the federal district court for the Southern District of New York had jurisdiction based on any of the grounds cited in the notice of removal. The City said it solely alleged violations of state law, and that the complaint did not necessarily raise a substantial and disputed question of federal law (Grable jurisdiction). The City also asserted that there was no federal jurisdiction under the federal-officer removal state, the Outer Continental Shelf Lands Act, or the Class Action Fairness Act, or based on federal enclave or diversity jurisdiction. The City requested costs and fees incurred as a result of the allegedly improper removal. New York City is to file its opening brief in support of the remand motion on July 7, 2021, with the opposition brief due on August 16, and the reply brief due September 6.

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Exxon Mobil Corporation and ExxonMobil Oil Corporation removed New York City’s case under the City’s consumer protection law to federal court.