County of San Mateo v. Peabody Energy Corp. (In re Peabody Energy Corp.)

A federal district court in Missouri upheld a bankruptcy court’s order requiring the San Mateo and Marin Counties and the City of Imperial Beach (the plaintiffs) to dismiss their climate change lawsuits against the reorganized Peabody Energy Corporation (Peabody). Peabody, a coal company, filed for bankruptcy in 2016 and emerged from bankruptcy in April 2017. The plaintiffs filed their lawsuit against Peabody and other defendants in July 2017. The district court found that Peabody’s Chapter 11 bankruptcy plan discharged the plaintiffs’ claim under California’s public nuisance statute because not only equitable but also legal relief was available to the plaintiffs for an alleged breach of the statute. The district court also found that the bankruptcy court did not abuse its discretion in determining that the plaintiffs’ other claims were not exempt from discharge.

The federal district court for the Eastern District of Missouri denied a motion by the County of San Mateo, the City of Imperial Beach, and the County of Marin (the appellants) for a stay pending appeal of a bankruptcy court’s decision enjoining them from pursuing their climate change tort law action against Peabody Energy Corporation (Peabody). The bankruptcy concluded that the appellants’ claims, which were filed in June 2017, were discharged in Peabody’s bankruptcy, from which it emerged in April 2017. In the appeal to the district court, the district court found that the appellants had not established either that they were likely to succeed on the merits or that they would suffer irreparable injury absent a stay pending appeal.