Exxon Mobil Corp. v. Healey

The Second Circuit Court of Appeals rejected Exxon Mobil Corporation’s (Exxon’s) appeal of a district court’s dismissal of Exxon’s lawsuit asserting that the New York and Massachusetts attorneys general engaged in viewpoint discrimination and violated Exxon’s constitutional rights by pursuing investigations of Exxon’s allegedly deceptive speech regarding climate change. The Second Circuit concluded that Exxon’s claims against the New York Attorney General were moot because the Attorney General had concluded its investigation and Exxon had prevailed in the subsequent state court enforcement <a href="https://climatecasechart.com/case/people-v-exxon-mobil-corporation/">action</a> that the Attorney General brought. The Second Circuit further found that Exxon “failed to establish a reasonable expectation that the conduct at issue” (the Attorney General’s fraud investigation) would recur, particularly because the Attorney General decided not to appeal the decision in favor of Exxon. The Second Circuit also rejected Exxon’s contention that injunctive relief was still available because the federal court could order the return or destruction of documents produced in discovery or the appointment of a monitor. In addition, the Second Circuit found that Exxon’s request for a declaratory judgment did not constitute a claim for prospective relief to remedy an ongoing constitutional violation. The Second Circuit also agreed with the district court that the doctrine of res judicata precluded Exxon’s claims against the Massachusetts Attorney General because Exxon could have raised its claims in an earlier state court <a href="https://climatecasechart.com/case/in-re-civil-investigative-demand-no-2016-epd-36/">proceeding</a> in Massachusetts.

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On November 20, 2018, Exxon Mobil Corporation’s counsel in its appeal of the dismissal of its lawsuit challenging the climate change-related investigations of the New York and Massachusetts attorneys general submitted a letter to advise the Second Circuit Court of Appeals of a district court decision in the Northern District of New York that denied New York State officials’ motion to dismiss viewpoint discrimination claims by the National Rifle Association (NRA). Exxon argued that its allegations against the attorneys general should have been reviewed under the same standards as were applied to the NRA’s claims, and contended that the court in the NRA case had rejected many of the arguments made by the attorneys general and their amici, including that actual chilled speech was necessary for a First Amendment claim and that viewpoint discrimination cannot arise from statements that might qualify as “government speech.”

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Briefing was completed in Exxon Mobil Corporation’s appeal to the Second Circuit Court of Appeals of the dismissal of Exxon’s lawsuit seeking to bar—largely on constitutional grounds—investigations by the New York and Massachusetts attorneys general of Exxon’s climate change-related disclosures. Exxon filed its reply brief on October 19, contending that its allegations established viewpoint discrimination in violation of the First Amendment and that it had also plausibly alleged other claims. Exxon contended its constitutional claims were ripe and that res judicata did not bar its claims against the Massachusetts attorney general because the company did not have a full and fair opportunity to litigate its First Amendment and other constitutional claims in state court.

Nineteen states and the District of Columbia argued in their brief that the First Amendment did not preclude states from conducting anti-fraud investigations and securities regulation. The amici states said they had an compelling interest in maintaining their investigative and consumer protection functions and contended that immunizing misleading and deceptive statements under an overbroad reading of the First Amendment would detrimentally affect consumers, investors, and financial markets.

In their amicus brief, former Massachusetts attorneys general addressed how the Massachusetts consumer protection law operates and asserted that Exxon should not be permitted to collaterally attack an investigation in federal court that it had unsuccessfully challenged in state court.

Three amicus briefs were filed in support of the attorneys general. A group of law professors with expertise in First Amendment law asserted in their amicus brief that profit-seeking companies do not have First Amendment rights to issue false or misleading statements that deceive investors or consumers.

The Massachusetts attorney general argued that Exxon failed to state plausible claims and also argued that Massachusetts state court decisions independently precluded Exxon’s claims.

On October 5, 2018, both attorneys general filed their briefs urging the Second Circuit to affirm the dismissal of the case. The New York attorney general argued that Exxon’s lawsuit was not ripe because failure to comply with its investigative subpoena would not have automatic consequences. The New York attorney general further argued that, in any event, the district court had correctly concluded that Exxon failed to adequately plead a First Amendment claim or any other claim, including Fourth Amendment, due process, conspiracy, and dormant Commerce Clause claims. The attorney general also contended that the district court had properly found that amendment of Exxon’s complaint would be futile.

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On August 3, 2018, Exxon Mobil Corporation (Exxon) filed its opening brief asking the Second Circuit Court of Appeals to reverse the dismissal of Exxon’s lawsuit challenging the constitutionality of investigations by the New York and Massachusetts attorneys general of climate change-related disclosures. Exxon argued that the district court had failed to address its viewpoint discrimination claims, which Exxon described as the “centerpiece” of its complaint. Exxon also contended that the district court had erroneously imposed an evidentiary burden on Exxon rather than accepting what Exxon argued were plausible allegations while also improperly drawing inferences favoring the attorneys general. Exxon further argued that it had adequately pleaded its claims under the Fourth Amendment, Fourteenth Amendment, and Commerce Clause regardless of whether it had adequately pleaded that the attorneys general were motivated by an improper purpose. Exxon also sought to reverse the dismissal on res judicata grounds of its claims against the Massachusetts attorney general. Exxon argued that its constitutional claims were not raised or decided in Massachusetts state court proceedings and that it had not had a full and fair opportunity to raise the claims.

Two motions were filed seeking leave to amicus briefs in support of Exxon. The National Association of Manufacturers (NAM) and U.S. Chamber of Commerce—which characterized their organizations as “two of the main representatives of the business community”—asserted that their proposed brief would be helpful “because this matter presents important and complex issues regarding the scope of a state’s power to subject private businesses to overbroad and burdensome legal investigations that chill First Amendment expression.” Twelve states, led by Texas, said they had “a direct and vital interest in the issues before the Court” because “state attorneys general possess an inherent duty to preserve their roles as evenhanded enforcers of the law.” The states argued that the New York and Massachusetts attorneys general were “embracing one side of a multi-faceted and robust policy debate, and simultaneously seeking to censor opposing viewpoints and that “[i]n doing so, they are violating ExxonMobil’s constitutional rights, abusing their power, and eroding public confidence in public officers.” The attorneys general’s briefs are due on October 5.

On May 31, 2018, a Second Circuit Court of Appeals motions panel granted Exxon Mobil Corporation’s (Exxon’s) motion to move Exxon’s appeal of the dismissal of its challenge to the Massachusetts and New York attorneys general climate change investigations from the expedited calendar to the regular calendar. Exxon’s opening brief is due on August 3.

The New York attorney general said removing the appeal from the expedited calendar would “harm the public interest by prolonging the pendency of this meritless and disruptive lawsuit” and noted that failure to state a claim was the sole basis for dismissal of claims against the New York attorney general.

In a motion to remove its appeal from the expedited calendar, Exxon argued that the appeal did not meet the Second Circuit’s requirements for expedited treatment because it had been dismissed in part on res judicata grounds based on a Massachusetts state court decision declining to set aside the attorney general’s civil investigative demand. Exxon said the res judicata ruling was not for failure to state a claim and that the res judicata ruling’s complexity and novelty made it unsuitable for expedited review, as did the appeal’s raising of “novel issues with far-reaching consequences for the First Amendment’s protection against viewpoint discrimination.”