Exxon Mobil Corp. v. Schneiderman

Exxon Mobil Corporation (Exxon) filed a notice of appeal on April 20, 2018, three weeks after the federal district court for the Southern District of New York dismissed the company’s lawsuit seeking to bar the New York and Massachusetts attorneys general from pursuing their investigations of Exxon’s climate change-related disclosures.

The federal district court for the Southern District of New York dismissed Exxon Mobil Corporation’s action against the New York and Massachusetts attorneys general. Exxon alleged that the investigations of the attorneys general into Exxon’s climate change-related disclosures were part of a conspiracy to “silence and intimidate one side of the public policy debate on how to address climate change.” Exxon asserted that the attorneys general had violated its constitutional rights, and that the investigations were preempted, violated the dormant Commerce Clause, and constituted common law abuse of process. The court found that “Exxon’s allegations that the [attorneys general] are pursuing bad faith investigations in order to violate Exxon’s constitutional rights are implausible and therefore must be dismissed for failure to state a claim.” The court also found that Exxon had not plausibly alleged essential elements of a dormant Commerce Claim and that its preemption claim also failed. In addition, the court found that it had personal jurisdiction over the Massachusetts attorney general but that res judicata barred the claims against her, based on an ongoing proceeding in Massachusetts state court.

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The New York attorney general asserted that the proposed amendment of the complaint “does nothing to shore up Exxon’s deficient claims.” In particular, the New York attorney general said controlling Second Circuit precedent foreclosed a claim of politically motivated conspiracy and that, in any event, the “purportedly new information” offered by Exxon “would not make this claim plausible.”

In reply papers in support of dismissal, the Massachusetts attorney general asserted that the amended complaint added no further facts regarding Attorney General Healey and would not cure the “fatal defects” of the claims against her.

In its opposition to the motions for dismissal for failure to state a claim, Exxon contended that its allegations established viewpoint discrimination and unlawful conspiracy to violate its rights. Exxon also asserted that it had preserved its right to bring a Fourth Amendment unreasonable search claim and had adequately pled such a claim. In addition, Exxon argued that its allegations stated a due process violation based on the “impermissible bias” of the attorneys general, that the allegations stated a claim under the dormant Commerce Clause based on the attempts by the attorneys general to regulate out-of-state speech, that the claim that SEC reporting requirements preempted investigation of Exxon’s reserves and asset impairments was timely, and that the Eleventh Amendment did not bar its state law claims.

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Exxon sought permission to amend its complaint to incorporate “additional documentary evidence” that had “come to light” since Exxon last amended its complaint in November 2016. The additional allegations included that organizers of a 2012 workshop had lobbied the attorneys general to pursue the investigations and that the New York attorney general had contacts with “billionaire activist Tom Steyer about campaign support in connection with his investigation of ExxonMobil.” Exxon’s proposed amended complaint also contained allegations regarding communications with the Rockefeller Family Fund and regarding the Fund’s financing of “so-called investigative journalism that the Attorneys General have used as a pretext,” and allegations of improper concealment of public records and regarding a shift in the New York attorney general’s “investigative theory.”

The Massachusetts attorney general’s supplemental memorandum of law argued that none of Exxon’s claims were plausible or legally cognizable. The attorney general argued that Exxon’s “bald, baseless” allegations that the investigation was undertaken “out of personal animus and in bad faith” to chill political speech did not meet pleading standards and could not sustain claims of conspiracy or abuse of process, or of violations of the First, Fourth, and Fourteenth Amendments. The Massachusetts attorney general further argued that Exxon’s preemption, dormant Commerce Clause, and other state claims failed as a matter of law.

On December 21, 2017, the New York and Massachusetts attorneys general filed supplemental memoranda of law arguing that the federal district court for the Southern District of New York should dismiss Exxon Mobil Corporation’s (Exxon’s) lawsuit seeking to block their investigations of Exxon’s climate change-related disclosures for failure to state a claim. The attorneys general previously filed motions to dismiss based on the absence of a ripe injury or the Colorado River abstention doctrine. The Massachusetts attorney general also argued that a Massachusetts state court decision precluded Exxon’s claims and that the court lacked personal jurisdiction. At a hearing on November 30, 2017, the district court requested that the attorneys general update their briefing on dismissal pursuant to Rule 12(b)(6) (previously brief in Texas federal court) to reference Second Circuit law. In its supplemental filing, the New York attorney general argued that Exxon’s claim that the investigation was an attempt to “suppress Exxon’s corporate viewpoint on climate change, in violation of the First Amendment,” was not plausible. The New York attorney general also argued that Exxon’s claims that the attorney general’s subpoena called for an unreasonable search in violation of the Fourth Amendment and violated the dormant Commerce Clause were without merit. In addition, the attorney general contended that Exxon’s allegations of “political bias” did not support a procedural due process claim, that Exxon’s claim that a Securities and Exchange Commission rule preempted the investigation was premature, and that the court was without jurisdiction to hear state law claims.

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In a letter to the court, the Massachusetts attorney general's office contended that the Massachusetts Supreme Judicial Court's <a href="https://climatecasechart.com/case/in-re-civil-investigative-demand-no-2016-epd-36/">taking Exxon's appeal</a> of the trial court's order requiring it to comply with the civil investigative demand provided additional support for abstention by the federal court.

Briefing was completed for the motions by the Massachusetts and New York attorneys general to dismiss Exxon Mobil Corporation’s (Exxon’s) action in New York federal court to block the states’ investigation of its climate change-related disclosures. Massachusetts Attorney General Maura Healey argued in her reply that a Massachusetts Superior Court order requiring Exxon to comply with her office’s Civil Investigative Demand precluded Exxon’s federal court action. Healey also argued that Exxon’s opportunities to present its case in state court made its federal claims unripe and that the federal court should abstain on Colorado River abstention grounds.

In his reply in support of the motion to dismiss, New York Attorney General Eric Schneiderman asserted that Exxon’s federal claims were not ripe and that the Colorado River abstention doctrine compelled dismissal of “this duplicative and wasteful federal action.” Schneiderman said Exxon’s representations in New York state court that it had fully and voluntarily complied with the attorney general’s subpoena “fatally undermine[d]” any claim of ripe injury. Schneiderman also said “the only conceivable effect of prospective federal relief” would be to interfere with the attorney general’s inquiry into Exxon’s alleged withholding or spoliation of evidence.

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Exxon Mobil Corporation (Exxon) argued to the federal district court for the Southern District of New York that its lawsuit against the attorneys general of New York and Massachusetts to bar their investigations into Exxon’s climate change-related disclosures should not be dismissed. Exxon argued that its constitutional claims were ripe, and that the “exceptionally narrow” Colorado River abstention doctrine was not justified because there was no pending state court proceeding that could result in comprehensive disposition of the litigation. Exxon also said the “narrow” decision in a pending Massachusetts state court action did not preclude its federal claims and that Massachusetts Attorney General Healey was subject to the court’s jurisdiction. Exxon said dismissal would “set a precedent with nationwide consequences” by “granting state officials license to harass perceived political opponents unimpeded by review in federal courts.”

New York Attorney General Eric Schneiderman and Massachusetts Attorney General Maura Healey asked the federal district court for the Southern District of New York to dismiss Exxon Mobil Corporation’s (Exxon’s) action seeking to block their investigations into Exxon’s climate change-related disclosures. Schneiderman’s motion to dismiss relied on the absence of ripe claims and the Colorado River abstention doctrine. Schneiderman contended that there was no ripe injury because his office’s subpoena was not self-executing and Exxon had purported to have voluntarily complied with the subpoena. He also argued that the federal court should defer to the parallel state proceeding rather than allow Exxon to assert some objections to the investigation in federal court and others in state court.

In her motion to dismiss the action, Healey argued that a January 2017 decision in her favor by the Massachusetts Superior Court precluded Exxon from litigating its claims in federal court; that abstention was warranted under the Colorado River doctrine; and that Exxon’s claims were not ripe because Exxon had—and was pursuing—an avenue for relief in state court. Healey also said that the New York federal court did not have personal jurisdiction over her.

After the transfer of Exxon Mobil Corporation’s (Exxon’s) lawsuit seeking to block investigations by the New York and Massachusetts attorneys general from Texas federal court to the federal district court for the Southern District of New York, the New York court declined to reopen jurisdictional discovery into the attorneys general’s motivations for commencing the investigations. The court also ordered the dismissal without prejudice of the attorneys’ general pending motions to dismiss and set a schedule for renewal of the motions. Briefing on the motions was to be completed by June 30, 2017. The order authorized the attorneys general to seek dismissal on the grounds of personal jurisdiction, ripeness, abstention pursuant to the Colorado River doctrine (which may apply where there are concurrent federal and state lawsuits pending), and collateral estoppel and res judicata. The court did not authorize the defendants to seek dismissal based on Younger abstention—the abstention doctrine on which the attorneys general primarily had relied in their motions before the Texas federal court. (Younger abstention applies when ongoing state judicial proceedings implicate important state interests and provide adequate opportunity to raise constitutional challenges.) Expressing concern that the attorneys general had commenced their investigations in bad faith, the Texas federal court had ordered discovery into the motivations of the attorneys general to determine whether the “bad faith” exception to Younger abstention applied. The New York court’s order followed a status conference held on April 21, at which the judge reportedly stated that she had a “<a href="https://insideclimatenews.org/news/21042017/exxon-mobil-climate-change-scandal-fraud-investigations-new-york-schneiderman">different view</a>” of the case than the Texas judge.

One day before a status conference, the attorneys general from Texas and 10 other states sought permission to file an amicus brief in support of Exxon. The 11 attorneys general said that the Massachusetts and New York investigations were “an attempt to establish and enforce a singular climate change viewpoint despite the fact that climate change is the subject of an ongoing international debate and far from settled” and that they would provide the court with a different perspective than the defendants “on the nature of the power being employed, the correct use of [civil investigative demands] and subpoenas, and where the boundaries of government power end and the protections of the First Amendment begin.” In their proposed brief, the 11 attorneys general argued that the Massachusetts and New York attorneys general were targeting critics and abusing their power, and argued that the politicized investigations would undermine public confidence. Echoing the concerns raised by the Texas federal district court, the 11 attorneys general argued that abstention under the Younger doctrine was not warranted because the defendants had commenced their investigations in bad faith.

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Prior to a status conference on April 21, 2017, the parties submitted a joint letter at the direction of the court in which Exxon proposed that jurisdictional discovery continue and the attorneys general requested that their motions to dismiss be decided after rebriefing under Second Circuit law. The attorneys general asserted that developments in the ongoing state court proceedings made Younger abstention particularly appropriate.