In re Exxon Mobil Corp. Derivative Litigation

In a consolidated stockholder derivative action against Exxon Mobil Corporation board members and executive officers (Exxon), the federal district court for the District of New Jersey granted Exxon’s motion to transfer venue to the Northern District of Texas. The case involves allegations that the defendants misrepresented the costs of climate change regulations and did not appropriately project future costs of carbon and greenhouse gas emissions. A related federal securities action and additional shareholder derivative actions are pending in the Northern District of Texas. The New Jersey federal court concluded that private and public interests weighed in favor of transfer.

The plaintiffs opposed Exxon's motion to transfer venue, arguing that their derivative complaint was the only one to plead that demand for litigation was wrongfully refused and that they should not be penalized for allowing Exxon time to consider and respond to their litigation demands. They also argued that private (e.g., their forum preference) and public factors (New Jersey’s interest in litigation regarding a well-known company incorporated within its jurisdiction) weighed heavily against transfer. In addition, the plaintiffs argued that a stay was not warranted.

Exxon Mobil Corporation (Exxon) moved to transfer a consolidated shareholder derivative action in the federal district court for the District of New Jersey to the Northern District of Texas, where a putative federal securities class action filed in 2016 and a consolidated federal derivative action filed in 2019 are pending. Exxon told the District of New Jersey that the cases in Texas raised “substantially the same allegations and same causes of action against the same defendants,” including allegations that Exxon officers made misleading statements about Exxon’s use of “proxy costs of carbon.” Exxon requested, in the alternative, that the District of New Jersey stay proceedings until the first-filed Texas suits were resolved.

An Exxon shareholder filed a shareholder derivative lawsuit against Exxon board members and executive officers in the federal district court for the District of New Jersey. The shareholder asserted that from 2014 through 2016 Exxon “was the lone ‘supermajor’ oil and gas company that refused to writedown its assets during the prolonged price collapse,” until the company disclosed a $2 billion impairment charge in January 2017. The complaint alleged that the defendants knew or were grossly negligent or reckless in not knowing that Exxon’s actual investment and asset valuation processes did not incorporate proxy costs of carbon in a manner that was consistent with Exxon’s public representations and internal policies; that Exxon did not incorporate proxy costs into the impairment evaluation processes; and that certain operations and assets were operating at a loss or impaired. The shareholder further alleged that the defendants’ misconduct caused Exxon to expend resources defending itself in a related securities class action suit in federal court in Texas and in an investigation and lawsuit by the New York attorney general. The shareholder also said the defendants’ actions “irreparably damaged Exxon’s corporate image and goodwill.” The complaint asserted claims of breach of fiduciary duty, waste of corporate assets, and unjust enrichment, as well as claims under the Securities Exchange Act of 1934 against certain defendants who are also defendants in the related securities class action.