Municipality of Bayamón v. Exxon Mobil Corp.

The federal district court for the District of Puerto Rico dismissed Puerto Rico municipalities’ federal and Puerto Rico law claims that fossil fuel industry defendants misrepresented the climate change-related risks of their products, which led to destructive hurricanes in 2017 that caused extensive damages. First, the court found that it could exercise personal jurisdiction over Exxon Mobil Corporation, Shell PLC, BP PLC, Motiva Enterprises LLC, Chevron Corporation, and ConocoPhillips as to all of the municipalities’ claims. The court dismissed all claims against Occidental Petroleum due to insufficient service of process and all claims against Rio Tinto PLC and BHP Group for lack of personal jurisdiction. The court also found that it lacked personal jurisdiction over American Petroleum Institute (API) for the federal antitrust and Puerto Rico law claims but that it had jurisdiction for claims against API under the Racketeer Influenced and Corrupt Organizations Act (RICO). On the merits, the court concluded that claims under RICO, federal antitrust law, and Puerto Rico law were time-barred under the applicable statutes of limitations. The court found that there was “overwhelming evidence of public knowledge of articles, reports, and cases making the connection between Defendants and Plaintiffs’ claims” so that by September 2021, four years after the 2017 hurricanes, the plaintiffs knew or should have known both that they suffered injury and also whom to sue. The court concluded that the continuing tort and related doctrines did not apply; the court also found that equitable tolling based on alleged fraudulent concealment or on more general equitable tolling principles would not apply. The dismissals of claims on jurisdiction and service of process grounds were without prejudice; the dismissals of claims as time-barred were with prejudice.

–

–

–

–

–

The court directed each side to file a brief on how the Supreme Court's decision in Fuld v. Palestine Liberation Organization regarding the Fifth Amendment's limits on the exercise of personal jurisdiction by federal courts affects this case.

–

–

A federal magistrate judge in the District of Puerto Rico recommended that the district court deny fossil fuel companies’ motions to dismiss Racketeer Influenced and Corrupt Organizations Act (RICO) and antitrust claims brought by Puerto Rico municipalities, but recommended dismissal of claims brought under Puerto Rico law. The magistrate described the municipalities as claiming that the defendants “engaged in a decades-long campaign to misrepresent the dangers of carbon-based and fossil fuel products which they marketed and sold” and that this conduct “ultimately led to the catastrophic destruction brought about by” Hurricanes Irma and Maria in 2017. Regarding personal jurisdiction, the magistrate judge found that the municipalities adequately pleaded that the defendants marketed, promoted, and sold products in Puerto Rico in satisfaction of the “purposeful availment” test; that these alleged activities were sufficiently related to the municipalities’ claims of a disinformation campaign; and also that the exercise of jurisdiction was reasonable. The magistrate recommended further discovery as to the jurisdictional issues (including with respect to certain defendants’ activities in Puerto Rico). The magistrate also recommended that a determination of RICO jurisdiction be deferred until after completion of jurisdictional discovery. The magistrate recommended dismissal of Occidental Petroleum due to improper service. Regarding the defendants’ statute of limitations arguments, the magistrate recommended that the motion to dismiss the claims as time-barred be denied because the municipalities sufficiently alleged that the defendants “engaged in a continued pattern of unlawful acts or omissions which cause foreseeable damages” and, alternatively, recommended that the motion be denied based on the doctrine of equitable tolling due to the defendants’ alleged fraudulent concealment of a disinformation campaign. The magistrate also concluded that the complaint adequately alleged the elements of RICO claims, including proximate causation, conspiracy, and the existence of an “enterprise” based on allegations that the American Petroleum Institute’s (API’s) and Global Climate Coalition’s (GCC’s) purpose was “to engage in a propaganda campaign to misrepresent the effects of fossil fuels on climate change.” Although the magistrate found that the municipalities’ allegations fell short of the heightened pleading standard for fraud, the magistrate recommended that the court allow the municipalities to conduct discovery on the RICO claims, finding that the municipalities sufficiently pled that information pertaining to the racketeering activity was likely under the defendants’ control. The magistrate rejected, at this stage of the litigation, the arguments that because the RICO claims were based on allegations regarding membership in API and GCC and the defendants’ public statements on climate change, the First Amendment and Noerr-Pennington doctrine (which protects entities who “join together to influence government action—even if they seek to restrain competition or to damage competitors”) barred the claims. The magistrate noted that the conduct alleged by the plaintiffs would not be protected under the First Amendment or shielded by Noerr-Pennington immunity. The magistrate recommended dismissal, however, of claims under RICO that required that the harm to the municipalities be alleged to result from the defendants’ acquisition or control over the enterprises or the use or investment of income derived from racketeering activities. The magistrate also recommended dismissal of all RICO claims against API, finding that the municipalities could not seek a remedy against API both as an “enterprise” and as a “person” subject to RICO liability. The magistrate also found that the municipalities could only bring the claims “as to their own proprietary rights” and not on behalf of their residents. For the municipalities’ antitrust claim, the magistrate found that the pleading of the existence of an anticompetitive agreement and an antitrust injury was sufficient to survive dismissal. Although the magistrate concluded that federal law did not preempt the municipalities’ nine claims under Puerto Rico law, the magistrate recommended dismissal of all nine causes of action for failure to state a claim.

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–