People v. PricewaterhouseCoopers LLP

At a hearing on August 29, 2018, a New York trial court ordered Exxon to produce 14 “readily available” or “easily produceable” spreadsheets that the New York attorney general sought in its investigation into Exxon’s climate change-related disclosures (but not 12 other spreadsheets requested by the attorney general that Exxon said would require extensive work). Exxon must also respond to an interrogatory to be served by the attorney general, which the attorney general indicated would concern whether Exxon applied a directive to use an “alternate methodology” to for accounting for greenhouse gas costs to assets and businesses across the company. In addition, Exxon agreed to provide documents it had already provided to the Securities and Exchange Commission but not to the attorney general. At the outset of the hearing, the judge told the attorney general that “this cannot go on interminably” and that “you’ve been investigating for two years. So you’re either going to file a case or you’re not going to file a case.” The attorney general indicated it was coming to an end of the investigation. Exxon told the court, “If they have a theory, they should bring a case. They should either put up or shut up.”

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The New York attorney general filed a motion to compel Exxon Mobil Corporation (Exxon) to produce certain documents in response to subpoenas issued by the attorney general in the investigation of Exxon’s climate change-related disclosures. The attorney general said Exxon had failed to produce cash flow spreadsheets used to make investment decisions, conduct corporate planning reviews, estimate company reserves and resource base quantities, and conduct asset impairment evaluations with respect to 26 major projects and assets “that are among the company’s largest and most at risk due to climate change.” The attorney general argued that the spreadsheets were highly relevant to whether and the extent to which Exxon incorporated a proxy cost for greenhouse gas emissions in its decision-making—which the attorney general characterized as a “key safeguard that Exxon has frequently touted.” The attorney general also said Exxon had continued to resist requests for documents provided by Exxon to the Securities and Exchange Commission (SEC) concerning impairment evaluations, reserves calculations, and climate change on the grounds of federal preemption. The attorney general argued that Exxon was precluded from arguing that SEC regulations preempted the attorney general’s investigation since the federal district court for the Southern District of New York had already rejected this claim in its March 2018 dismissing Exxon’s federal lawsuit challenging the investigation.

At a hearing on June 16, 2017, the New York Supreme Court indicated that the New York Attorney General could conduct interrogatories and depositions in its investigation of Exxon Mobil Corporation’s (Exxon’s) climate change-related disclosures but that the court would not require Exxon to respond to the attorney general’s second round of document requests. The court ordered Exxon to produce four witnesses to testify about their compliance with the attorney general’s earlier document requests, to produce an employee of a federal subsidiary for a deposition, and to update production of documents in accordance with the attorney general’s requests through 2016. The court indicated that the attorney general had broad power to propound the interrogatories. The court, which issued its orders in response to motions to quash (by Exxon) and to compel (by the attorney general), indicated that the matter should be taken to the Appellate Division if the parties disagreed with the scope of compliance with the attorney general’s subpoenas that the court was ordering.

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On June 2, 2017, the Attorney General filed papers defending the subpoenas and cross-moving to compel. The Attorney General said in a brief and affirmation that the investigation had uncovered evidence of potentially false and misleading statements regarding Exxon’s application of the proxy cost of greenhouse gases in its decision-making. The Attorney General argued that the new subpoenas were necessary to fill in gaps in Exxon’s production of documents related to the company’s risk-management practices, and that the testimonial subpoenas were also reasonably related to the investigation. The Attorney General disputed Exxon’s characterization of the subpoenas as unduly burdensome and as making improper demands for information. The Attorney General also argued that its prospective enforcement actions under New York’s anti-fraud statutes were not subject to federal preemption.

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On May 19, 2017, Exxon filed an order to show cause seeking to quash the document subpoena and four testimonial subpoenas that related to past subpoena compliance. Exxon argued that the Attorney General had not provided a factual basis to justify the demand for additional records and, moreover, that the Attorney General had impermissibly demanded that Exxon review and synthesize information and compile spreadsheets and summaries not already in existence. Exxon also contended that the Attorney General was probing areas foreclosed from state inquiry by federal regulation.

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On May 8, 2017, the Office of the New York State Attorney General served 10 subpoenas on Exxon Mobil Corporation (Exxon) in its investigation of Exxon’s climate change-related disclosures. One subpoena sought information and documents related to oil, gas, and other hydrocarbon projects approved, deferred, or declined by Exxon and “proxy costs” associated with those projects to reflect policies to stem greenhouse gas emissions. The subpoena also demanded information related to Exxon’s decisions regarding impairment or write-downs for oil and gas projects and Exxon’s estimates of its oil and gas reserves. In addition, the subpoena sought more recent documents responsive to the Attorney General’s November 2015 subpoena and documents provided to the U.S. Securities and Exchange Commission in its climate change investigation of Exxon. The other nine subpoenas were testimonial subpoenas.

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On December 1, the attorney general informed the court that though the parties had agreed in principle to a production schedule, they disagreed on “the parameters of what constitutes a reasonable production.” The attorney general asserted that Exxon continued “to insist on producing from a select group of custodians using search terms it has been advised repeatedly are inadequate.” Specific gaps mentioned in the attorney general’s letter to the court included documents regarding the proxy cost of carbon that Exxon said it used to integrate the impact of climate change into its business and information related to climate change and oil and gas reserves. The court scheduled a hearing for December 6.

On November 21, the New York State Supreme Court said it would deny the New York Attorney General's motion to compel a response to its investigative subpoena but that if the parties could not reach an agreement on a date for production, it would fix a date and, if necessary, “arbitrate what are reasonable or unreasonable search terms.”

In New York Supreme Court, the New York Attorney General moved to compel Exxon Mobil Corporation to respond to its November 2015 subpoena seeking climate change-related documents pursuant to New York anti-fraud laws. The attorney general said that approximately five months prior to its motion it had asked Exxon to prioritize production of documents concerning the company’s valuation, accounting, and reporting of its assets and liabilities, and the impact of climate change on those processes, but that Exxon had not cooperated with this request. The attorney general told the court that despite acknowledging in New York court that the subpoena was valid, Exxon was “effectively moving to quash the subpoena” in federal court in Texas. The attorney general attributed Exxon’s delay in responding to its prioritization request as an effort to “forestall judicial intervention” in New York until it obtained an injunction from the federal court.

The New York Supreme Court ordered Exxon Mobil Corporation (Exxon) and its accounting firm, PricewaterhouseCoopers LLP (PwC), to comply with a subpoena issued by the New York Attorney General to PwC in August 2016. The court rejected Exxon’s argument that it could withhold documents based on an accountant-client privilege under Texas law. The court concluded that Texas law would not preclude production of the requested documents, but that, in any event, New York law—which does not recognize an accountant-client privilege—was applicable.

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The New York attorney general filed an application for an order to show cause on after Exxon Mobil Corporation (Exxon) notified the attorney general's office that it intended to assert that some documents requested in the subpoena to PricewaterhouseCoopers LLP (PwC), Exxon's accounting firm, were shielded from disclosure by an accountant-client privilege. In its papers supporting its application, the attorney general said that PwC had served as Exxon’s independent auditor since before 2010 (the time period covered by the subpoena), a role in which PwC examined whether Exxon’s financial statement disclosures were supported by evidence. The attorney general said that PwC also served from at least 2008 to 2013 as global advisor and report writer for the Carbon Disclosure Project, a non-profit organization that functions as a global disclosure system for environmental information, including greenhouse gas emissions, from companies including Exxon.

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