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. 

Lawsuit brought by municipalities in Puerto Rico seeking to hold fossil fuel companies liable for losses resulting from storms during the 2017 hurricane season and ongoing economic losses since 2017.

Municipality of Bayamón v. Exxon Mobil Corp.

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Federal Magistrate Said Puerto Rico Municipalities’ RICO and Antitrust Climate Claims Should Proceed Against Fossil Fuel Companies

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United States of America

Puerto Rico

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Justice is the ethical and political framework that addresses fairness, including issues of responsibility, rights, and structural inequity.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

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The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

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Extreme weather refers to events where a weather variable exceeds (or falls below) a threshold. Meaning it is significantly different from the average or usual weather pattern.

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Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

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Slow onset events evolve gradually from incremental changes over many years or from increased frequency or intensity of recurring events. As defined in the Cancun Adaptation Framework (2010), slow onset events include risks and impacts from rising temperatures, desertification, biodiversity loss, land and forest degradation, glacial retreat, ocean acidification, sea level rise, and salinization.

Federal Magistrate Said Puerto Rico Municipalities’ RICO and Antitrust Climate Claims Should Proceed Against Fossil Fuel Companies

Policy instrument

Risk

Impacted group

Just transition

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance