Federal appeals court rules against oil companies An appeals court said two climate change lawsuits against the oil industry should be heard in state court. Oil companies have been fighting such cases on jurisdictional grounds for years and losing.

Federal judges deal the oil industry another setback in climate litigation

Cars drive on flooded streets as Tropical Storm Henri approaches, in Hoboken New Jersey on August 22, 2021. Kena Betancur/AFP via Getty Images hide caption

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Cars drive on flooded streets as Tropical Storm Henri approaches, in Hoboken New Jersey on August 22, 2021.

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A federal appeals court has ruled that a pair of lawsuits that seek to hold oil companies accountable for the effects of climate change should be heard in state courts, striking down efforts by the fossil fuel industry to get the cases in front of federal judges.

While climate change "is an important problem with national and global implications," cases cannot be transferred to federal courts "just because they are important," the U.S. Circuit Court of Appeals in Philadelphia said August 17.

Lawyers representing the state of Delaware and the city of Hoboken, N.J., sued more than a dozen oil companies and an industry trade group in 2020 for allegedly misleading the public about the role that fossil fuels play in causing climate change. The Delaware and Hoboken lawsuits are among more than 20 similar cases filed across the United States in the last several years.

Fossil fuel companies have largely unsuccessfully pushed to have the lawsuits tried in federal court, rather than state courts, arguing that the issues under litigation are of national significance. The ruling issued on August 17 marked the fifth time that a federal appeals court has blocked the oil industry from moving such cases out of state courts, says Karen Sokol, a professor at the Loyola University New Orleans College of Law.

"The first cases were filed in the summer of 2017, and the [fossil fuel] industry has kept this fight up in jurisdictional battles now for five years," Sokol says. "It's saying in its public messaging that these cases are baseless, but it's doing everything it can to keep them out of discovery and trial in state court."

Delaware and Hoboken have accused oil companies and the American Petroleum Institute (API) of violating various state statutes, including laws against consumer fraud. Consumer protection cases, including lawsuits involving alleged corporate misinformation campaigns by tobacco companies, have historically been tried in state court.

"Oil companies ask us to hear two sweeping climate-change suits. But the plaintiffs filed those suits in state court based only on state tort law," Judge Stephanos Bibas wrote for the Court of Appeals in Philadelphia.

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Delaware has said sea level rise caused by climate change will threaten more than $1 billion in property value, with flooding expected to hit areas with high poverty rates especially hard. Hoboken said it is seeking hundreds of millions of dollars to cover current and future costs associated with climate change adaptation, remediation and economic loss.

A spokesperson for Delaware Attorney General Kathy Jennings said her office agreed with the ruling from the appeals court.

Chevron spokesperson Bill Turenne said the cases belong in federal court "due to their sweeping implications for national energy policy, national security, foreign policy, and other uniquely federal interests.

"Climate change is a global phenomenon requiring a coordinated federal policy response, not a patchwork of state lawsuits," Turenne said in an emailed statement. "As the Court noted, [the] ruling was on a jurisdictional question; we look forward to prevailing on the overall merits of these cases."

Ryan Meyers, general counsel at API, called the lawsuits "an enormous waste of taxpayer resources." Climate change policy is ultimately "an issue for Congress to debate, not the court system," he added.

An Exxon Mobil spokesperson said the company is "reviewing the ruling and evaluating next steps." Other oil companies named in the lawsuits filed by Delaware and Hoboken either declined to comment or did not respond to messages seeking comment.

Climate advocates welcomed the appeals court decision. "The polluters that spent decades lying about their products' role in fueling the climate crisis are terrified of having to face consequences for their actions, and have tried desperately to avoid state court," Richard Wiles, president of the Center for Climate Integrity, said in a statement. "But once again, appeals courts have batted down Big Oil's attempts to escape accountability."

In addition to fighting lawsuits on jurisdictional grounds, the fossil fuel industry is pushing for states to pass laws that would block municipalities from suing companies for damages related to climate change, according to the Center for Climate Integrity, a watchdog group.

The U.S. Chamber of Commerce Institute for Legal Reform has advocated for such measures. "Armed with novel theories of liability and supported by throngs of private contingency fee counsel, municipal plaintiffs remain an ongoing and disruptive threat to business," the group said in a 2021 report.

Since 2019, municipal litigation preemption bills have been introduced in Arizona, Florida, Ohio and Kansas, and one has passed in Texas, according to the Center for Climate Integrity.

"These are multiple fronts to ensure that [cases] never get to the merits," says Sokol, adding that the fossil fuel industry is looking for "blanket immunity" from corporate accountability.