In California Climate Cases, Jurisdictional Battle Takes Center Stage

California counties and cities suing the fossil fuel industry for climate damage are fighting back against the industry’s attempts to move their cases from state to federal court, a jurisdictional tug-of-war likely crucial to the cases’ success. In two separate hearings in mid-February, two U.S. District Court judges heard both sides in hearings with the defendant companies arguing the plaintiffs’ complaints are inherently about global fossil fuel emissions, raising questions about federal energy policy and market conduct outside of California.

The cities of San Francisco and Oakland, as well as the counties of Marin and San Mateo and the city of Imperial Beach argued their claims arise under state nuisance law and should be moved back to state court.

Both hearings were held in the U.S. District Court for the Northern District of California, with Judge William Alsup hearing the San Francisco and Oakland cases and Judge Vince Chhabria hearing the three others. The timetable for the judges’ decisions is uncertain.

In the hearing for the San Mateo cases on February 15, Judge Chhabria sounded skeptical of the fossil fuel industry position, which was presented by Chevron lawyer Theodore J. Boutrous, Jr. “I sympathize with your argument to a point. This certainly feels like a national issue,” the judge said initially, but went on to question key tenets of the defendants’ argument.

The defendants argue that federal common law must govern the plaintiffs’ claims, which raise federal issues, that the Clean Air Act completely preempts those claims, that the claims implicate defendant activity on federal lands and that the lawsuits involve bankruptcy proceedings—defendant Peabody Coal has successfully argued its bankruptcy shields it from previous liabilities and was released from the case.

But Judge Chhabria challenged several of these points. He said the Clean Air Act does not completely preempt the plaintiffs’ claims and  said state courts are capable of deciding preemption questions. The judge said federal common law doesn’t exist in this case and so the question becomes whether existing regulations allow for state law nuisance actions. “That is a straight preemption question that needs to be decided by the state court,” Chhabria said.

The California plaintiffs say their complaint arises under well-established state tort law. The core issue is not energy policy and regulation, but rather the defendants’ deceitful promotion of a harmful product and product liability tort is traditionally the domain of state law. For example, California lead paint litigation proceeded under California tort law. Like the lead paint manufacturers, the fossil fuel defendants knowingly sold and marketed a harmful product while concealing the danger, the plaintiffs say.

“Whether the lawsuits are in state court or federal court, we have a responsibility to protect our residents, businesses, roads, and other facilities from the costs and damage associated with rising sea levels. Our taxpayers should not be burdened with those costs when the damage is being caused by greenhouse gas pollution from these fossil fuel companies’ products,” plaintiffs said in a joint statement. “They have known about the damage their products cause for nearly 50 years, and they not only failed to warn people about it, but they actively worked to deceive the public, press, and policymakers about those impacts.”

Regardless of the forum that is ultimately selected, the cases would proceed under state common law. Defendants are resolute in their belief that they have a right to a federal forum, and will likely seek an appeal if the cases are remanded to state court. At the conclusion of the San Mateo hearing, BP lawyer Jonathan Hughes requested the court grant a stay on mailing a remand order so defendants could proceed with an appeal, if necessary.