Texas Court OKs Exxon Attempt to Challenge California Climate Plaintiffs

A judge has ruled that Texas has jurisdiction over municipal officials in California who have filed suit against Exxon and other oil companies for climate change-related damages.

Agreeing with claims made by Exxon in a petition submitted earlier this year, Tarrant County District Judge R.H. Wallace, Jr. last week gave the oil giant the go-ahead to ask the Texas court for permission to depose officials from California municipalities that have filed climate liability lawsuits against the company.

If the effort succeeds, it could have a profound chilling effect on communities or anyone making liability claims, experts say. A federal judge has already rejected Exxon’s argument that climate investigations violate the company’s First Amendment rights.

“It’s a very bold and provocative argument that in my view is really about harassing the plaintiffs and the plaintiffs’ lawyers, not about somehow preserving some robust sense of free speech,” said Ann Carlson co-director of the UCLA School of Law’s Emmett Institute on Climate Change and the Environment.

In the petition, Exxon argued that California does not have personal jurisdiction over the company, and therefore would not be the appropriate forum in which to litigate the company’s anticipated claims.

By granting jurisdiction in Texas, Wallace has also cleared the way for Exxon to ask the Texas court to order the California municipalities to turn over documents related to its potential claims. Exxon may also ask the court to depose attorney Matthew Pawa, who is representing the cities of Oakland and San Francisco.

Exxon contends that Pawa is spearheading a wave of suits that violate its Constitutional rights and alleges that the California cases are part of a large-scale conspiracy by environmental activists and government officials seeking to penalize the company for its views on climate change.

“The court has here asserted that Texas has specific personal jurisdiction over California public officials for suits filed in California on the remarkable grounds that because Exxon is headquartered in Texas, all of its free speech activities have taken place there,” said Carroll Muffett, president of the Center for International Environmental Law.

“The implications of this are really profoundly chilling for anyone who would hold any company accountable in any state for misleading consumers or investors about risks to the products or risks to the company and that is at heart what all of these suits are about,” said Muffett, who added that taken to its logical conclusion, the order means any company headquartered in Texas or with a subsidiary in the state can investigate and countersue anyone who takes legal action against it in other states.

In its petition, Exxon told the judge that law enforcement tactics and litigation in California are abusive and an attempt “to stifle ExxonMobil’s exercise, in Texas, of its First Amendment right to participate in the national dialogue about climate change and climate policy.”

Wallace agreed, ruling that the matter should be decided in Texas.

“A violation of First Amendment rights occurs where the targeted speech occurs or where it would otherwise occur but for the violation,” said Wallace in the document, which appears to have been drafted by Exxon and signed off on by the judge with minimal editing.

Carlson said the motion, and the court’s approval, is highly unorthodox.

“It’s obvious that the oil companies were venue shopping, looking in Texas where they know they have a friendly judge,” said Carlson.

Carlson said the decision will not likely survive appeals, but Exxon may also be trying to scare off other cities who are considering climate litigation.

“The questions that the defendants are supposedly seeking to answer in the discovery are not really relevant to the underlying legal claims,” she said. “Part of the strategy may be to say, ‘if you sue us, we’re going to make your life as uncomfortable as possible’.”

Exxon did not respond to a request for comment, but said in the petition that it will use information gained during the discovery to “determine whether legal action is warranted and perpetuate evidence for a likely lawsuit in Texas.”

Exxon also alleges that a “disconnect” exists between climate change-related harms outlined by the municipalities in the suits and bond disclosures given to their investors, which “are silent or express uncertainty about such harms.”

California officials say that’s not true. A study released on Monday by a former head of the Securities and Exchange Commission’s municipal bonds division also concluded the oil company’s claims are unfounded.

“Exxon’s claims in Texas, and the findings and conclusions, which were proposed by Exxon, are as inaccurate and deceptive as their decades-long campaign to mislead the public about their role in causing sea level rise and climate change,” said Serge Dedina, Mayor of Imperial Beach, who said the city is appealing the decision.

“Exxon’s attack on the California cities and counties that have sued Big Oil is part of their usual playbook,” said John Coté, communications director for the San Francisco city attorney’s office.

Coté said Exxon has used similar tactics against attorneys general who are investigating the company for possible climate change-related fraud.

After learning it was under investigation by Massachusetts Attorney General Maura Healey and New York Attorney General Eric Schneiderman for possible climate change-related fraud, Exxon sued the attorneys general.

That case—which was initially filed in Texas and later transferred to a New York court—was recently dismissed by a U.S. District Judge Valerie Caproni. In her decision, she rejected claims by the company that its First Amendment rights were being violated.

Exxon also tried to sidestep Healey’s investigation in Massachusetts, where earlier this month, the Massachusetts Supreme Judicial Court affirmed a lower court decision compelling Exxon to comply with the investigation and turn over documents related to the impact of its products on climate change. The court also rejected a petition by Exxon asserting that Healey does not have jurisdiction over the company.

Muffett said the Texas judge has taken a remarkable leap of legal logic.

“To paraphrase the relevant standard of review under Texas law, no reasonable and fair minded juror could have found for Exxon on this flimsy evidence and Rube-Goldbergian legal theory,” said Muffett. “Judge Wallace’s findings of fact in this case are clearly wrong and manifestly unjust. I really don’t see how these finding of fact or conclusions of law can withstand serious scrutiny by an impartial court upon review.”

Carlson said she finds it particularly ironic that Exxon is trying to use the court system to dissuade the California municipalities from pursuing legitimate litigation by claiming its First Amendment rights are being violated simply because the plaintiffs are exposing its contradictory behavior.

San Francisco is one of the municipalities appealing the judge’s order.

“These proceedings in Texas are simply a smokescreen,” said Coté. “The oil industry has known about climate change for decades, they knew their products were causing it, and they misled the public about it. No legal shell game in Texas is going to change that.”