Judge Agrees to Divest from Exxon Before New York’s Climate Fraud Case

A New York judge agreed to sell his stock in ExxonMobil to resolve a potential conflict of interest flagged by the New York attorney general’s office after it filed its lawsuit alleging the oil giant misled investors over climate change risk.

Responding to the state’s request that he recuse himself from the case, Judge Barry R. Ostrager said in a hearing Wednesday in New York Supreme Court that he would sell his Exxon stock if New York withdraws its request and waives any claim of conflict of interest.

Ostrager, 71, had held up to $250,000 in Exxon shares, according to the judge’s latest financial disclosure form filed with the Ethics Commission for the Unified Court System.

New York Attorney General Barbara Underwood recently filed the suit against Exxon under the state’s Martin Act, alleging the company deceived and defrauded investors by not being transparent about the financial risk it faces from climate change.

Ostrager had presided over the subpoena proceedings throughout the state’s investigation of Exxon, which lasted more than two years, and both sides had waived objections to Ostrager’s financial disclosures during the investigation.

But the AG’s office argued that Ostrager could not be impartial in overseeing the lawsuit given his interest as an Exxon shareholder. “A justice who is an Exxon shareholder, or was an Exxon shareholder during the period in question, would have economic interests in both the subject matter in controversy and in the party defendant,” the letter said.

When Ostrager offered to sell his Exxon stock at Wednesday’s hearing, the state attorneys initially tried to press their case for recusal. Ostrager then became annoyed and called the state’s request “gamesmanship and judge-shopping.” He said the state could appeal his decision to a higher court.

But following a short break, the state attorneys said they would accept Ostrager’s offer.

Manisha Sheth, New York’s deputy attorney general for economic justice, said the state would accept the proposal and would not seek appeal, “assuming your honor divests your honor’s shares in Exxon as well as any interest in the proceeding.”  

Ostrager indicated at the end of the hearing that he wants the trial to conclude in 2019.