By Karen Savage
ExxonMobil wants a shareholder lawsuit filed against it thrown out.
The shareholders allege that current and former Exxon executives and board members failed to protect their investments and the company from the risks of climate change. Two similar cases Von Colditz v. Woods, et al, and Montini v. Woods, et al, were consolidated into this single action by a federal court judge in Texas last year. It is a derivative suit, which allows shareholders to sue on behalf of themselves and the corporation.
But the oil giant now argues that because it is incorporated in New Jersey, that state’s law should apply and an internal investigation showed the claims to be false.
“Dismissal is required where, as here, a majority of the board’s independent directors has determined in good faith, on the basis of a reasonable inquiry, that derivative litigation is not in the corporation’s best interests,” Exxon attorneys Daniel J. Kramer and Nina Cortell wrote in a motion to dismiss, which was filed Wednesday in the U.S. District Court for the Northern District of Texas, Dallas division.
Exxon told the court that it assembled a working group composed of board members, who with guidance from Simpson Thacher & Bartlett, a New York law firm, investigated the shareholders’ claims and found them to be “entirely without merit.”
Exxon says the finding is consistent with that of former Simpson Thacher & Bartlett partner and current New York Supreme Court Judge Barry Ostrager, who in December ruled that the New York attorney general’s office failed to prove that Exxon deceived investors after a 12-day trial.
Derivative suits often arise when fraud, mismanagement or dishonesty is ignored by a corporation’s officers and the board of directors.
In this case, shareholders allege Exxon violated federal securities law, breached fiduciary duties and wasted corporate assets by not disclosing what they knew about climate change. Chief executive Darren Woods and his predecessor, Rex Tillerson, are named in the suit.,
“Exxon has a well-documented history of intentionally misleading the public concerning global climate change and its connection to fossil fuel usage, as well as the impact the changing climate will have on Exxon’s reserve values and long-term business prospects,” shareholder Samuel Montini said in an amended complaint filed in September.