Exxon won — an example of stupidly conceived — government-sponsored litigation

12 December 2019

From my attorney's perspective

Government debases itself, when it misuses law's intent just to "get" someone whom it does not like.

Here's the background

The State of New York concocted a legally silly case against Exxon, and then lost it with "prejudice".

"Prejudice" is legal jargon that means a judge was apparently so irritated with New York's incompetently delivered bullshit — that his judgment barred the state from repeating its harassment of Exxon (in the future) based on similarly foolish grounds.

Was this a noble public interest failure on New York's part?

Hardly.

Here is what New York said that it was trying to do, when it sued Exxon regarding climate change:

The $1.6 billion lawsuit brought by the New York attorney general’s office alleged that Exxon deceived investors about the true cost of climate change.

The trial, which began in October and was the first climate fraud lawsuit to go to trial, was the result of a four-year investigation.

“Despite this decision, we will continue to fight to ensure companies are held responsible for actions that undermine and jeopardize the financial health and safety of Americans across our country, and we will continue to fight to end climate change,” Attorney General Letitia James said in a statement following the verdict.

AG James' justification does not sound bad, until . . .

. . . one sees how New York went about demonstrating its case:

Then-New York Attorney General Eric Schneiderman announced his investigation of the company in 2015.

At that point, the charge was broader, claiming that the company knew about the impact of carbon emissions on climate change for decades but covered it up.

In the years since, the case narrowed in scope.

Ultimately, it was under New York’s Martin Act — a 1921 law meant to protect investors from false statements from corporations, even if the company wasn’t intentionally trying to be deceptive.

“This is a case about the disclosures ExxonMobil made about its use of a cost of carbon to hedge against the risk of more exacting regulations and what a reasonable investor would have understood those disclosures to mean,” the Oct. 7 pretrial memo read.

“By representing that it was applying higher projected carbon costs than it was actually using, ExxonMobil made its assets appear significantly more secure than they really were, which had a material impact on its share price. In so doing, ExxonMobil defrauded its investors under the Martin Act.”

In his 55-page ruling, Ostrager said his verdict pertained only to whether or not Exxon deceived investors.

“Nothing in this opinion is intended to absolve ExxonMobil from responsibility for contributing to climate change through the emission of greenhouse gases in the production of its fossil fuel products,” he wrote.

“ExxonMobil is in the business of producing energy, and this is a securities fraud case, not a climate change case.”

Perverse legal approach

Evidently, New York struggled to come up with legal justification to get Exxon. This being so because law is written by rich corporations and people.

There is nothing, we can intuit, under the existing state or federal legal regime that might have held Exxon accountable for allegedly wrecking the planet that airs, feeds and waters us.

Consequently, New York's attorney general's office decided to use the state's obscure 1921 statute to zing Exxon for:

allegedly misleading shareholders

about

the presumably increased financial risks of investing

under

global warming's (equally presumed) risk-enhancing umbrella.

Can you imagine trying to "preponderantly" demonstrate . . .

. . . that:

the unknown probability of being caught out in lies

about the actualities (whatever those turn out to be)

of global warming's (again presumed) magnitude

would

reduce Exxon's profitability

and

accompanying shareholder return

to such a large degree

and

in a somewhat calculable way —

so that

a (presumably) lowered investor return

would provably exceed

random fluctuations of ordinary investment profits —

in such a way that

a reasonable investor

would have changed her (past circumstances) mind

about

buying Exxon stock?

In addition to those insuperable hurdles of proof

Contemplate the divide between New York's presumed purpose and its utilized means.

Did New York's complaint have anything to do with moral rectitude regarding climate change itself or the planet's health?

Obviously not.

We are forced to the unseemly recognition that New York used the excuse of protecting shareholders' financial health:

most of those being also rich

and

presumably capable of looking out for themselves

to thrash corporate Exxon

for

an alleged shareholders-treatment wrong

that virtually no one else in the state

actually gives a darn about.

There is professionally honorable legal creativity.

And there is bullshit.

This was bullshit.

The moral? — Government that pursues "noble" causes — via unseemly and twisted means . . .

. . . is not any better than the alleged demons that it chases.

One of the depressing aspects of modern American culture is that it lacks integrity virtually everywhere.

PeteFree.com

Exxon won — an example of stupidly conceived — government-sponsored litigation