ExxonMobil Did Not Mislead Shareholders About Climate Risks, Rules New York Court

New York Attorney General Letitia James loses a trumped up fraud lawsuit against the oil company.

Grandstanding New York state Attorney General Eric T. Schneiderman began a case in 2015 against ExxonMobil in which he accused the company of lying to its shareholders about what it knew of the risks of climate change to its future profits. The attorney general's office calculated that the damage to shareholders could be as high as $1.6 billion.

After a three-week civil trial, state Supreme Court Justice Barry Ostrager today ruled, "The Office of the Attorney General failed to prove, by a preponderance of the evidence, that ExxonMobil made any material misstatements or omissions about its practices and procedures that misled any reasonable investor."

Basically Justice Ostrager reached the same conclusion I did four years ago about what reasonable investors could surmise from ExxonMobil disclosures. Back then I reported:

"Over the decades, company executives did frequently point to uncertainties in the developing climate science. But this seems have changed after the IPCC issued its Fourth Assessment of climate science in 2006 which stated:

'Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations.'

After that report, for the first time (that I could find at least), the company's 2006 annual report noted the risks of climate change to its business:

'Political and Legal Factors: The operations and earnings of the Corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political and legal factors including … laws and regulations related to environmental or energy security matters, including those addressing alternative energy sources and the risks of global climate change…'"

Justice Ostrager additionally pointed out, "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. ExxonMobil is in the business of producing energy, and this is a securities fraud case, not a climate change case."

According to CNBC, the case against ExxonMobil was dismissed "with prejudice" which means that it is unlikely Letitia James, the state's current attorney general, will seek to file another lawsuit against the company. Similar shareholder fraud lawsuits have been filed in Massachusetts, Texas, and New Jersey.

For what it's worth, since ExxonMobil began noting the risks of climate change in its annual reports, its share price has hovered between $56 to $102 and is currently trading at around $69.

Comments

[Geraje Guzba]

Ostrager, in my experience, is an imminently sensible, no-nonsense judge. Good to see him slap down this bullshit.

[Chipper Morning Wood]

As opposed to the some-nonsense judge that sentenced what's his name. You know, that guy that started that whatchamacallit site.

[darkflame]

The judge from the Silk Road case?

[Fist of Etiquette]

Over the decades, company executives did frequently point to uncertainties in the developing climate science.

Whose models have all since been proven ONE HUNDRED PERCENT accurate.

[yet another dave]

One hundred and eleventy percent!

[BigT]

Actually closer to 300% in terms of the projected T rise compared to the measured T rise.

[Square = Circle]

Now we're being told it's not so much that the models are inaccurate as that they have a GIGO problem.

Who knew climate systems would be problematically complex to model?

[mad.casual]

Who knew climate systems would be problematically complex to model?

You've gotta admit that its a good scheme. Old engineers and scientists could quibble about data and models but, at the end of the day, the bridges stood or fell and people got paid or lost their jobs. But if you extract it away from all reality perpetually 100 yrs. into the future you don't actually have to build any bridges, just oscillate between blaming the data, and blaming the models and continue raking in the dough.

[BYODB]

So, how long until we return to the good ol' days of global cooling?

They vacillate between diametric opposites so quickly it's impossible to tell what they're actually trying to say beyond 'humans have some effect on the environment'.

Which, of course, is the actual consensus rather than 'human's are definitely to blame for everything' which seems to be their default claim to government and media.

[Unicorn Abattoir]

With a margin of error of +/- 100%.

[Echospinner]

60% of the time it works every time.

[Enjoy Every Sandwich]

Wait until Greta hears about this! Another adolescent tantrum is no doubt coming soon.

[Anomalous]

How dare you!

[Sarah Palin's Buttplug]

What clown thought a self important scoldy teenage white girl was novel and worth paying attention to?

[mad.casual]

New Greta On The Shelf Doll Will Track Your Climate Sins - The Babylon Bee, still on top of things.

[Longtobefree]

Did I miss the part where New York will reimburse the legal fees?
Is there a permanent injunction to prevent future bullshit suits?
Does anyone care?

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

Isn't that what "dismissed with prejudice" means -- can't be amended and revived?

[MatthewSlyfield]

It doesn't mean they can't file other bogus lawsuits on other made up grounds.

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

Can't do nothing about that. I have heard of some inmates or other vexatious litigators who eventually have to have a judge's permission to file lawsuits (IANAL so that is some paraphrasing!) but I don't think any AG has ever reached that level.

[I'm Not Sure]

"The attorney general's office calculated that the damage to shareholders could be as high as $1.6 billion."

Attorney General Eric T. Schneiderman believes that a company has the responsibility to preserve the company's value for the benefit of shareholders?

Are the other progressives aware of this?

[MoreFreedom]

Sad to see that Democrats are using taxpayer money to attack rich companies to raise money. I suppose they thought that suing Exxon and putting it and all natural gas and gasoline producers out of business would lead to people complaining they can't buy gas, and forcing people to buy electric cars, even though most of them run on electricity generated by burning fossil fuels. That, or they'd expect Exxon to raise it prices (along with all other gasoline manufacturers) to cover the costs of being sued by the government.

The morality of attacking Exxon is also questionable, given that people's demand for gasoline is what causes Exxon to produce gasoline. The drivers make the most pollution.

Seems like a Democrat plan to control and further tax our energy use, via the courts and lawsuits on energy producers, so they get the money. That's tyrannical theft via government in my book.

[Square = Circle]

The morality of attacking Exxon is also questionable, given that people’s demand for gasoline is what causes Exxon to produce gasoline. The drivers make the most pollution.

^ This. It's like suing grape and grain producers for the social impacts of alcoholism. There are a couple of more agents in the cause-and-effect chain that have been leap-frogged over . . .

[BigT]

Alcoholism is a real harm. It's more like suing grape and grain producers because you had to take a pis.

[Square = Circle]

Alcoholism is a real harm, yes (almost certainly a greater harm than climate change, which isn't clearly a harm at all), but my point was that grape and grain producers meet many market demands, only some of which have to do with alcohol production, and even in that sector lots of alcohol is produced and used for purposes other than getting drunk.

I.e., it is the people getting drunk who are responsible for the alcoholism problem.

[BYODB]

Well, you can't get blood from a stone so it's little surprise they go after the person in the chain that actually has money.

It's essentially the same notion where they try to hold gun manufacturers liable for what people do with their product.

[TrickyVic (old school)]

""The morality of attacking Exxon is also questionable, given that people’s demand for gasoline is what causes Exxon to produce gasoline. The drivers make the most pollution.""

You beat me to it.

They are just providing a product that we consume. We would cry friggin foul if they stopped producing and sue them to force them to restart.

[creech]

Don't worry, in a few generations the gasoline producers will be out of customers. All the kids marching in the streets today against climate change have pledged never ever to drive a gasoline driven vehicle or fly in an airplane.

[Sevo]

And only use 'phones in granite cases.

[JWatts]

"All the kids marching in the streets today against climate change have pledged never ever to drive a gasoline driven vehicle"

Of course they expect their mom to be around driving them to the nearest climate protest or cool party.

[TrickyVic (old school)]

Yeah, they will just drive electric cars with lithium batteries while ignoring where the electricity and lithium come from. All the while ignoring where those old batteries will be discarded.

Ah, just kidding, they will scream to the high heavens about the industry sins required to make their form of transit happen. Just like they do now.

[Ron]

its like the cigarette suit they don't want to stop production they just want a new means of collecting monies without calling it a tax

[Uncle Jay]

"New York Attorney General Letitia James loses a trumped up fraud lawsuit against the oil company."

Well, so what?
Since when does telling the truth count in a New York City court house?

[Bubba Jones]

New case. Alarmism over global warming has artificially depressed the stock valuation. Investors were harmed. Lawsuit filed.

[El Oso]

'Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations.'

Ronny proves that a person can be wrong 100% of the time....

[BigT]

He was quoting the IPCC report. But, he is a warmist as well, just not as extreme.

[Square = Circle]

"Lukewarmist" it's known as. Observing that warming is happening, but not quickly enough to be a crisis.

Which is why the public discussion has turned from "it's happening too fast, which could be a problem," to "it's happening, and look at that crying little girl!"

[TrickyVic (old school)]

I'm Darthwarmist. Luke's father.

[darkflame]

nice.

[Dillinger]

i'll never believe you!

[TrickyVic (old school)]

Don't make me cutoff your hand.

[Jerryskids]

Well, two cheers for the New York AG losing a trumped up fraud lawsuit, but there's plenty more where that came from. Exxon only has a few tens of billions to defend themselves with, the government has an infinite supply. The government can afford to lose a thousand cases, they only need to win once. It'll be like the tobacco settlement, the government is desperate for revenue and they'll become more and more blatant about the "you've got money, we need it, hand it over" lawsuits until anybody with any appreciable amount of money wises up and gets the hell out. Out of business, out of this country, off this planet if need be.

[Square = Circle]

It’ll be like the tobacco settlement

Wasn't Al Gore bragging a number of years ago that he was going to repeat the tobacco settlement success with the climate change thing? I'm feeling too lazy to google it right now.

[BigT]

Gore, 1988:

'Throughout most of my life, I've raised tobacco,'' he told an audience in North Carolina. ''I want you to know that with my own hands, all of my life, I put it in the plant beds and transferred it. I've hoed it. I've chopped it. I've shredded it, spiked it, put it in the barn and stripped it and sold it.''

If there is a more hypocritical a-hole in the USA, I don't know who it is.

[Square = Circle]

And I have to say, in my gut I don't believe a word of "with my own hands, all of my life, I put it in the plant beds and transferred it. I’ve hoed it. I’ve chopped it. I’ve shredded it, spiked it, put it in the barn and stripped it and sold it."

But maybe he's speaking metonymically about his hired farm hands.

[TrickyVic (old school)]

""I’ve hoed it. ""

That's when Bill Clinton's ears perked up.

[BYODB]

Yes, Al Gore did indeed 'help' a few state AG's to go after oil companies like tobacco companies.

Just one report of it, there are others

Of note:

The similarities to the tobacco lawsuits end there. The biggest difference is party politics: AGs United for Clean Power is made up exclusively of Democratic officials. “All 50 states were involved in the tobacco settlement in 1998,” says Nolette. “This coalition just helps to show how AGs have become entrenched in the partisan, ideological landscape.”

And they wonder why they continually fail.

[Dillinger]

what's that chick gonna do with her sign now?

[Jerry B.]

More of Democrats’ effort to govern by lawsuit. May all the others meet the same fate at some level.

[Tom Bombadil]

"ExxonMobil is in the business of producing energy,"

ExxonMobil is not in the business of producing energy. They are in the business of producing fuels. I, and every other human on Earth are in the business of producing energy from those fuels. "We" are also responsible for producing the dreaded CO2 emissions.

[Square = Circle]

ExxonMobil Chemical is a petrochemical company which was created by merging Exxon's and Mobil's chemical industries. Its principal products includes basic olefins and aromatics, ethylene glycol, polyethylene, and polypropylene along with speciality lines such as elastomers, plasticizers, solvents, process fluids, oxo alcohols and adhesive resins. The company also produces synthetic lubricant base stocks as well as lubricant additives, propylene packaging films and catalysts. The company was an industry leader in metallocene catalyst technology to make unique polymers with improved performance.[citation needed] ExxonMobil is the largest producer of butyl rubber.[120]

Infineum, a joint venture with Royal Dutch Shell, is manufacturing and marketing crankcase lubricant additives, fuel additives, and specialty lubricant additives, as well as automatic transmission fluids, gear oils, and industrial oils

Hence my grape-and-grain producers example above - it's not event the case that Exxon only produces things for people to burn. It makes things out of oil and nat gas. Some of those things are fuels people use for various purposes.

[Kazinski]

"For what it's worth, since ExxonMobil began noting the risks of climate change in its annual reports, its share price has hovered between $56 to $102 and is currently trading at around $69."

I hope you aren't trying to associate Exxon's share price with global warming risk. Over that same period oil prices have ranged between 30 and 140bbl and are currently around 60.

[Brett Bellmore]

"For what it's worth, since ExxonMobil began noting the risks of climate change in its annual reports"

Technically, they're not noting the risks of climate change. They're noting the risks of legislation premised on climate change. Which is why they listed it under "political and legal" risks.

This risk, unlike the risks of climate change itself, is very well established indeed.

[Old Smokin' Egg]

As a XOM shareholder, I'd very much like to be able to join a class-action suit against James, for diminishing the value of my shares by forcing the company to incur the expense of defending against this baseless lawsuit.

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