Exxon readies for fight against activists
Oil company may test regulation of corporate speech
WASHINGTON – Imagine this storyline: One of the largest oil companies in the world becomes the victim of a left-wing conspiracy, funded by wealthy liberals who persuade Democratic attorneys general across the nation to sue the company to stop it from offering different views about climate change.
What sounds like the stuff of a bad Hollywood thriller is in fact the narrative Exxon Mobil’s attorneys are telling as they seek to defend the company from myriad lawsuits and investigations into what oil companies knew about climate change and when they knew it. With a surprising procedural victory
in a Texas court recently, Exxon is attempting to gain greater latitude in what it and other oil companies can say — or not say — about climate change and the impact on their businesses, seeking to build on legal rulings that have expanded corporations’ rights of free speech in recent years, legal scholars say.
The U.S. government has long limited First Amendment protections for corporations, prohibiting them from making false statements to further business interests — a staple of U.S. consumer protection laws going back to the days of snake oil salesmen peddling so-called magic elixirs. But Exxon’s case could test how far the courts are willing to go to uphold governments’ ability to regulate commercial speech.
‘An unusual claim’
Exxon is arguing that the state and local governments suing the company have gone too far, trying to impose an Orwellian code of conduct to drown out those who call attention to uncertainties about how climate change will play out over the long term and affect the global economy.
“Exxon is framing (climate change) as a legitimate political debate in which they are a participant, rather than a for-profit company trying to make a buck,” said Tamara Piety, a law professor at University of Tulsa. “There has been a growing movement (among corporations) to raise the First Amendment. If something can be proven to be unconstitutional, it’s completely off the table.”
Over the past two decades, companies have successfully used the free speech strategy to challenge government regulations on everything from the placement of workplace signs explaining employee rights to the distribution of patients’ medical data. A key win for corporate America came in the 2010 Citizens United case, when the Supreme Court ruled that limits on corporate spending in political campaigns violated companies’ free speech rights.
Now Exxon is seeking to expand corporate rights one step further, arguing that the government legal action, based on the company’s past statements, is little more than leverage to get oil companies to agree to a widearching climate change deal that would restrict what they can say about the issue — in violation “of Exxon Mobil’s constitutional rights.” That includes investigations launched by the New York and Massachusetts attorneys general into whether Exxon lied to shareholders and consumers about the risks of climate change to the environment and its business, and lawsuits filed by cities and counties in California and Colorado, which are seeking damages from Exxon and other oil companies for the costs of rising sea levels and increased wildfires.
Exxon in January asked a state court in Fort Worth to order more than a dozen city and county officials from California to sit for depositions by Exxon’s attorneys to determine whether they are conspiring with plaintiffs’ attorneys and environmentalist activists to force Exxon into accepting a deal. A New York federal judge in March dismissed a similar request by Exxon to depose the New York and Massachusetts attorneys general, ruling it was based on “extremely thin allegations and speculative inference,” but the Texas judge, R.H. Wallace Jr., decided to give the company more room to prove its claim, ruling in April that Exxon could begin making requests to depose specific officials.
Exxon declined to comment. But James Coleman, a law professor at Southern Methodist University in Dallas and a contributor to the conservative Federalist Society, said Exxon, which has come out in support of the Paris climate accords and a national carbon tax, is simply protecting its First Amendment rights to communicate about climate change and the effects on its finances as it sees fit.
“It’s an unusual claim (by Exxon), but it doesn’t mean it’s wrong,” he said. “The government can make you give accurate information, but the government can’t force you to say things you disagree with. For instance, the government couldn’t make Exxon say climate change is the defining challenge of our time, even if they consider it a fact.”
San Francisco and other California communities are challenging Wallace’s ruling in the Texas 2nd Circuit Court of Appeals, potentially setting the case on a path to the Texas Supreme Court. And considering the political makeup of the state’s high court, Exxon stands a good chance of winning its argument, said Tom McGarity, a law professor at the University of Texas, who sits on an advisory board to the California plaintiffs.
“It presents a very sympathetic venue,” he said. “It’s a pro-business Supreme Court.”
Activist conspiracy?
The case in Texas comes three years into a legal campaign against Exxon and other oil companies. In Exxon’s telling, it all stems from a meeting of environmental activists in the beach town of La Jolla, Calif., in 2012.
Activists and attorneys discussed a strategy for addressing climate change based on the tobacco lawsuits of the 1990s, which successfully argued tobacco companies were liable for smokers’ deaths because executives knew the risks but still claimed publicly they did not, according to an account of the meeting published by the Union of Concerned Scientists, an environmental group that helped organize the event
If Exxon and other oil companies could be shown to have known the risks to health and safety of climate change but did nothing to warn the public and investors, then perhaps activists could create a groundswell of public outrage to change the political and economic landscape for oil companies, much as they had for tobacco companies.
“We wrote up a report so other lawyers and policymakers could pick up on those lessons (from tobacco) and use them, like you would any science you would hope is actionable,” said Peter Frumhoff, head of policy and science at the Union of Concerned Scientists. “The first tenet of good science is being transparent.”
But the activists also gave Exxon a potential weapon to counterattack.
The company’s lawyers have focused on one line in the Union of Concerned Scientists’ account, in which activists describe how they could use litigation for “maintaining pressure on the industry that could eventually lead to its support for legislative and regulatory responses to global warming.” That game plan, Exxon lawyers said, was then adopted by government prosecutors, including the former New York Attorney General Eric Schneiderman, who recently resigned amid allegations of sexual abuse.
Wallace, the Texas judge, agreed with the company lawyers, writing that environmentalists who attended the La Jolla meeting “aimed to chill and suppress Exxon Mobil’s speech.”
California and Colorado officials dismiss Exxon’s legal maneuvers as little more than intimidation tactics aimed at frightening and bogging them down in paperwork. A spokesman for the New York Attorney General’s Office called Exxon’s strategy an attempt to “distract and deflect from the facts at hand.”
Within conservative circles, Exxon’s conspiracy message seems to be gaining traction.
Earlier this year, David Bookbinder, an attorney with the libertarian Niskanen Center, filed suit against Exxon and the Canadian oil company Suncor, claiming they were responsible for the costs sustained by Colorado local governments in fighting wildfires and other effects of climate change.
A few weeks later, he began seeing his name pop up on conservative websites, including the Daily Caller and one owned by the U.S. Chamber of Commerce. Articles suggested Bookbinder and his colleagues were part of a conspiracy funded by the Rockefeller Brothers Fund, a New York charity with more than $900 million in assets that is overseen by the descendants of the late oil tycoon John D. Rockefeller, whose Standard Oil was the precursor to Exxon Mobil.
The claim was based on a $200,000 grant the Niskanen Center received shortly before the Colorado lawsuit was filed. Bookbinder said the grant had nothing to do with the lawsuit and scoffed at the idea his plaintiffs were part of a conspiracy to damage Exxon.
“My clients don’t want Exxon out of business,” he said. “Then they don’t get paid.”
In a statement, the Rockefeller Brothers Fund said, “Litigation is one tool that can help to level the playing field by leaning into legal standards that are meant to serve the common good.”
Considering appeal
In its legal filings, Exxon maintains that the Rockefellers and hedge fund billionaire Tom Steyer, who is funding a campaign to impeach President Donald Trump, are behind the wave of litigation. Exxon lawyers cited a $30,000 campaign donation Steyer made to a former mayor of San Francisco shortly before that city filed suit, as well as a Columbia Journalism School investigation into how Exxon’s past statements questioning climate science conflicted with what its scientists were saying internally.
The Rockefeller Family Fund, another charity controlled by Rockefeller descendants, funded the Columbia investigation.
There’s nothing illegal about using money to try to influence a company’s behavior. But that’s beside the point for Exxon. Just as climate activists succeeded in convincing more Americans that climate change is a large and growing threat Exxon wants to promote the idea of a liberal conspiracy to undermine a fossil fuel industry that employs hundreds of thousands of people and fuels the U.S. and global economies.
Exxon is now considering an appeal of a ruling by the Massachusetts Supreme Judicial Court that found the state’s Attorney General’s Office had not violated the company’s constitutional rights when it demanded the company turn over documents. Such an appeal would go to the U.S. Supreme Court, where Exxon’s success in convincing the public of its liberal conspiracy narrative could make the difference between winning and losing.
“I don’t think the Supreme Court is completely oblivious to public opinion,” said Piety, the Tulsa law professor, “and the more Exxon can marshal public opinion, the better chance they have of convincing the courts.”