Exxon's case against Massachusetts Attorney General Maura Healey and New York Attorney General Eric Schneiderman was dismissed.A federal judge dismissed Exxon's case against Massachusetts Attorney General Maura Healey and New York Attorney General Eric Schneiderman. Photo credit: Drew Angerer/Getty Images

By Karen Savage

A federal judge dismissed Exxon’s lawsuit attempting to stop investigations by two state attorneys general into potential climate fraud by the company, which the company claimed are politically motivated and in violation of its Constitutional rights.

Ruling that Exxon’s allegations against Massachusetts Attorney General Maura Healey and New York Attorney General Eric Schneiderman are “implausible” and brought “on the basis of extremely thin allegations and speculative inferences,” U.S. District Court Judge Valerie Caproni dismissed the suit with prejudice on Thursday.

In the suit, Exxon claimed the investigations are an abuse of the AGs’ political positions and violated the oil giant’s First, Fourth and Fourteenth amendment rights. The case was first filed in the U.S. District Court for the Northern District of Texas in June 2016, but was transferred to New York last year.

In Thursday’s decision, Caproni called Exxon’s allegations that the investigations are politically motivated a “wild stretch of logic.”

She wrote that the company’s claims all centered around a single press conference and a handful of meetings with climate activists. Caproni said the company relied on a narrative that was “the result of cherry-picking snippets from the transcript of the press conference.”

To further illustrate her point, Caproni included the complete quotes from Healey and Schneiderman in her ruling.

“Nothing that was said can fairly be read to constitute declaration of a political vendetta against Exxon,” wrote Caproni, who said Exxon’s arguments also fail “to tie the AGs to any improper motive, if it exists” among activists.

Caproni said while Exxon says it shares Schneiderman’s and Healey’s belief that climate change is real,  that does not erase the possibility that Exxon may have “sowed confusion” to fraudulently bolster its bottom line.

She said the company’s communications with outside groups are potentially relevant, particularly if Exxon “knowingly helped climate-change deniers craft a messaging strategy that was consistent with Exxon’s political desire to avoid regulations harmful to its economic interests but inconsistent with its internal understanding of climate change.”

The ruling was welcome news for the attorneys general, who have expended significant energy defending themselves from Exxon’s legal pushback. At one point the Texas federal judge nearly required Healey to submit to a deposition by Exxon.

“Exxon has run a scorched earth campaign to avoid answering our basic questions about the company’s awareness of climate change,” Healey said in a statement. “Today, a federal judge has thoroughly rejected the company’s obstructionist and meritless arguments to block our investigation. Massachusetts customers and investors deserve answers from Exxon about what it has known about the impact of burning fossil fuels on its business and the planet, and whether it hid this information from the public.”

Schneiderman echoed Healey’s thoughts. “I am pleased with the court’s decision to dismiss Exxon’s frivolous, nonsensical lawsuit that wrongfully attempted to thwart a serious state law enforcement investigation into the company,” Schneiderman said. “As the Court noted, Exxon’s claims in this lawsuit were ‘implausible’ and unsupported, while its strategy amounted to a type of ‘legal jiu-jitsu’ that resulted in nothing more than a ‘huge waste’ of time and money.”

The judge also rejected claims by Exxon that the preamble to an agreement between Healey, Schneiderman and a group of attorneys general referred to as the ‘Green 20’ is confirmation that the group is willing to violate the oil giant’s First Amendment rights. The preamble states that the attorneys general share an interest in “ensuring the dissemination of accurate information about climate change.”

“Nothing in the common interest agreement defines ‘accurate information about climate change’ in a way that suggests that the AGs have agreed to punish protected speech. Ensuring the public receives accurate information is consistent with a bona fide investigation—not retaliation,” wrote Caproni.

Exxon did not immediately respond to a request for comment.

Also debunked was Exxon’s contention that requests for documents dating back to 1977—well-beyond the six-year statute of limitations—indicated political animosity toward the company and its views.

“If the AGs are investigating whether Exxon made material misrepresentations in the past six years, Exxon’s historic knowledge is relevant, whether it was gained five years ago or twenty-five years ago,” wrote Caproni. “Evidence that Exxon made material misrepresentations before the limitations period is relevant to Exxon’s present-day intent and could be evidence of a continuing scheme that persisted into the limitations period.”

The judge also brushed off Exxon’s argument that the evolving focus of Schneiderman’s investigation indicates bias. Schneiderman initially focused on whether Exxon downplayed the severity of climate change, but has now expanded his probe to look at whether Exxon deceived investors by using two different accounting methods—one for communicating climate risk to the public and another for internal projections.

Caproni called the shifting investigation argument “too slim a reed to support Exxon’s allegations of an improper motive.”

“At every turn in our investigation, Exxon has tried to distract and deflect from the facts at hand. But we will not be deterred: our securities fraud investigation into Exxon continues,” said Schneiderman.

Exxon filed a separate case against Healey in Massachusetts in 2016, similarly alleging that her investigation is politically motivated and violates its First Amendment rights. In January 2017, Massachusetts Superior Court Judge Heidi E. Brieger ruled in Healey’s favor and pointed out that “zealously” pursuing defendants does not make Healey’s actions improper.

Exxon appealed Brieger’s decision and the appeal was heard on Dec. 5 by the Massachusetts Supreme Judicial Court. A decision is expected in the coming months.

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