A New York judge ruled in favor of the attorney general's office in Exxon's challenge to the climate fraud suit.The New York attorney general's office, led currently by Letitia James, did not engage in prosecutorial misconduct in investigating Exxon for climate fraud, a judge ruled Wednesday. Photo credit: Timothy A. Clary/Getty Images

By Karen Savage

A judge dismissed several claims by Exxon to stop New York State’s lawsuit against the oil giant for alleged climate fraud, including charges of prosecutorial misconduct and conflict of interest.

New York Supreme Court Judge Barry Ostrager on Wednesday rejected claims by Exxon that the New York attorney general’s office violated the company’s First Amendment and due process rights in filing the suit last year. He also denied Exxon’s request for access to the personal email account of former Attorney General Eric Schneiderman.

“I am happy with the judge’s decision today, and look forward to continuing to make our case in court,” said New York Attorney General Letitia James.

New York brought the suit last year under the state’s Martin Act, which prohibits securities and other types of financial fraud. The state alleges that Exxon intentionally deceived investors by misrepresenting what it knew about the risks of climate change to its business.

Exxon responded by accusing the New York attorney general’s office of misconduct, saying it is selectively enforcing the law and is violating the company’s constitutional rights. Ostrager reserved judgement on whether the AG’s office is selectively enforcing the law, but ruled the other defenses were “irrelevant to the case.”

“At the end of the day you’re going to either prove a Martin Act violation or not,” Ostrager told the attorney general’s lawyer, Marc Montgomery, during the hearing.

Exxon did not immediately respond to a request for comment.

New York contends that Exxon violated the Martin Act when it “employed internal practices that were inconsistent with its representations, were undisclosed to investors, and exposed the company to greater risk from climate change regulation than investors were led to believe.”

New York’s lawsuit said “this fraud reached the highest levels of the company” and included former chief executive Rex Tillerson, who became President Trump’s first Secretary of State in 2017.

This is the second time a judge has turned aside misconduct claims by Exxon. U.S. District Judge Valerie Caproni dismissed a case last year that Exxon filed in federal court to stop New York’s investigation.

The company has maintained that the attorney general’s suit is politically motivated and claimed that Schneiderman used his email account to communicate with third-party attorneys during a nearly three-year investigation he launched in 2014 into the company’s actions and communications about climate change.

The investigation revealed that Exxon used two methods of climate accounting— one for public disclosure to investors and one for private internal use—to potentially defraud investors. It also revealed that Tillerson used an alias email account for certain internal communications.  

The lawsuit, which was filed last year by then-Attorney General Barbara Underwood, is the culmination of that investigation. James was elected to the office last November, after the suit was filed.

The dismissal of Exxon’s claims clears the way for pre-trial discovery to proceed. The next conference in the case is scheduled for June 23 and a trial is scheduled to begin on Oct. 23.

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