By Karen Savage
The New York attorney general’s office argued that Exxon is guilty of repeatedly deceiving shareholders about the risk posed to their investments by climate change and therefore the oil giant’s reputation couldn’t have been harmed when the AG dropped two fraud charges against it at the end of Exxon’s climate fraud trial this month.
Attorney General Leticia James’s office argued this in a brief this week after Exxon challenged the dropped charges following the trial in New York Supreme Court. James initially charged Exxon with four fraud-related claims, including violations of New York’s powerful Martin Act. Her office dropped two of the charges—claims of equitable fraud and common law fraud—during closing arguments of the trial.
The AG’s decision—along with Ostrager’s willingness to allow the charges to be dropped—exasperated Theodore Wells, Exxon’s lead attorney. During a lengthy tirade, Wells told the court the state should have dropped the charges much earlier.
Exxon filed a motion last week alleging that the New York attorney general harmed the company’s reputation by dropping the two charges. The company is asking Ostrager to issue an order dismissing the two discontinued fraud charges with prejudice, meaning the charges cannot be refiled—which Ostrager already said he would do.
Exxon is also asking Ostrager to state in the order that the evidence shown at trial did not indicate the company intended to defraud shareholders, nor did the evidence show that shareholders relied on potentially deceptive information when making investment decisions. Alternately, the company wants Ostrager to order the AG to issue a stipulation that includes the same statement.
The AG’s office said Exxon’s reaction ignores evidence presented during the trial showing Exxon committed fraud under the Martin Act and a second statute covering repeated violations of the Martin Act. Kevin Wallace, acting chief of the attorney general’s investor protection bureau, wrote the opposition to Exxon’s motion.
Exxon’s requested statement is not necessary, Wallace wrote. He also contends the oil giant wants the stipulation to use in fighting other litigation various groups have field against the company.
Massachusetts Attorney General Maura Healey filed a similar fraud lawsuit against Exxon in October and shareholders in Texas have filed suits alleging they were misled by Exxon.
“Exxon has no right to rulings or stipulations in this matter just because the company believes they will be useful—though not binding—in separate litigation pending in other courts,” Wallace wrote.
The AG also contends Exxon could have filed motions to remove the two charges after evidence was presented, but chose not to.
“If those claims were as damaging to the reputation of Exxon and its employees as the company asserts, Exxon had every opportunity to seek to have them removed from the case,” Wallace wrote, adding that the company chose not to do because it did not want to risk denial by Ostrager. “Exxon is not entitled to a judgment that it decided not to seek on multiple occasions.”
Exxon’s post-trial motion is an attempt to “distract attention from the core allegations in this case: that Exxon’s representations to its investors were materially false and misleading, in violation of the Martin Act and Executive Law,” Wallace wrote.
Ostrager will hold a hearing on the motion on Dec. 6 and Ostrager is expected to issue a decision on the remaining charges by late December.