Calif. cities file appeal in effort to avoid possible lawsuit from Exxon

By David Yates | Jul 12, 2018

Potential defendants argue Texas court lacks jurisdiction.

FORT WORTH – Several California cities and counties found to be hypocrites by a Texas judge recently filed briefs requesting a Texas appellate court dismiss ExxonMobil's effort to depose numerous officials and an attorney involved in orchestrating climate change litigation against the oil industry.

Recently filed climate change lawsuits under the public nuisance theory allege fossil fuel companies contributed to global warming-induced sea level rise and seek damages for past and future natural disasters, such as flooding. But despite these dire predictions, the plaintiffs failed to include the alleged near-certain doom in their bond offerings to potential investors, Exxon says.

Exxon filed its petition in Tarrant County District Court on Jan. 8, seeking pre-suit discovery for a potential lawsuit against the California municipalities and officials and also Matt Pawa, a Hagens Berman attorney who is pursuing many of the cases on a contingency fee.

Pawa was instrumental in creating the “playbook” that includes efforts by the attorneys general of New York and Massachusetts, according to Exxon.

Exxon’s petition alleges the potential defendants engaged in a civil conspiracy by planning and then filing climate change lawsuits in California against co-defendants Chevron, BP, ConocoPhillips and Royal Dutch Shell.

The company further asserts California officials are talking out of both sides of their mouths - blaming Exxon for impending flooding disasters while not disclosing the alleged threat to possible investors in bond offerings. A Tarrant County judge agrees.

Statements made to potential investors contradict allegations made by the municipalities when they sued the energy industry, Exxon says. For example:

San Mateo County’s complaint says it is “particularly vulnerable to sea level rise” and that there is a 93% chance the county experiences a “devastating” flood before 2050. However, bond offerings in 2014 and 2016 noted that the county “is unable to predict whether sea-level rise or other impacts of climate change or flooding from a major storm will occur."

In response to Exxon's petition, the municipalities filed special appearances, challenging the Texas trial court’s jurisdiction.

On March 14, Judge R.H. Wallace Jr., 96th District Court, denied all of the special appearances, court records show. An appeal has since ensued in the Texas Second Court of Appeals.

On July 6, the cities of San Francisco and Oakland filed individual briefs, while several other municipalities and officials banded together to file a collective brief. A federal judge recently dismissed San Francisco's and Oakland's lawsuits.

The briefs question whether a state court can exercise “specific personal jurisdiction” over an out-of-state defendant, even one that directed a tort against an in-state resident.

“Exxon’s strategy — initiating civil proceedings in Texas in response to public proceedings in other states — is all too familiar,” states San Francisco’s brief.

In 2016, the AGs of New York and Massachusetts initiated investigations into Exxon’s business practices.

Exxon responded by waging war on two fronts, challenging the investigations directly and by commencing litigation in Texas alleging the AGs had violated Exxon’s constitutional rights and engaged in abuse of process, the brief states.

The Northern District of Texas transferred the action to the Southern District of New York, where Exxon’s claims were dismissed in March. The company has appealed to the U.S. Court of Appeals for the Second Circuit.

Exxon’s separate attempt to halt the Massachusetts’ investigation was also rejected by the state’s Supreme Judicial Court.

“Despite the fact that Exxon’s repeated attempts to interfere with legitimate efforts of state law enforcement have been uniformly and unequivocally rejected, Exxon has nonetheless recycled the allegations and arguments from the Federal and Massachusetts actions in its present Rule 202 petition,” San Francisco’s brief states.

Oakland argues in its brief that the trial court erred in accepting Exxon’s argument that the climate change lawsuits targeting oil companies “somehow should be deemed to be targeting Texas itself.”

“It is undisputed that Oakland and Pawa (who represents Oakland) did not visit Texas, email anyone in Texas, call anyone in Texas, transact any business in Texas, or make any other contacts with Texas for any purpose related to the matters asserted in Exxon’s 202 petition,” the brief states.

“Instead, Exxon’s theory of specific personal jurisdiction is that these out-of-state residents ‘targeted’ Texas itself by activities they undertook entirely outside of Texas, most importantly by suing Texas and non-Texas corporations for public nuisance in California courts for harms to California state residents and California public entities.”

The collective California public entities, the cities of Imperial Beach and Santa Cruz, along with the counties of Marin, San Mateo and Santa Cruz, contend that they have no offices in Texas or do business in the state.

The municipalities argue Exxon failed to meet its burden of establishing personal jurisdiction under the Texas long-arm statute, which allows the exercise of personal jurisdiction over a non-resident defendant.

“Nonetheless, Exxon contended that the Texas state court could exercise jurisdiction over these entities because Exxon felt the effects of the California lawsuits on its ability to speak publicly in Texas about the ‘national’ debate over climate change,” the collective brief states.

As of July 10, Exxon has not yet filed a reply brief, but the issue was briefly addressed in the California litigation. The company says the California litigation has the effect of quelling its Texas-based free speech rights.

"Indeed, a Texas court has already found that it may exercise personal jurisdiction in that case because the Potential Defendants’ 'conduct was directed at Texas-based speech, activities, and property,'" the company wrote.

"And the Texas court recognized that '[a] violation of First Amendment rights occurs where the targeted speech occurs or where it would otherwise occur but for the violation.' Accordingly, the Texas court concluded that 'ExxonMobil exercises its First Amendment rights in Texas, and Texas is the site of the speech challenged by the Potential Defendants’ lawsuits. The anticipated claims therefore concern potential constitutional torts committed in Texas.'”

The collective appellants are represented by Pete Marketos and Tyler Bexley, attorneys for the Dallas law firm Reese Marketos.

Oakland is represented in part by the Law Office of Steven K. Hayes in Fort Worth.

San Francisco is represented in part Robert Manley and Richard Kamprath, attorneys for the McKool Smith law firm in Dallas.

Appeals case No. 02-18-00106-CV

Trial court case No. 096-297222-18

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Organizations in this Story

British Petroleum Chevron U.S.A. ConocoPhillips Exxon Mobil Hagens Berman Sobol Shapiro, LLP Royal Dutch Shell

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