Rulings in climate cases swung momentum to plaintiffs’ side

The 9th U.S. Circuit Court of Appeals recently handed California local governments a major victory in what is likely the most important climate change litigation currently underway in the United States.

The 9th Circuit issued decisions in two closely related cases brought by numerous California cities and counties against some of the world's most powerful oil, natural gas and coal companies. In those lawsuits, the local governments seek money damages from the fossil fuel industry for the multifaceted harms that those local jurisdictions and their residents have suffered as a result of climate change. Plaintiffs attribute those harms in major part to the greenhouse gas emissions generated by the corporate defendants' energy products.

The Court of Appeals' May 26 decisions deal with a strategically important threshold issue: Should these climate cases be litigated in California state courts -- where the local governments initially filed them -- or in federal court, as the corporate defendants prefer? In both cases, the 9th Circuit unanimously ruled that the lawsuits should be pursued in state courts. That's a key win -- though not a dispositive one -- for the California local governments in this David-vs.-Goliath legal battle.

A bit of legal background is helpful at this point: In 2011, the U.S. Supreme Court held in American Electric Power v. Connecticut, 564 U.S. 410, that state climate lawsuits against coal-fired power plant owners based on federal common law theories are "displaced" by the federal Clean Air Act. However, the justices expressly declined to address the question of whether state common law claims are similarly displaced by the act.

Beginning in 2017, a number of California coastal cities and counties, led by the cities of Oakland and Imperial Beach and the counties of San Mateo, San Francisco and Marin, have brought coordinated lawsuits against multinational energy companies in California state courts. These lawsuits are based on longstanding state common law principles, including public and private nuisance, trespass, negligence and failure-to-warn claims. They seek compensation from the energy industry based on their fossil fuel products' deleterious climate change impacts -- in particular, from sea level rise, more intense and frequent coastal storms, and flooding. The local government plaintiffs allege that these impacts, in turn, are already causing substantial financial harm and safety risks to those jurisdictions and their constituents, and will continue to do so.

The energy company defendants moved quickly, removing each of these cases from the state courts in which they were filed to federal district court. Under federal rules, defendants can automatically obtain removal to federal court as a preliminary matter; it is then up to the assigned federal district judge to decide whether each case has been validly removed and therefore appropriate for resolution in federal court or, alternatively, improperly removed and therefore properly remanded back to state court for disposition.

Here is where things got both complicated and interesting: The lawsuits brought by Oakland and San Francisco, once removed to federal court, were assigned to U.S. District Judge William Alsup of the Northern District of California. The San Mateo, Marin and Imperial Beach cases were similarly removed to the Northern District but assigned to a different district court judge, Vince Chhabria. Judge Alsup ruled that the Oakland and San Francisco cases had been properly removed to federal court because they raised issues "necessarily governed by federal common law" and ultimately dismissed Oakland/San Francisco claims. Down the hall, meanwhile, Judge Chhabria ruled that the San Mateo/Marin/Imperial Beach cases had been improperly removed, and remanded them back to the state courts in which the cases had been originally brought.

Two parallel appeals to the 9th Circuit followed: Oakland and San Francisco appealed Judge Alsup's refusal to remand and subsequent dismissal of their cases, while the energy defendants separately appealed Judge Chhabria's order remanding the San Mateo, Marin and Imperial Beach cases back to state court. The 9th Circuit wisely coordinated the cases for oral argument and disposition.

Both 9th Circuit decisions -- City of Oakland v. BP LLC, 2020 DJDAR 4811, and County of San Mateo v. Chevron Corporation, 2020 DJDAR 4820 -- were unanimous opinions authored by Circuit Judge Sandra Ikuta. While they focus on sometimes arcane issues of federal procedure, the decisions have enormous practical significance.

In City of Oakland, the defendant energy companies had raised numerous legal grounds to support removal of the Oakland and San Francisco cases to federal court, all of which appear (to this observer) to be attenuated at best. The first of their two principal arguments was that removal was proper under the so-called "federal officer" rule, which provides that lawsuits against federal officers are properly removable from state to federal court. The energy defendants, relying on the fact that it has various contracts with the federal government to, e.g., supply oil to the Elk Hills Petroleum Reserve and in the form of leases allowing them to drill for oil and gas on the Outer Continental Shelf, argued that they should be considered "federal officers" for purposes of federal removal rules. However, the 9th Circuit panel rejected the defendants' federal officer theory.

The second ground for removal asserted by the City of Oakland corporate defendants was that removal is proper when substantive federal law has eliminated the power of state courts to act in a particular legal area. Here, they relied on the Supreme Court's American Electric Power decision, arguing that federal common law was really at the heart of the cities' lawsuit. Again, however, the Court of Appeals found the contention without merit. Noting that the cities' lawsuit as filed relied only on state common law, the court held that "the [cities'] state-law claim for public nuisance fails to raise a substantial federal question." It remanded the cases to Judge Alsup to determine if there was any other viable reason to decline to retain the cases, but the writing on the wall is rather clear: The Oakland and San Francisco cases are headed back to state court.

The 9th Circuit's decision in County of San Mateo is more straightforward. There the Court of Appeals upheld District Judge Chhabria's remand decision, finding the energy company's removal of this set of cases improper. While defendants on appeal had raised numerous arguments to justify their removal of the County of San Mateo cases, the panel concluded that only the "federal officer" theory was properly before the court. The Court of Appeals found defendants' reliance on that theory just as misplaced as it did in the City of Oakland cases.

Accordingly, all of the California local governments' pending climate change lawsuits against the energy industry defendants are headed back to state court for further proceedings on the merits of their claims.

So why is this pair of essentially procedural decisions so consequential?

First of all, home court advantage matters just as much in litigation as it does in sports. The energy defendants thought -- with good reason -- that they would get a more favorable judicial reception in federal courts, which in recent years generally have not been receptive to climate change-related litigation. In particular, several recent climate change lawsuits brought by private parties and local governments in federal court have foundered on the threshold issue of standing to sue. Had the energy defendants been successful in keeping the current cases in federal court, they doubtless would have attacked the California local governments' standing to pursue the cases on their merits.

But the stringent standing rules applied by federal courts don't apply in California and most other state courts, which have minimal standing requirements not likely to impede the local governments' climate change lawsuits. Additionally, state courts are both more familiar with the state common law doctrines the plaintiffs are invoking, and more inclined to apply them favorably to the local governments' claims. Two recent examples are (1) private and government plaintiffs' successful actions against oil and gas companies for environmental damage associated with MTBE contamination of groundwater supplies from leaking underground petroleum storage tanks; and (2) similarly successful efforts by California local governments -- including several of the same plaintiffs pursuing the current climate change litigation -- to obtain financial compensation from the manufacturers and marketers of lead-based paint to address the profound adverse public health impacts associated with that product.

Second, the climate change litigation initiative first launched here in California has since spread across the United States to become a truly national phenomenon. Comparable lawsuits have been brought against Big Energy by such disparate government plaintiffs as the cities of Baltimore and New York; King County, Washington; local governments in Colorado; Honolulu County, Hawaii; and the state of Rhode Island. In virtually all of these out-of-state cases, the corporate defendants have similarly attempted to remove them to federal court, with similarly unsuccessful results. Indeed, the 4th Circuit earlier this year rejected the same removal arguments tossed by the 9th Circuit. (The same removal question is currently pending in the 1st, 2nd and 10th Circuits.)

Third, recall the 9th Circuit's conclusion in City of Oakland that the cities' state common law claims "fail to raise a substantial question of federal law." Just as that holding struck a seemingly fatal blow to defendants' removal strategy, so too is it likely to defeat the energy industry's substantive position that federal statutory and common law preempt the California local governments' state common law claims.

To be sure, this climate change litigation is far from over. The government plaintiffs still face formidable challenges if they are to prevail on the merits of their monetary claims against the energy multinationals. Those challenges include quantifying the defendants' proportionate share of global GHG emissions, their consequential share of liability, causation questions, etc. But the plaintiffs and their attorneys have confidence in the climate science underlying their lawsuits and their ability to "fingerprint" the defendants' share of GHG emissions. And the companies' ability to avoid liability in these cases may well be undercut by damning revelations that they commissioned private studies as far back as the 1960s identifying the inextricable link between fossil fuel GHG emissions and climate change -- at the same time those companies were carrying out an extensive public relations campaign of climate change-related misinformation targeting the public, media and government decision-makers alike.

Finally, a pair of postscripts: First, it would be erroneous to chalk up these two decisions as simply another judicial frolic by a left-leaning 9th Circuit. To the contrary, Judge Ikuta is one of the 9th Circuit's most conservative judges, appointed to the Court of Appeals by former President George W. Bush. Her opinions in both cases were joined by Judge Kenneth Lee, a Trump nominee recently confirmed by the U.S. Senate, and Judge Morgan Christen, an Obama appointee.

Second, these appeals brought forth a flood of amici briefs from across the political, economic and ideological spectrum. They include major environmental organizations, the U.S. Chamber of Commerce, a U.S. senator and dueling coalitions of "blue state" attorneys general (led by California Attorney General Xavier Becerra) and "red state" attorneys general (headed by Indiana Attorney General Curtis Hill.) Particularly noteworthy is the fact that the Trump administration filed a friend-of-the-court brief supporting the energy company defendants. The federal government's most breathtaking assertion was that the California local government lawsuits "are inconsistent with constitutional principles of separation of powers"; that remarkable contention drew nary a mention from the 9th Circuit panel.

City of Oakland and County of San Mateo represent major wins for the local governments bringing these cases and, correspondingly, a very significant setback for the energy industry defendants. The momentum in these cases has doubtless swung to the plaintiffs' side, and it will be most interesting to see if they can parlay their latest appellate victory into favorable judgments or settlements. In any event, these cases and the related lawsuits pending across the U.S. represent the most important, currently active climate change litigation in the nation. 