tateattorney.com – A brief introduction to California’s lawsuit against oil and gas companies and the API alleging that they are liable for causing climate change, at least in part . . . (David Tate, Esq.)

The State of California has filed a lawsuit against several oil and gas companies and the American Petroleum Institute. There is a lot to unpack here, basically at every turn (or every turn of the complaint pages). The complaint is 135 pages, filed in the San Francisco Superior Court. A copy of the complaint is provided below. The current named defendants are:

Exxon Mobile Corporation;

ExxonMobil Oil Corporation;

Shell PLC;

Shell USA, Inc.;

Shell Oil Products Company LLC;

Chevron Corporation;

Chevron U.S.A. Inc.;

Conocophillips;

Conocophillips Company;

Phillips 66;

Phillips 66 Company;

BP P.L.C.;

BP America Inc.;

American Petroleum Institute; and

Does 1 through 100 (i.e., additional defendants might be added).

Broadly stated, the State of California alleges that the defendant oil and gas companies as oil and gas producers are responsible (i.e., legally liable) for causing pollution, carbon dioxide (CO₂) and climate change – the complaint further alleges that at some point defendants became aware that their oil and gas fossil fuel product was causing the pollution, climate change, and the alleged results of climate change (e.g., allegedly drought, wildfires, climate temperature increases, melting ice and rising ocean water levels, more extreme weather, etc.), and that defendants allegedly denied and continued to deny those facts, which allegedly has caused damages to the people of the State of California (and presumably continue to cause additional damages – i.e., continue to cause additional pollution, CO₂ and climate change). The complaint further alleges that defendant American Petroleum Institute (“API”) as a trade organization for the oil and gas producer defendants at some point also became aware that defendants’ product was causing pollution and climate change, and the results of climate change, and that API allegedly also denied and continued to deny those facts, which allegedly has caused damages to the people of the State of California.

The legal causes of action are alleged as follows:

Public nuisance (California Civil Code Sections 3479, 3480, and 3494);

California Government Code Section 12607 (holding that the California Attorney General my bring suit for equitable relief in the name of the people of the State of California against any person for the protection of the natural resources of the State from pollution, impairment, or destruction);

Untrue or misleading advertising (California Business and Professions Code Section 17500);

Misleading environmental marketing (California Business and Professions Code Section 17580.5);

Unlawful, unfair, or fraudulent business practices (California Business and Professions Code Section 17200);

Strict products liability – failure to warn; and

Negligent products liability – failure to warn.

I note that the complaint does not allege some of the standard causes of action for pollution/environmental contamination and fraud.

What does this mean? My perspective and interests are in the law, compliance with laws and regulations (authority, duty, rights, breach, liability, damages, mitigation, mediation and settlement), risk management, internal controls, and governance, and from the viewpoint of people who are wearing different hats and who are or who might be involved in these issues, including for example, CxOs in general, boards and directors, audit committees, perhaps governance committees, risk committees, CEOs, CFOs, CLOs, CAEs, CCOs, CROs, perhaps CHROs, outside auditors, and more, and also with respect to various entities that might be involved in or that might be impacted by these issues in their operations including public companies and businesses, some non-public, private businesses and companies, some nonprofits, governmental entities, agencies and departments, and more.

A few other states have also filed lawsuits that are similar in nature.

Obviously this initial introduction is not an evaluation of the complaint. Industry and society (California, U.S., and worldwide) have been able to develop significantly because of oil and gas fossil fuels and the motors and machines that they help to run. Resulting pollution and CO₂ emissions have been known. People, businesses, nonprofits and governmental entities have continued to use oil and gas and still continue today.

Society (worldwide) and the great majority of people (worldwide) use and continue to use and to burn oil and gas and to emit CO₂ on a daily or regular day-to-day living basis, and even continue to manufacture and sell products, motors and machines that run on oil and gas (such as the automobile manufactures). Thus, it is arguable that the causes of action could be alleged against the majority of businesses, nonprofits, governmental entities, and people throughout society (worldwide) – and perhaps also certain other trade associations – as the State of California, and other states, and the U.S. also have allowed and permitted the sale and use of oil and gas, and the CO₂ emissions, to lawfully continue.

The complaint presents another issue that perhaps should be considered by all businesses, nonprofits, governmental entities, trade associations and others: that is, how to safely discuss as a matter of law, and how to legally protect certain discussions and deliberations that pertain to climate change, pollution, their scope 1, scope 2 and scope 3 greenhouse gas emissions, and possible liability exposure?

Thus, as this case and the claims and arguments develop, there will be many issues and situations, and decisions by the Court, about which a broad cross-section of business, nonprofits, governmental entities, and society should want to consider in terms of their own actions and future actions.

The following is a link to the State of California Department of Justice release discussing the lawsuit https://oag.ca.gov/news/press-releases/attorney-general-bonta-announces-lawsuit-against-oil-and-gas-companies

The following is a copy of the complaint:

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David Tate, Esq. (and inactive CPA)

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Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

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David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.