Update on Public Nuisance Lawsuits

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In AEP v. Connecticut (2011), the Supreme Court unanimously rejected federal common law nuisance claims brought by states and cities against companies alleged to have contributed to global warming by emitting greenhouse gases. The Court held that Congress, by enacting the Clean Air Act, had displaced the federal common law of nuisance and gave jurisdiction over these issues to the EPA. The Court declined to open up a “parallel track” to enforcing carbon emissions standards in the federal system via the federal courts.  Since that time, states and municipalities in California and elsewhere have brought similar suits under state nuisance law, but judges have indicated this problem needs a national solution that “must be fixed by our [other] political branches.” At present, the First, Second, Fourth, Ninth, and Tenth Circuits are hearing arguments about whether these issues belong in the federal courts, state courts, or elsewhere. 

Featuring: 

Theodore J. Boutrous Jr., Partner, Gibson, Dunn & Crutcher LLP 

 

 

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Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Environmental Law & Property Rights Practice Group, was recorded on Tuesday, February 23, 2020, during a live teleforum conference call held exclusively for Federalist Society members.     

 

Wesley Hodges:  Welcome to The Federalist Society's teleforum conference call. This afternoon’s topic is an “Update on the Public Nuisance Lawsuits.” My name is Wesley Hodges, and I'm the Associate Director of Practice Groups at The Federalist Society.

 

      As always, please note that all expressions of opinion are those of the expert on today's call.

 

      Today we are very fortunate to have with us Mr. Theodore Boutrous, who is a Partner with Gibson Dunn. Ted is the lead attorney for his client, Chevron, and as led the defense of the companies who are parties to this case since 2017. After our speaker gives his remarks, we will have time for your questions. Thank you very much for sharing with us today. Ted, the floor is yours.

 

Theodore J. Boutrous Jr.:  Thanks very much, Wes. I thought I’d start by putting a little context on where we are in these public nuisance lawsuits that have been brought. Just a quick recap: beginning in July of 2017, there’ve been 14 suits filed by 17 plaintiffs around the country, 7 counties, 8 cities, 1 state, and 1 trade association, all alleging a variation of a claim that oil and gas companies, who they’ve sued various collection of the companies, have contributed to climate change and should pay damages in billions for the injuries that the plaintiffs have allegedly suffered as a result of climate change.

 

      All but one of the suits has been filed in state court. All of the other claims have been filed at least originally, as state law nuisance claims. So the cities, the counties, the one trade association are alleging that by extracting oil and natural gas and other products and in selling them to consumers, who then use them as intended in a lawful manner, that as a result, carbon dioxide, greenhouse gas emissions, are occurring. That mixes globally, warms the Earth’s atmosphere, and then causes sea level rise and other actions that injure the municipalities.

 

      So all of the claims have that theme to them, and they're seeking to apply, generally, state law to those claims. So they're asking state courts to rule that one particular state can regulate the oil and gas production activities and the emissions around the United States and around the globe.

 

      It originally -- the effort to create tort law that would apply to climate change began back in the early 2000s. And there was a series of cases brought then by cities, counties, and others that sought to allege federal common law public nuisance claims. There was a case called AEP, American Electric Power, that made it all the way to the Supreme Court. It was a case brought by New York, California, and others against five of the biggest power plants that they alleged created greenhouse gas emissions.

 

      And in that case, the Supreme Court in an opinion by Justice Ginsburg found that emissions in interstate pollution claims generally are governed by federal common law, but that was just the answer to the first part of the equation. The question was then whether federal common law provided a remedy. And the claims were very similar to what I just described, except they were served under federal common law as opposed to state law. And the Supreme Court said very clearly, “This is not an issue that the federal courts can grapple with.” And in fact, Congress, through the Clean Air Act, delegated the regulation of emissions, including greenhouse gas emissions, to the Environmental Protection Agency, and that that displaced any potential federal common law remedy. And the Court’s decision in AEP is really interesting and to my mind forecloses, in one way or another, all of these claims that are being asserted now.

 

      And the Court said that these are complex balancing questions where we have to look at our energy needs as a country, the economics, the disruption of our economy that would occur by reducing emissions, by reducing oil and gas production and the like, and they’re complex scientific issues, they’re international and national policy issues. And by the way that’s really our theme in these cases. Global warming’s an important issue. It’s a policy question that we need to have international agreements. We need to have policymakers focus on these issues. And the Supreme Court held that given all of those factors, the federal courts could not engage in federal common law tort remedies to try to address greenhouse gas emissions and global warming.

 

      In the wake of that decisions, there were several other decisions in the lower courts. The Ninth Circuit in the Kivalina case came to the same conclusion in a case involving five or six major oil and gas companies—a number of them that are defendants now in the latest spade of lawsuits—found, again, that there was displacement even though it was a slightly different claim. The claims were seeking to regulate emissions, and therefore the claims were displaced by the Clean Air Act and the Supreme Court’s decision.

 

      And just to back up a second, in 2007 the Supreme Court had held that the EPA did have the power to regulate greenhouse gas emissions as a pollutant. And that became an important part of the Court’s ruling in AEP in terms of displacement.

 

      There was a case against automakers, very similar, that I handled back in 2006. In 2007 Judge Jenkins in the Northern District of California and San Francisco ruled that a claim seeking to hold the automakers liable for greenhouse gas emissions and therefore climate change and global warming could not go forward. It was a policy issue for the political branches, not the courts.

 

      So these cases have faced all sorts of judicial rejection in the federal courts. And no court has endorsed anything remotely similar to the types of sweeping extraordinary claims that the plaintiffs are now asserting in this wave of state law public nuisance claims. So what happened, I think—I’m doing a little bit of mind reading here—but after the federal courts rejected these claims emphatically over and over again, culminating with the Supreme Court, the plaintiffs in the cities and counties and plaintiff’s lawyers devised a new strategy. And in fact, it’s been publicly reported that there was a workshop in La Jolla, California back in 2012 called the “Workshop on Climate Accountability, Public Opinion, and Legal Strategies,” where some of the plaintiff’s lawyers who are now involved in these cases and had been involved in the federal cases, others, purported experts, got together and tried to create an analogy to the tobacco litigation, and I think began the process of trying to develop these state law claims. And so this is literally round two. These claims are very similar to round one when they were in the federal system. And so I think that they're doomed to the same fate, but it’s going to be a slightly different route to get there.

 

      The litigation has proceeded -- as I mentioned, the filings have been in state court originally. And it all started with filings in California by Oakland and San Francisco. They filed in state court; we removed those cases to federal court. And Judge Alsup in the Northern District was assigned to the cases. The plaintiffs filed a motion to remand and we opposed it and Judge Alsup denied the motion to remand. We argued a number of things. First of all, because of the nature of the claims -- they literally challenge all of the oil and gas production activities, going back to the Industrial Revolution. And they target the production activities, but their claim -- it’s all about the emissions that result from the burning of fossil fuels.

 

      We had multiple grounds for federal removal. Our lead argument is that no matter how you slice it, no matter how you try to disguise these claims, they arise under federal law. Federal law provides the source of the claim, irrespective of the label. And Judge Alsup agreed with us on that point, found that these claims because they're interstate and international in scope necessarily arise, if anywhere, under federal law because state law cannot apply to activities around the United States and around the globe. So Judge Alsup agreed with us, kept the case in federal court, and in the same day, moments later, issued an order convening a climate science tutorial a month or so into the future, where he asked both sides to present the best -- what’s the state of the science? What’s the history of the science of climate change?

 

      So we were off and running in federal court. We had the climate science tutorial. It was an all-day affair. I presented for the defendants. The plaintiffs had several scientists present for them. And our approach was to say, “Look, Chevron, for example, does not do its own climate science. It looks to the findings of the intergovernmental panel on climate change, the IPCC.” And so we walked through those issues with the Judge. And the Judge ultimately said there wasn’t really a lot of disagreement between us, the defense side, and the plaintiff’s side; that there were issues here that climate change was important.

 

      And that really, again, went to our main theme in these cases. That whatever you think the right policy result is, whatever you think the solutions might be to climate change, the courts are not going to be the ones to achieve them. And the law doesn’t work. It doesn’t fit. It’s never been stretched this far. It just makes no sense and the courts just can’t do it.

 

      Ultimately, Judge Alsup granted our motion to dismiss pretty much along those lines. The court found that, yes, federal common law must be the source of law. But federal common law, one is displaced by the Clean Air Act. But to the extent the claims reached beyond the borders of the United States where the Clean Air Act doesn’t apply, the federal courts are not supposed to creating torts that regulate activities in foreign counties, including oil and gas production activities that are both endorsed and encouraged by foreign countries.

 

      And in fact, foreign governments have companies themselves that engage in oil and gas production activities. And that the Supreme Court’s recent Jesner decision in the alien tort area caution very strongly against federal courts making federal common law claims that touch on foreign relations, foreign activities because of the potential disruption of diplomatic relations; the intrusion on the powers of the Executive Branch and Congress. And so Judge Alsup dismissed the claims on the merits. That went up on appeal.

 

      In the meantime, another set of claims by other counties and cities in California had been filed before Judge Chhabria in the same courthouse down the hall. Judge Chhabria denied our motion to remand. He found that they were labeled state claims, that maybe we had a really good preemption argument but that’s a defense. Judge Chhabria rejected our statutory grounds for removal. And I really think they are very strong. These issues are -- we just argued about a month ago in the Ninth Circuit these issues. 0

 

      I feel like we’ve got multiple statutory grounds for removal, including federal officer removal, which is a very broad jurisdictional grant. Because many of the companies acted under the direction of the federal government in assisting the federal government in extracting oil and gas, including back in World War II, including on the Outer Continental Shelf, which is another grant of jurisdiction to the federal courts for any claims arising out of, or relating to an activity, done on the Outer Continental Shelf. And that includes huge swaths of oil and gas production in the United States because the federal government, the statute the Outer Continental Lands Act, really was meant to ensure that the federal government’s authority over that land was clear, precisely so that it could extract efficiently and as much as possible the minerals in the ocean. And so there’s federal jurisdiction for any claims relating to those activities. And much of the oil and gas activities targeted by these lawsuits occurred on that federal land.

 

      But Judge Chhabria rejected those arguments; found that because those claims were so broad, it couldn’t say that the activities by a federal officer, or on the Outer Continental Shelf, were the but-for cause of global warming. We contend that that’s not the proper analysis. Clearly, those activities relate to the federal officer activities and activities on federal land, like the Outer Continental Shelf. That’s all that’s required.

 

      So those issues are up on appeal in the Ninth Circuit, along with Judge Alsup’s ruling that we properly did remove because these claims actually arise under federal law, notwithstanding their label, of the merits decision by Judge Alsup.

 

      Over on the other coast, in New York the plaintiffs decided to file in federal court a diversity action. But, again, alleging claims under state law. New York law could be specific in that it’s the City of New York. There we were before Judge Keenan. And we made the same argument even though we weren’t in the remand battle situation. We argued that even though the claims said they were state law claims, they allege worldwide activity. Activity all over the country, the United States. They impinge, by all accounts, basically the exact same claims that the Supreme Court found in AEP were the type of claims that do have their source in federal law, interstate pollution type claims; claims that involve interstate or international activity where state law just can’t apply. So that the court should that the courts should treat them as federal common law claims.

 

      And Judge Keenan agreed with us and found, again, that they were federal, notwithstanding their label, but number one, displaced by the Clean Air Act and the AEP’s decision’s analysis of that. And similar to Judge Alsup, Judge Keenan found that separation of powers concerns and the need to respect Congress and the President’s authority on these sorts of issues, particularly when they involve foreign countries and treaties and the Paris Agreement and international cooperation that’s needed to actually address global warming. That’s just not an area, when you look at the Supreme Court’s decision in Jesner and other cases, where the federal courts can get involved.

 

      And so Judge Keenan dismissed the City of New York’s claims. Both Judge Alsup and Judge Keenan talked about how it’s not appropriate or logical or fair for the cities and counties to bring these lawsuits, both when they are significant users and burners of fossil fuel, and when society and civilization’s benefited so much from these activities. And I liked to say in these arguments that the plaintiff’s claims really are, for better or worse, challenging the way modern civilization has developed to this day. That’s not a tort. That’s just second guessing how things proceeded and the decisions that were made.

 

      And Judge Alsup noted we have benefited greatly from oil and gas production and that the result of that: energy. We need energy. And so, yes, you can debate maybe there would’ve been a different path, or maybe now we need—and I think my client, Chevron, agrees with this—new technologies. We need to reduce carbon where possible. We need innovation. But that’s not a tort law claim, and I think both Judge Keenan and Judge Alsup agreed with that. Judge Jenkins agreed with that in the auto maker case I mentioned.

 

      The Supreme Court in AEP said that, basically, in the context of the federal claims that were being asserted there. And most recently, the Ninth Circuit in the Juliana case, which involved suits brought on behalf of young people, kids; I think a public interest group. The Ninth Circuit issued a very, very strong opinion saying, “Global warming’s very important.” The court really accepted the plaintiff’s claims—this was at the summary judgment state—that we are at a crisis point, but ruled that the relief that the plaintiffs were seeking was just beyond the capability of the federal court system.

 

      In that case, they were asking for declaration injunction that essentially would’ve required Congress and the President to require the United States to become independent of fossil fuels in its operations and its activities, and would’ve required the courts to tell the other two branches how to do that in order to reduce emissions in order to combat global warming. And the Ninth Circuit held, not surprisingly, that the federal courts just couldn’t be in that business.

 

      And so the court also, in the Ninth Circuit, touched on an issue that I haven’t really mentioned that’s been, early on at least, really the most publicly touted aspect of the plaintiff’s cases in these suits. Which is that in their effort to make a tobacco analogy had argued and alleged in their complaints that the oil companies had some sort of secret knowledge of the dangers of climate change and had concealed that knowledge while promoting their products to the public, and therefore causing this public nuisance.

 

      The problem with that argument, it was touched on in Juliana, the Ninth Circuit noted that the record in that case, which was at summary judgment, was undisputed. That the federal government itself has long known about these issues, been grappling with these issues. They quoted President Johnson in 1965 in a proclamation, making the point that human activities are contributing to a change in our atmosphere and climate. Our climate science tutorial demonstrated, when we were in the Northern District, that these issues have been in the public sphere for decades and decades. And the IPCC, the United Nations body, which really is the leading group of scientists, thousands of scientists, going back to 1990 have been issuing reports that really kind of track the public’s understanding of the degree to which we can really predict what causes climate change and what the consequences will be.

 

      The IPCC reports have gotten more and more certain, and about a decade ago or so they became pretty unequivocal that human activity is the principle driver here and started being more emphatic about the potential consequences. And so this sort of fraud on the market theory, this misrepresentation theory, is really -- does not have legs.

 

      In one of the hearings, the plaintiffs had cited a document as if it were a bombshell. They didn’t say what the document was in their complaint. Judge Alsup asked to see it because it did sound bad. It sounded bad to me. It was supposedly a trade association meeting where someone back in the 1990s was saying that catastrophic consequences were going to occur because of climate change. It sounded bad. It turned out it was a PowerPoint presentation that was made by someone literally just recounting the findings of the latest IPCC report. So it wasn’t secret knowledge. It was a discussion of something that was widely public.

 

      So those claims, I don't think, have any possibility of succeeding when all is said and done. They raised very thorny First Amendment questions. They fall apart when they're tested in court. But they're part of the suite of claims that are being made in these cases that we’re dealing with.

 

      Just briefly and then maybe we’ll go to questions, the other cases the status is as follows: in the Fourth Circuit, we’re on appeal from a district court decision denying our motion -- granting the motion to remand a case brought by the City of Baltimore. So all of the issues that I just mentioned that are in the Ninth Circuit are in the Fourth Circuit pending. We argued that a couple months ago.

 

      We’re in the First Circuit where a Rhode Island judge, in the state of Rhode Island’s action, granted Rhode Island’s motion to remand the case back to state court. And again, the same sorts of removal issues that I mentioned early are in those cases on appeal.

 

      The First Circuit has a case called Swiss American that is very interesting because it talks about arising under jurisdiction in a situation where you’re trying to determine whether a claim arises under federal or state law irrespective of its label. And the court relied on a case we’ve been citing and relying on called Standard Oil that really takes the approach that I think -- we think mandates the approach. And Standard Oil was approvingly cited in the AEP decision by the Supreme Court. It says you look to the source of the law, whatever the label is, and you determine is it the kind of case that has a uniquely federal interest at stake. And we argue the uniquely federal interest is among other things that this is interstate and international. That’s why we have a federal government because the states can’t be battling with each other to regulate each other’s activities.

 

      And in the Swiss American decision applied that in an arising under a context and found that claim was a federal claim and that there was jurisdiction. So we’re battling those removal issues in those appellate courts. We had the argument in the Second Circuit. We’re waiting an opinion. And, as I mentioned, we argued in the Ninth Circuit about three weeks ago or so.

 

      We have lots going on. I feel very good about our positions here. I think what the Supreme Court said in AEP means that these cases simply can’t go forward. It’s inconceivable to me that when the Supreme Court found that the federal courts should not and could not regulate, via tort law, emissions around the globe that it intended to throw it all back to the 50 states and all the judges in those states to apply their own nuisance law to do that. That would make no sense.

 

      And so I think, ultimately, the courts will come to that conclusion. And we’re going to try to make that sooner rather than later so that the focus can be on the important policy issues presented by climate change rather than this litigation which is destined to fail. And with that, Wes, maybe we can open it up to questions.

 

Wesley Hodges:  Fantastic. Well, Ted, thank you so much for those remarks. I don’t have any questions out of the gate right yet, Ted, so I'm going to ask you one of my own. Just curious of the ball park on this, when these cases all shake out, what do you expect the end result to likely be?

 

Theodore J. Boutrous Jr.:  Well, you know, Wes, it’s interesting because we have these two tracks. I believe that if we’re successful in keeping the cases in federal court, the federal courts are going to do exactly what Judge Alsup and Judge Keenan did when they reached the merits and what every federal courts that’s really grappled with the merits has said. That this is just not something for the courts.

 

      The state -- it’s interesting because we’ve been in federal court and fighting the removal battle. We’re just starting to brief the cases in state court. Our arguments in state court under state law are extraordinarily strong because most states—many states—California, my home state where I am right now, has laws on the books that not only don’t make it illegal to engage in oil and gas production activities but actually affirmatively declare it as the policy of the state to encourage maximum extraction of these valuable resources for the good of our society, our economy, and the like.

 

      So from a public nuisance standpoint, or any kind of tort law claim, it all comes down to reasonableness, a cost-benefit analysis—when you look at the activities, the cost of the activities are so extreme and the damages so extreme that the benefits are vastly outweighed. Under state law, you just can’t get there because this is an activity that the government needs. It encourages -- we all participate in these activities. And again, that’s not to discount the fact that people had strong views that we need to take immediate action. From a policy standpoint, we need to debate those issues.

 

      So I think at the end of the day, the courts—state and federal level—are going to reject these claims. But it’s really unfortunate that everyone’s going to be spending all of the energy and resources to battle these things out in court rather than just really looking at positive affirmative policy solutions to drive this in the right direction here. But I think bottom line we’re going to win these cases, whether they're in state or federal court. I think they should be in federal court, though, because these are really inherently federal issues.

 

Wesley Hodges:  Now, Ted, while we wait for any questions from the audience, is there anything that you’d like to jump into in more detail?

 

Theodore J. Boutrous Jr.:  One of the things that I just alluded to is that public nuisance, private nuisance law, a lot of it goes to this balancing of cost and benefit. And one of our arguments for removal is that by bringing these claims under state law, the plaintiffs, the cities and counties are really asking the state courts to second guess the balancing of those costs and benefits that necessarily are done at the federal level, pursuant to federal statutes, including the Clean Air Act.

 

      And if you think about it, havoc, chaos will result if state courts in all 50 states and the District of Columbia are all coming to their own conclusions and seeking to regulate the same behavior and to second guess the balance struck by the federal government on something that is inherently federal.

 

      And that issue really goes both to our removal argument. We argue that, under what’s called the Grable doctrine, that such a fundamental predicate in federal issue that would have to be decided as part of a state law claim, that that provides jurisdiction in the federal courts. But it also just goes to the completely untenable nature of these claims.

 

      And I do think—not a shock, and I don’t even mean to be pejorative—I do think that one of the significant driving factors for these lawsuits is more of a public perception, a platform to focus attention on these issues. At some point the legal theories become so untenable that it’s questionable whether that is an appropriate use of our legal system. But from an analytical standpoint and judicial lawmaking perspective, these claims, however they're characterized at the end of the day, will fail.

 

Wesley Hodges:  So, Ted, anything else you’d like to comment on or cover before we wrap up our call?

 

Theodore J. Boutrous Jr.:  Maybe I’ll just add one last point for sort of the Supreme Court watchers here. We have an interesting split—this is for the civil procedure and Supreme Court watchers—on this question of the appealability of an order that remands a case back to state court. And we have the federal officer removal statute is one of really only two removal provisions that allow a defendant to appeal where the case is remanded to state court.

 

      And that’s because Congress felt it was so important to preserve the ability of federal officer or a private company working under the direction of the federal government to have access to a federal court -- to the federal court system. That’s appealable. And the statue says that an order that is decided pursuant to that statute is appealable.

 

      We argue, and the Seventh Circuit has held in a very thorough opinion by Judge Easterbrook that because the statute talks about the order being appealable, all of the issues that are addressed in the order go up on appeal as well. So we argue that all of our removal grounds, to the extent they were rejected by Judge Chhabria, are in play on appeal. And the plaintiffs cite a case from the Ninth Circuit that I don't think really addressed this issue and say, no, no, there’s a panel opinion that says only the issue that’s appealable.

 

      The issue that’s mentioned here, federal officer removal, that’s the only issue that can be dealt with on appeal. Our response to that is no, it doesn’t say issues are appealable. It says the order is appealable. And the Supreme Court in this Yamaha case from a couple decades ago ruled that under 1292(b) when you're talking about certifying issues for interlocutory appeal, the whole order goes up, even though you're literally certifying particular issues as being worthy for interlocutory appeal. The Supreme Court said no, 1292(b) says that -- it talks about the order that dealt with the issues. So we argue, and I think the better reasoned circuit decisions agree with us, that the entire order is up on appeal.

 

      There’s a Fourth Circuit decision that I argued in the Fourth Circuit, was wrongly decided and distinguishable, that is on the other side of what we’re arguing. So it’s really a kind of an interesting civil procedure question that’s lurking here, too, that could end up in the Supreme Court.

 

Wesley Hodges:  Well, thank you, Ted, for laying that out as you did. So do you have any closing thoughts for us or anything you’d like to add before we wrap up?

 

Theodore J. Boutrous Jr.:  Yeah, I would just say I really appreciate the opportunity to do this. And one of the things I’ve always admired about The Federalist Society is you get these important issues out there. You do encourage full and open discussion on all sides of the issues. And that’s really been one of the themes of our case – let’s hear what everyone has to say. Let’s look at all the viewpoints. And I think The Federalist Society has always been really a leader in terms of legal thought and the approaches to how we should debate issues. So I really appreciate that.

 

Wesley Hodges:  Well, we’re grateful for you, Ted, and thank you for those kind words. We invite everyone to continue to watch these cases with us and see how Ted and the defense does and how these move forward. So on behalf of The Federalist Society, I'd like to thank Ted for the benefit of his valuable time and expertise today. We welcome all listener feedback by email at [email protected]. Thank you all for joining us for the call. We are now adjourned.

 

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