Courthouse Steps Decision Teleforum: BP P.L.C. v. Mayor and City Council of Baltimore

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Nearly two dozen lawsuits against energy manufacturers seeking state tort damages over climate change have been filed in state courts. The defendants removed the cases to federal courts because the subject matter of the litigation involves exclusively federal issues, namely national energy policy over the worldwide uses of fossil fuels.

On May 17, 2021, The Supreme Court released its decision in one of the cases, BP P.L.C. v. Mayor and City Council of Baltimore. By a vote of 7-1, the judgment of the U.S. Court of Appeals for the Fourth Circuit was vacated and the case remanded. Justice Gorsuch's majority opinion was joined by all other members of the Court except Justice Sotomayor, who dissented, and Justice Alito, who took no part in the consideration or decision of the case.

Phil Goldberg and Karen Harned join us to discuss this decision and its implications. 

Featuring: 

Phil Goldberg, Special Counsel for the Manufacturers’ Accountability Project (MAP), a project of The National Association of Manufacturers (NAM), and Washington D.C. Office Managing Partner, Shook, Hardy & Bacon, LLP

Karen Harned, Executive Director, National Federation of Independent Business Small Business Legal Center 

 

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Event Transcript

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group Teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 

Nick Marr:  Welcome, everyone, to this Federalist Society Teleforum conference call as this afternoon, May 21, 2021, we're having a Courthouse Steps Decision Teleforum on the case called BP P.L.C. v. Mayor and City Council of Baltimore. I’m Nick Marr, Assistant Director of Practice Groups here at The Federalist Society.

 

      As always, please note that expressions of opinion on our call today are those of our experts.

      We're very pleased to be joined by two experts this afternoon taking time out on this Friday afternoon to join us and review this case. We're very grateful to them. I'm going to introduce them, and then they'll take it away, reviewing the case

      First we're joined by Phil Goldberg. He's Special Counsel for the Manufacturer's Accountability Project, a project of The National Association of Manufacturers and part of the Washington D.C. Office -- he's a managing partner of the Washington D.C. Office of Shook, Hardy & Bacon, LLP.

      We're also joined by Karen Harned, an experienced Teleforum speaker. We're glad to that she's back. She's the Executive Director of the National Federation of Independent Small Business Legal Center.

      And with that, Karen, I'll hand the floor to you first. Thanks very much for being with us.

Karen Harned:   Thank you and thank you all that are here on a Friday afternoon to join Phil and I for this interesting discussion or what I hope will be. This case, which is BP P.L.C. v. Mayor and City Council of Baltimore, concerns -- in broad context, it concerns climate change. The decision, honestly, was very narrow and a procedural one. But we're going to talk about how we got here. I'm going to review quickly the facts and the opinions, and then Phil's going to chime in with additional observations on the opinion and then talk more broadly about what this case may or may not mean in the future for climate change litigation.

      To set the table, 10 years ago, in AEP v. Connecticut, the Supreme Court had ruled that corporations could not be sued for greenhouse gas emissions under federal common law because The Clean Air Act delegates the regulation of those emissions to the EPA because as we know, there has been a big movement on the part of environmentalists in particular to ramp up greenhouse gas regulation to the extent the federal government hasn't gone as far as they would like. That set the table on that, and that put down those types of lawsuits in the federal courts.

      Those that are wanting more regulation decided to go a second route. So really starting, I think, in the summer of 2017, we saw cities and counties across the country filing lawsuits against oil and gas companies for climate change related claims, and they were doing it in state courts this time. So for example, in California, you had eight cities and counties that had sued. New York City sued. In Colorado, Boulder City and Boulder County as well as San Miguel County had sued. And then bringing us to this suit, Baltimore City sued. Again, all of them sued in state court.

      In Baltimore, the case at hand, that city sued around two dozen fossil fuel companies for creating what they called a public nuisance, and they had public and private nuisance, I think, were at least two of their eight claims that they had against these companies. So they did it in state court, and not surprisingly, the defendants wanted to get moved to federal court. That ended up really being what this particular case turned on. What Chevron said was look, this case needs to move to federal court because of the federal officer removal statute, which allows for removal of lawsuits filed in state courts against state federal officers or anyone that acts as a federal officer. Chevron had argued that Baltimore was trying to hold it liable for actions it took as federal officers or under the directions of them because, for example, they were trying to hold them liable for production of fossil fuels that were produced offshore under federal government leases. So they tried to remove, and that ended up getting challenged or pushed back, obviously, by the city.

      There're just two instances as a general rule where orders that send a case back to state court cannot be appealed. One is the federal law says -- it's one with the civil rights and one with the federal officer removal. Basically the Fourth Circuit ruled that it could only review whether removal was appropriate in this case under the federal officer statute, and it said it wasn't appropriate. And so then it declined to take on Chevron's attempt to appeal to the district court's rejection of the other grounds for removal to federal court. It said, no, we don't have federal officer removal. I'm not going to look at the rest of this. So that's where it came to the Court.

      Justice Gorsuch, for 7-1 majority, held that the Fourth Circuit was mistaken, that a federal appeals court can review the district court's entire remand order, not just the part about whether or not they were federal officers, when one of the grounds is appealable. So basically, if you've got one appealable ground for removal, which would include the federal officer statute or civil rights statute—those are the two exceptions—then you can get the whole order appealed and considered by the appellate court as to whether or not the federal court is appropriate or the district court is appropriate.

      In this instance, what Gorsuch's opinion said was basically when you look at the statute, order is order, and they weren't carving out a certain part of the order. They know how to do that when they write statutes. The other side argued well, they also know how to write -- they both were arguing on textual sides, so I feel like Gorsuch had a bit of a stronger argument there.

      Sotomayor was the only dissenter. She just argued that she was concerned that this was just going to be a way for companies in these types of litigations or other types of litigations that might involve the federal officer statute or civil rights to shoehorn their way out of the state court into federal court and that the exception was going to swallow the rule.

      Justice Alitoand I don't know whywas not part of this decision. I think he was recused for some reason.

      That is the bottom line. It's not -- so the interesting part's all the climate change stuff, but at the end of the day, this really was about whether or not if you have grounds for removal on one of these two exceptions, and this one the federal officer exception was the specific of this case, does that mean the whole order including the other grounds can be appealed too if you don't agree with the state having jurisdiction or not. But the question now isand I’m going to let Phil clean up my mess to the extent that I didn't make sense because it's Friday afternoonon the opinion, but also talk about what this might mean because as we saw again after AEP, the cities went and are trying this route through state courts on climate change. Will this ruling have much of an impact, if any, or do you think, Phil, going forward on climate change litigation and what that might look in the future?

Phil Goldberg:  Well, thanks, Karen, and thanks to The Federalist Society for hosting this conference. I really appreciate it, and it's an important case and important set of litigation that we're talking about here and certainly look forward to the question part of this and see what's on your all's mind.

      As Karen said, my name is Phil Goldberg. I’m a partner here at Shook, Hardy & Bacon. I co-chair the code policy group and I'm also Special Counsel to the Manufacturer's Accountability Project, which is under The National Association of Manufacturers. It was specifically formed to talk about this kind of litigation where oftentimes you have people seeking a political agenda try to use the courts and create very novel legal theories in order to try to advance their political agendas or their policy agendas even though they're really not proper lawsuits for the courts.

      I first want to say that the manufacturing community is very much focused on the effort of trying to deal with climate change. The manufacturers generally, including those in the energy sector, appreciate the risks of climate change and are working hard on the technologies that we need to innovate new ways, and more efficient ways, to source and use energy so that we can reduce our impact on the climate. That's not what this litigation is about. We're all on the same team when it comes to saying okay we've got to do something about this. This is really just about solutions. Innovation and collaboration is the only way to get to solutions. Lawsuits and lawyers are not going to get us past the current situation.

      With that premise, let me then talk about the ruling and what Karen was just saying and also maybe how it's going to play out. Karen went throughand I just want to emphasizethat the reason we're here is because the plaintiffs' lawyers are trying to circumvent federal law. We see a lot of times we'll see in the paper about the defendants are trying to stay in federal court because state courts are less favorable to the defendants. Well, it's really the other way around. What the dynamics here are that the federal law is clear. AEP v. Connecticut said these are areas for Congress and EPA and even said it would be inappropriate to bar the law of any state when it comes to emissions policy on carbon.

      So what the plaintiffs here are trying to do, and they've created this litigation campaign to do, is to try to circumvent federal law, to try to get around the Supreme Court, to try to find a state court that will, frankly, home team one of these cases against these larger corporations. It's a little bit disingenuous to suggest that somehow that the companies are trying to stay in federal court because it's better for them. Really, that's where the law is. These are federal issues of how we're going to assign rights and responsibilities for climate change. These are sort of masquerading as state court cases, but they're really involving federal law.

      And so the other side is tying themselves into a pretzel to try to somehow figure out how to stay in state court and at least have the veneer of a state court case because AEP v. Connecticut was so clear, because the Ninth Circuit was so clear in the Kivalina case back in 2012. All this was so clear back then. Don't take my word for this. Their own words say this.

      They had meeting in La Jolla, California in 2012 where they said the courts offer, at least in their mind, the best current hope for imposing their agenda. They talked about various concepts with suggestions ranging from lawsuits under public nuisance laws to liable claims to consumer protection acts. And they emphasized making their lawsuits look like traditional damage claims rather than directly asking a court to regulate emissions or put a price on carbon. They said even if your ultimate goal might be to shut down a company, you still might be wanting to start out asking for compensation for injured parties. Then all of this, they then explained at the La Jolla conference, was about the importance of framing a compelling public narrative. They talked about naming the narrative in order to help generate outrage.

      So all of this is a political campaign to discredit and what they later said to establish in the public's mind that these companies are "corrupt," to "delegitimize them," and to "force officials to disassociate themselves from them." They are hoping to "creating scandal" through the lawsuits to drive their political outcomes. That's what the backdrop to all of this is. None of that was what was discussed Monday in the opinion by the Supreme Court, but that's the backdrop to what's really going on here.

      What they're trying to do is -- so they filed all these cases that Karen has talked about, trying to at least get at least one state court judge want to buy into this framework and be willing to let a case to go forward. The Annapolis is one of the more recent ones to file, and the city attorney for Annapolis in a press conference said that he was confident "the Maryland courts will get us there." So they know what this is about. When you look at the issues and if the federal courts are able to look at all of the reasons why these are inherently federal claims, we're confident that they're going to ultimately get to the right place, which is to dismiss these cases.

      I'm not saying these are slam dunks. I'm not saying that there's a bright line, but we've always maintained the position that when the courts fully look at this, at the end of the day, there should be no liability for selling and producing the energy that we all need to live a modern life, to fuel our cars, to heat our homes, to power our factories, to turn on our lights, all the things that we have to do. That is not a liability inducing event. It's a collective shared global challenge for which we need a global and certainly federal solution when we're setting policies within the country.

      What the issue here -- and I do think, frankly, the plaintiffs have a little bit of advantage in the sense that there's something called the well-pleaded complaint rule, and they've completed their compliant or state tort claims. So the burden is obviously on the defendants or the companies to say why these are inherently federal issues. As they and we have explained in our briefings to the Court, these cases are not specific to any jurisdiction. They're basically copy and paste claims that are being filed around the country because what they're really going after is the international production, sale, promotion, and use of energy. If you look, at the end of the day, that's what this is about.

      The federal judges who have looked at these issues have largely agreed. You had Judge Alsup in the Ninth Circuit, he saw through these cases for what they are. You had Judge Keenan in the Second in New York see through this and say that these were basically emissions cases hiding in with this other packaging around it. And the Second Circuit upheld Judge Keenan's ruling just a few weeks ago and agreed and saying that these are federal issues, that these are not liability issues, and they should be decided in the political branches and the policy branches of government.

      When we've had judges look at this, especially federal judges and they look at the substance of what's going on, they have come to the conclusion that these are not appropriate cases but are policy matters. So that is exactly why the plaintiffs' lawyers are trying to get around the federal courts. They are trying to undermine federal law, and they're trying to get their policy preferences driven through state court judges. That's where we are now.

      In the past few days, the judge hearing Annapolis case stayed that case pending the outcome of what the Fourth Circuit now will do in Baltimore. There was a hearing in a Delaware case earlier this week where the impact of the Baltimore case was discussed. That’s in the Third Circuit, not the Fourth. I would image that there will be motions filed if they haven't been already in all the cases to send them back to the -- all the cases where the federal circuits have said they're only looking at the federal officer removal doctrine issue in those remand appeals -- and get them back into the First Circuit and presumably the Ninth. I think we'll have to see what happens there and in the other circuits as well. This will be playing out over a long period of time. This is a procedural mechanism that puts it back into federal court. Some circuits may send them back to state court still, but we think that there either will be a circuit split on that or more circuits will realize that these are federal cases and then will take the next steps where they come.

      Hopefully that filled in some more of the picture from where Karen left it off, and happy to open it up and answer questions or pass it back to Karen if she has more to add.

Karen Harned:   Well, actually, I just had a question for you, but I think you kind of alluded to it in your final comment there which is basically this was the Supreme Court once again going as narrow as it possibly could, but you anticipate, I presume, that as these different -- assuming the different circuits do rule differently on whether or not these cases can continue in state courts that the Supreme Court's going to have to deal with the merits as some point?

Phil Goldberg:  I think that's right. This is a 7-1 ruling as you indicated. Alito tends to recuse himself from energy sector cases, my understanding is dealing with personal investments. I don't know exactly what they are. It was a 7-1 ruling. I think they get 7-1. They probably had to agree to just focus on the narrow issue rather than make boarder statements about the climate litigation which some of us were hoping they would do, at least drop a few breadcrumbs as to what they thought about the larger case. But then it probably would have been a 5-3 or whatever decision, and this was on the legal issue clearly, the majority agreed, and I think that the way they decided to go. It's obviously the way the decided to go.

      I think to suggest that this is the last time the Supreme Court is going to see these cases, I think, is wrong. There already is a cert petition before them on the next issue up the rung of the ladder. So the first question is, on this appellate issue of review, can they look at the whole order, and that's what they decided. Then the next question is, well, when you look at the whole order, are these federal or are these state issues or are these inherently federal?

      Judge Alsup in the City of Oakland in the City of San Francisco cases said yeah, they are inherently federal, and then he dismissed it on the substance. Well, the Ninth Circuit overturned that ruling on the jurisdictional aspects of that ruling saying that they fall under the well-pleaded complaint rule that this should go back to -- should just be remanded back to state court. The defendants have filed a cert petition in that case, and that's currently pending as a cert petition before the Supreme Court where they could answer that next question. Are these inherently federal, and should they be heard in federal court? They haven't ruled on that yet. It took about a month or so to get docketed, and the plaintiffs got a 30-day extension in their response. I think they just filed their brief in opposition a week or so ago. That may get to a judicial conference before the Court recesses. It may not. So it's unclear when they're going to look at that and whether they would grant review, grant cert in that case.

      That would be the next easy opportunity for the U.S. Supreme Court to hear these cases. But at some point, they'll be back. I would [inaudible 00:23:30] if you start seeing state court cases go forward and trials and all that, they'll be back before the Supreme Court because that would just be undermining its authority.

Karen Harned:   Yeah. No, I think you're right on that for sure. I guess, Nick, really, honestly, if there's people with questions, we should go ahead and take them.

Nick Marr:  Great. Okay. Let's open the floor up. Thank you both for that great conversation. Let's see, and we've got one caller online right now, so you have the floor.

Arthur Hellman:  Hello. This is Arthur Hellman at the University of Pittsburgh. Thanks for a very informative presentation. I'd like to pick up on what you were saying about the well-pleaded complaint rule. One of the exceptions to that rule is the doctrine of complete preemption which allows state law claims to be recharacterized as federal. Is that one of the issues that's in play here, in addition to the question of federal common law as providing the basis for regular federal question jurisdiction?

Phil Goldberg:  The short answer is yes. They are arguing complete preemption. The federal districts courts that have remanded the case have said there is no complete preemption. When Judge Alsup looked at this, it really was more when you sit back and you consider this issue, it is inherently federal. We're dealing with setting national energy policy and how we're going to transition to more efficient uses and sources of energy. These are not state tort claims even if they're presented that way. Judge Alsup, he's a very well-respected judge. He's not political, and so that should have been and I think was very influential, and it was unfortunate the Ninth Circuit overturned it. But there are a number of reasons why the defendants have a number of grounds that they have put forward in terms of why these are federal issues and should be heard in federal court, and that's one of them. So, yeah.

Arthur Hellman:  Well, the inherently federal certainly makes sense as a practical matter. The problem as you're aware is fitting that into the Supreme Court's doctrine. But one of the old cases, one of the Milwaukee cases that said that federal common law could be the basis for regular jurisdiction under § 1331. I'm wondering how the Ninth Circuit distinguished that. I think that's a sentence in the opinion, but it was the Supreme Court speaking, as I recall, on precisely that point.

Phil Goldberg:  Yeah, the idea of interstate pollution, which if you're arguing that climate -- that carbon emissions and greenhouse gas emissions is pollution, that's sort of global pollution and obviously beyond interstate, but it's certainly not within a state. So there's those line of cases that you mentioned where that raises federal issues for federal court. That is also one of the grounds that is being discussed. I'd have to go back and take a look at the Ninth Circuit. I apologize for not having looked at it before the call as to exactly what it said about that to the extent that it did. But, yeah, there is that line of , and that is yet another grounds for why these are federal.

Arthur Hellman:  Good. Thank you. All these are very interesting issues, and I agree with you that the Supreme Court will ultimately have to wade back into this.

Phil Goldberg:   Thank you for the questions. Good questions.

Nick Marr:  We don’t have any callers in the queue right now. The floor is wide open, but Phil or Karen, I'll send it back to you.

Karen Harned:  Well, I guess I really don't have anything else really to add other than just that it is painful at times to watch the Court work this incrementally because I do just think that it results in a lot of unnecessary litigation. Had they at least even, as you said Phil, given some breadcrumbs as to where they might go on whether or not this is a federal issue and whether or not states are even appropriate to take these cases, that would have been helpful. But it is what it is, so we live to fight another day on that one. But that's really all I have. Phil, do you have anything that you'd like to add?

Phil Goldberg:  Only that my son has just finished his junior year at The University of Pittsburgh and hopefully Professor Hellman will look out for him and make sure that he graduates and does well in the future. He's in the business school. I'm not sure, Professor Hellman, if that's where you are [laughs].

      This is an important issue I think beyond just -- in sort of two realms. One is the climate change realm and we deal with climate policy and what we need to be doing as a country and whether we should allow the tail to wag the dog here, rather than deal with this head on in a national and coordinated fashion, which I think is what we should be doing.

      But also, there's this movement among the plaintiffs' bar to use public nuisance, to use Consumer Protection Act claims, to use these novel tort theories, and not even not as far as public nuisance are concerned, it's not the way those torts are normally used. They try to create the veneer of these torts in order to try to blame manufacturers or make manufacturers pay for societal or other issues that are going on. And they want to just skip right over often who's truly at fault or who's engaging in any misconduct.

      Here I'm not suggesting that there's misconduct being engaged in, but if they find a chemical in drinking water, they want to say oh, let's sue the manufacturer who made the chemical or oh, we don't know who did that, we'll just sue them all and make all the manufacturers of that chemical pay to clean up the drinking water. When maybe it was some other company who had that chemical just dumped the chemical into the water and it got into the drinking water.

      So taking this idea that we're just taking these shortcuts. We're going to change the law. We're going to create this liability whether for political purposes like here or just to why not make them pay for it instead of us which is what the communities here are talking about in the climate change cases, it's not the right use of tort law. It's not the right use of liability law, generally. It should be of concern to a lot of people because it sounds a little bit abstract, but it's going to really hit us in the pocketbook and it's going to hit us in our jobs and it's going to hit us in a lot of the stuff that we do every day if all of a sudden the manufacturing community is supposed to bankroll all of these issues. There's just not enough money there to do it, and we're going to really set our manufacturing community back competitively if we're asking them to pay for all these issues. Was that enough to put everyone to sleep? [laughter]

Karen Harned:  No. I couldn't agree more [crosstalk].

Nick Marr:  All righty. I don't see any new questions, and I think we may have come to the end of our time this afternoon unless, Phil or Karen, you want to step in with any closing remarks or that might have been it. We can close out this afternoon and give everyone a bit of their time back on this Friday afternoon.

      I want to thank you all for joining us today, especially, thanks on behalf of The Federalist Society to our speakers, Phil and Karen, for taking the time to do this, for the benefit of their valuable time and expertise today. Of course, thank you to our audience for calling in and  your good question. We welcome your feedback by email at info@fedsoc.org. Also, at the beginning of next week, check your emails and our website for announcements about upcoming Teleforum calls, Zoom events, and more. And with that, thank you all for joining us today. Have a great weekend. We are adjourned. 

 

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Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s Practice Groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at www.fedsoc.org.