Communicating with Sugarman Rogers through this website does not create an attorney-client relationship with the firm or any of our attorneys. Our decision as to whether and on what terms we may agree to represent a client involves consideration of a variety of factors, discussion with the prospective client, and, where appropriate, a written engagement agreement.
Please do not use this form of communication to transmit any private, personally identifying, or other confidential information. We cannot guarantee the confidentiality or security of this means of communication.
April 16, 2018
Attorney General granted broad authority to investigate ExxonMobil for unfair trade practices relating to its climate change knowledge and activities
Date: April 16, 2018
Related Services: Environmental & Energy Law
On April 13, 2018, the Massachusetts Supreme Judicial Court ruled that the state Attorney General can proceed with her investigation into whether Exxon Mobil Corporation (“ExxonMobil”) violated the state consumer protection law (G. L. c. 93A) by concealing its knowledge about whether and how fossil fuel emissions contribute to global warming and climate change. Unless the U.S. Supreme Court intervenes, as a result of the SJC’s decision in Exxon Mobil Corp. v. Attorney General ExxonMobil will now be required to disclose reports, communications, and other materials concerning the company’s understanding of climate change risks, its potential failure to inform the public about those risks, and its efforts “to undermine the evidence of climate change altogether, in order to preserve its value as a company.”
The events leading up to this case began in April 2016, when the Attorney General served a civil investigative demand (C.I.D.) seeking a wide range of ExxonMobil’s internal documents on climate change dating from the 1970s to the present. The core purpose of the C.I.D. was to determine whether ExxonMobil had made false or misleading statements to the public or its investors about climate change, including whether the effects of climate change would adversely impact the value of ExxonMobil’s fossil fuel-based business. In June 2016, ExxonMobil challenged the C.I.D.’s validity in Massachusetts Superior Court, raising four arguments as to why it should not be required to comply with the Attorney General’s investigation. ExxonMobil claimed that: (1) it is not subject to personal jurisdiction in Massachusetts; (2) the Attorney General should be disqualified for bias against the company; (3) the C.I.D. violates its statutory and constitutional rights; and (4) the case should be stayed pending a ruling on ExxonMobil’s request for relief in a separate federal court action filed in Texas. The Superior Court denied ExxonMobil’s challenge, ordering the company to produce the documents sought by the Attorney General.
ExxonMobil appealed, and the SJC accepted the case. In its decision, the SJC addressed—and rejected—each of ExxonMobil’s four arguments:
1. Massachusetts has jurisdiction over ExxonMobil for purposes of the A.G.’s investigation
First, the SJC determined that “there is a sufficient connection between” the Attorney General’s investigation “and Exxon[Mobil]’s Massachusetts-based activities” to create jurisdiction in this state. That determination was based on the Court’s finding that ExxonMobil’s activities in Massachusetts (namely, its franchisor-franchisee relationship with more than 300 Exxon and Mobil-branded retail service stations here) satisfied both the state’s “long‑arm statute,” G. L. c. 223A, § 3, and constitutional requirements of due process. In particular, the SJC found that because ExxonMobil has the right to control its franchisees’ “advertising of its fossil fuel products to Massachusetts consumers,” the Attorney General had met its burden to show that its investigation “arose out of” ExxonMobil’s activities and contacts in Massachusetts.
2. The Attorney General is not disqualified from investigating Exxon
The SJC also rejected ExxonMobil’s claim that the entire Attorney General’s office should be disqualified from this investigation because of statements made by the Attorney General during a March 2016 press conference. During that conference, the Attorney General announced the investigation of ExxonMobil while stating that “fossil fuel companies that deceived investors and consumers about the dangers of climate change should be, must be, held accountable.” ExxonMobil argued that these statements violated Rule 3.6 of the Massachusetts Rules of Professional Conduct, which prohibits any lawyer from making prejudicial statements to the public concerning an ongoing investigation. But the Court held that they were not inappropriate but rather a “reasonable” part of the Attorney General’s job “to inform the public of the basis for the investigation into Exxon.”
3. The Attorney General’s investigation does not violate Exxon’s rights
The SJC also found that the content and scope of the C.I.D. was not overly broad, unduly burdensome, arbitrary or capricious. Contrary to ExxonMobil’s claims, the Court held that the materials sought by the Attorney General were “describe[d] with reasonable particularity” since the C.I.D. focused specifically on “Exxon’s knowledge of the impacts of carbon dioxide and other fossil fuel emissions on the Earth’s climate.” Moreover, as the Court stated, Chapter 93A grants the Attorney General “broad investigatory powers,” including the power to examine all materials relevant to an alleged unlawful act, provided that the investigation does not exceed reasonable limits. The Court also explained that the Attorney General does not need to have probable cause that a Chapter 93A violation occurred before initiating an investigation; rather, “she need only have a belief that a person has engaged in or is engaging in conduct declared by be unlawful.”
4. Exxon’s federal lawsuit will not prevent the investigation from going forward
Finally, the Court denied Exxon’s request to stay this case pending the outcome of its federal litigation, originally filed in the Northern District of Texas and later transferred to the Southern District of New York. In that federal litigation, ExxonMobil has challenged the constitutionality of Healey’s investigation, and later a similar investigation opened by New York Attorney General Eric Schneiderman. In support of its decision denying a stay, the SJC explained that Massachusetts Superior Court—rather than federal court in Texas—is the most appropriate forum in which to litigate disputes arising under Chapter 93A. The Court then rejected ExxonMobil’s argument that this case should be stayed because ExxonMobil had filed the federal lawsuit one day earlier, explaining that courts have “discretion to give preference to a later-filed action when that action will better serve the interests involved,” and pointedly noting that discouragement of forum-shopping is a consideration when ruling on a motion to stay a case in favor of a prior-filed action.
Having disposed of each of ExxonMobil’s four arguments, the SJC then affirmed the Superior Court’s decision compelling ExxonMobil to comply with the Attorney General’s demand for records concerning ExxonMobil’s knowledge of activities relating to climate change.
Notably, this decision represents the second recent defeat for ExxonMobil in its attempts to thwart state investigations into whether the company misled the public about its knowledge of climate change. On March 29, 2018, a federal court in the Southern District of New York dismissed the preemptive federal lawsuit filed by ExxonMobil against Healey and New York Attorney General Eric Schneiderman that sought to stop both investigations, finding that “Exxon’s allegations that the [attorneys general] are pursuing bad faith investigations in order to violate Exxon’s constitutional rights are implausible and therefore must be dismissed for failure to state a claim.”
Following its landmark 2016 climate change decision in Kain v. Department of Environmental Protection, this decision is further evidence that the SJC is ready and willing to grapple with emerging climate change issues, and that fossil fuel companies’ attempts to undermine investigation into the connections between their business activities and climate impacts will be closely scrutinized. The SJC’s matter-of-fact description of climate change caused by greenhouse gas emissions as “a distinctly modern threat that grows more serious with time, and the effects of which are already being felt in Massachusetts” reflects that the Court considers the premises of climate deniers to be demonstrably false, as a matter of both fact and law. Also striking is the routine manner in which the SJC disposed of a bold and aggressive challenge by Exxon to an equally bold exercise of state law enforcement power to investigate a matter of grave import. The Court found no need to develop any extraordinary new rules, but simply provided a traditional application of familiar jurisdictional and procedural doctrines to the unusual facts at hand.