After more than four years of litigation that pitted the State of New York against energy giant Exxon Mobil for allegedly hiding the cost of climate change from investors, a judge has exonerated the company of wrongdoing.
New York Justice Barry Ostrager ruled on the Exxon Mobil case on Tuesday.
“The Office of the Attorney General failed to prove, by a preponderance of the evidence, that ExxonMobil made any material misstatements or omissions about its practices and procedures that misled any reasonable investor,” Ostrager wrote in his ruling.
“The office of the Attorney General produced no testimony from any investor who claimed to have been misled by any disclosure, even though the Office of the Attorney General had previously represented it would call such individuals as trial witnesses,” Ostrager wrote.
In what could be a nod to the environmentalists who blasted the decision, the judge explained the legal basis of the suit.
“Nothing in this opinion is intended to absolve ExxonMobil from responsibility for contributing to climate change through the emission of greenhouse gases in the production of its fossil fuel products,” Ostrager wrote. “ExxonMobil is in the business of producing energy, and this is a securities fraud case, not a climate change case.”
Then-New York Attorney General Eric Schneiderman launched the investigation in 2015, claiming that the company knew about the impact of carbon emissions on climate change for decades but hid the data.
In the years since, the case narrowed in scope, and in the end, it fell under New York’s Martin Act — a 1921 law meant to protect investors from false statements from corporations, even if the company was not trying to be deceptive, CNBC reported.
CNBC reported on the reaction to the ruling:
The $1.6 billion lawsuit brought by the New York attorney general’s office alleged that Exxon deceived investors about the true cost of climate change. The trial, which began in October and was the first climate fraud lawsuit to go to trial, was the result of a four-year investigation.
“Despite this decision, we will continue to fight to ensure companies are held responsible for actions that undermine and jeopardize the financial health and safety of Americans across our country, and we will continue to fight to end climate change,” New York Attorney General Letitia James said in a statement following the verdict.
The case focused on how Exxon, the United States’ largest oil company, accounted for the future potential cost of climate change. New York’s case accused the company of misrepresenting these costs, with James arguing that the company used one set of numbers publicly, while operating with a less conservative forecast internally.
Exxon also reacted to the verdict.
“Today’s ruling affirms the position ExxonMobil has held throughout the New York Attorney General’s baseless investigation,” Exxon spokesperson Casey Norton said in a statement. “We provided our investors with accurate information on the risks of climate change.”
“The court agreed that the Attorney General failed to make a case, even with the extremely low threshold of the Martin Act in its favor,” Norton said.
“Lawsuits that waste millions of dollars of taxpayer money do nothing to advance meaningful actions that reduce the risks of climate change,” Norton said in the statement.
“ExxonMobil will continue to invest in researching breakthrough technologies to reduce emissions while meeting society’s growing demand for energy.”
Bloomberg reported on former Secretary of State and Exxon Mobil CEO Rex Tillerson’s role in the case:
New York initially claimed that former Exxon chief executive officer Rex Tillerson had spearheaded the scheme to dupe investors and that the plan was readily adopted by his underlings. Tillerson rejected the claim under oath, while Exxon’s lawyer said New York had dragged the names of the company’s executives and engineers “through the mud” by advancing such a claim and then dropping it at the last minute.
During his opening statement to the judge, Exxon’s lawyer, Theodore Wells, said the state had been swayed to investigate the company by talks with environmentalists and billionaires who wanted to vilify the company at the expense of facts.
“It’s almost like the Russians trying to interfere with the election,” Wells said on the first day of the trial. “I mean, think about what’s going on here.”
The case is People of the State of New York v. Exxon Mobil, 452044/2018, New York State Supreme Court (Manhattan).
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