On March 15, 2020, the Second Circuit rejected an appeal brought by ExxonMobil attempting to block investigations by the New York and Massachusetts Attorneys General into historical claims made by Exxon regarding climate change.  These cases have a long procedural history in both state and federal courts as Exxon has employed multiple procedural vehicles to attempt to halt the investigations.  Generally, both investigations relate to whether Exxon intentionally mislead investors and the public regarding its knowledge and the risks of climate change.  We've previously discussed many of the twists and turns in these cases including:

Most recently, Exxon, arguing a number of constitutional challenges, appealed from a judgment of the United States District Court for the Southern District of New York that dismissed its complaint against the New York and Massachusetts Attorneys General and denied leave to amend its complaint as futile.  Exxon filed separate claims, later consolidated, against the New York and Massachusetts AGs in an attempt to prevent their investigations into its historical knowledge of climate change.  As to the New York AG, the court held that Exxon's appeal was moot because the New York AG already concluded its investigation in an enforcement action, in which Exxon prevailed.  For the Massachusetts AG, the court held that the various claims brought by Exxon were precluded by res judicata because Exxon either did, or could have, raised the issues in the Massachusetts State Court case referenced above.  Accordingly, AG Healey's lawsuit continues.

In another loss for ExxonMobil, the Suffolk County Superior Court ruled, on March 22, 2022, that it will not be able to argue that the suit brought by the Massachusetts AG is politically motivated.  Specifically, the court held that "Exxon has failed to suggest plausibly that the Mass. AG's actions constitute selective enforcement.. [because] none of its factual allegations (as opposed to the numerous conclusory ones) in the Amended Answer plausibly suggest that Exxon was singled out for disparate treatment."   Further, the court found that Exxon's allegations do not "plausibly suggest that the Mass. AG is solely engaged in political retaliation and lacks good faith belief that Exxon engaged in fraud."

Both the New York and Massachusetts AGs' investigations focused on Exxon's knowledge of climate change and whether it mislead investors about its knowledge and the risks associated with burning fossil fuels.  These investigations were brought on, in part, in response to the growing Environmental, Social, and Governance ("ESG") focus by investors in analyzing material risks in investments.  In June 2021, twelve state AGs, including Massachusetts and New York, sent a letter to the SEC calling "for comparable, specific, and mandatory climate-related disclosures" by SEC regulated firms.  On March 21, 2022, the SEC proposed new rules on climate disclosures.  In sum, the proposed rules will require climate disclosures in financial statements and Green House Gas emission disclosures in other required filings such as registration statements, periodic reports, and proxy statements.  Please review our ESG Alert on these proposed rules for a more in depth analysis.

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