City & Cnty. of Honolulu v. Sunoco LP

153 Hawai‘i 326

537 P.3d 1173

CITY AND COUNTY OF HONOLULU and Honolulu Board of Water Supply, Plaintiffs-Appellees,

v. SUNOCO LP; Aloha Petroleum, Ltd.; Aloha Petroleum LLC; Exxon Mobil Corporation; ExxonMobil Oil Corporation ; Royal Dutch Shell PLC ; Shell Oil Company; Shell Oil Products Company LLC; Chevron Corporation; Chevron U.S.A. Inc.; BHP Hawaii Inc.; BP PLC ; BP America Inc. ; Marathon Petroleum Corporation; ConocoPhillips; ConocoPhillips Company; Phillips 66; and Phillips 66 Company, Defendants-Appellants,andBHP Group Limited and BHP Group PLC, Defendants-Appellees.

SCAP-22-0000429

Supreme Court of Hawai‘i.

October 31, 2023

Theodore J. Boutrous, Jr.,^* Joshua D. Dick,* Melvyn M. Miyagi, Ross T. Shinyama, Summer H. Kaiawe, Honolulu, Andrea E. Neuman,* and Erica W. Harris,* for appellants Chevron Corporation and Chevron U.S.A., Inc.

C. Michael Heihre, Michi Momose, J. Scott Janoe,* Honolulu, Megan Berge,* and Sterling Marchand,* for appellants Sunoco LP, Aloha Petroleum, Ltd., and Aloha Petroleum LLC

Paul Alston, John-Anderson L. Meyer, Claire Wong Black, Glenn T. Melchinger, Honolulu, Theodore V. Wells, Jr.,* Daniel J. Toal,* and Yahonnes Cleary,* for appellants Exxon Mobil Corporation and ExxonMobil Oil Corporation

Joachim P. Cox, Randall C. Whattoff, David C. Frederick,* James M. Webster III,* and Daniel S. Severson,* for appellants Shell plc (f/k/a Royal Dutch Shell plc), Shell U.S.A. Inc. (f/k/a Shell Oil Company), and Shell Oil Products Company LLC

Margery S. Bronster, Lanson K. Kupau, Honolulu, Kelly A. Higa Brown, Victor L. Hou,* and Boaz S. Morag,* for appellants Woodside Energy Hawaii Inc. (f/k/a BHP Hawaii Inc.) and appellee BHP Group Limited

Lisa A. Bail, David J. Hoftiezer, Honolulu, Jonathan W. Hughes,* Matthew T. Heartney,* and John D. Lombardo,* for appellants BP plc and BP America Inc.

Ted N. Pettit, Honolulu, Shannon S. Broome,* Shawn Patrick Regan,* and Anne Marie Mortimer,* For appellants Marathon Petroleum Corporation

Crystal K. Rose, Adrian L. Lavarias, Honolulu, Sharon Paris, Jameson R. Jones,* Daniel R. Brody,* Steven M. Bauer,* Margaret A. Tough,* and Katherine A. Rouse,* for appellants ConocoPhillips, ConocoPhillips Company

Crystal K. Rose, Adrian L. Lavarias, Honolulu, Sharon Paris, Steven M. Bauer,* Margaret A. Tough,* and Katherine A. Rouse,* for appellants Phillips 66 and Phillips 66 Company

Victor M. Sher,* Dana M.O. Viola, Robert M. Kohn, Nicolette Winter, Jeff A. Lau, Matthew K. Edling,* Corrie J. Yackulic,* and Stephanie D. Biehl,* for appellees City and County of Honolulu and Honolulu Board of Water Supply

Anne E. Lopez, Ewan C. Rayner, for amicus curiae, Department of Attorney General

Tara A. Buckley, for amicus curiae, Hawai‘i State Association of Counties

Chase H. Livingston, for amicus curiae, Legal Scholars

Mark M. Murakami, Honolulu, for amicus curiae, Chamber of Commerce of the United States of America

RECKTENWALD, C.J., McKENNA, AND EDDINS, JJ., CIRCUIT JUDGE JOHNSON AND CIRCUIT JUDGE TONAKI, ASSIGNED BY REASON OF VACANCIES, AND EDDINS, J., CONCURRING

OPINION OF THE COURT BY RECKTENWALD, C.J.

I. INTRODUCTION

The City and County of Honolulu and the Honolulu Board of Water Supply (collectively, Plaintiffs) brought suit against a number of oil and gas producers¹ (collectively, Defendants) alleging five counts: public nuisance, private nuisance, strict liability failure to warn, negligent failure to warn, and trespass. Defendants appeal the circuit court's denial of their motions to dismiss for both lack of jurisdiction and failure to state a claim. We conclude that the circuit court properly denied both motions, and accordingly, this lawsuit can proceed.

Plaintiffs argue this is a traditional tort case alleging that Defendants engaged in a deceptive promotion campaign and misled the public about the dangers of using their oil and gas products. Plaintiffs claim their theory of liability is simple: Defendants knew of the dangers of using their fossil fuel products, "knowingly concealed and misrepresented the climate impacts of their fossil fuel products," and engaged in "sophisticated disinformation campaigns to cast doubt on the science, causes, and effects of global warming," causing increased fossil fuel consumption and greenhouse gas emissions, which then caused property and infrastructure damage in Honolulu. Simply put, Plaintiffs say the issue is whether Defendants misled the public about fossil fuels’ dangers and environmental impact.

Defendants disagree. They say this is another in a long line of lawsuits seeking to regulate interstate and international greenhouse gas emissions, all of which have been rejected. Greenhouse gas emissions and global warming are caused by "billions of daily choices, over more than a century, by governments, companies, and individuals," and Plaintiffs "seek to recover from a handful of Defendants for the cumulative effect of worldwide emissions leading to global climate change and Plaintiffs’ alleged injuries." They argue: (1) the circuit court lacked specific jurisdiction over the Defendants; (2) Plaintiffs’ claims are preempted by federal common law, which in turn, was displaced by the Clean Air Act (CAA); and (3) alternatively, Plaintiffs’ claims are preempted by the CAA.

We agree with Plaintiffs. This suit does not seek to regulate emissions and does not seek damages for interstate emissions. Rather, Plaintiffs’ complaint "clearly seeks to challenge the promotion and sale of fossil-fuel products without warning and abetted by a sophisticated disinformation campaign." Mayor & City Council of Baltimore v. BP P.L.C., 31 F.4th 178, 233 (4th Cir. 2022), cert. denied, ––– U.S. ––––, 143 S. Ct. 1795, 215 L.Ed.2d 678 (2023) (characterizing a complaint brought against many of the same Defendants in this case alleging broadly the same counts, theory of liability, and injuries). This case concerns torts committed in Hawai‘i that caused alleged injuries in Hawai‘i.

Thus, Defendants’ arguments on appeal fail. First, Defendants are subject to specific jurisdiction in Hawai‘i because: (1) Plaintiffs’ allegations that Defendants misled consumers about fossil fuels products’ dangers "arise out of" and "relate to" Defendants’ contacts with Hawai‘i, i.e., Defendants’ sale and marketing of those fossil fuel products in Hawai‘i, Ford Motor Co. v. Montana Eighth Judicial District Court, 592 U.S. ––––, 141 S. Ct. 1017, 1025, 209 L.Ed.2d 225 (2021) ; (2) it is reasonable for Hawai‘i courts to exercise specific jurisdiction over Defendants, and doing so does not conflict with interstate federalism principles because Hawai‘i has a "significant interest[ ] ... [in] ‘providing [its] residents with a convenient forum for redressing injuries inflicted by out-of-state actors,’ " see id. at 1030 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ); and (3) the Supreme Court has never imposed a "clear notice" requirement, see id. at 1025.

Second, the CAA displaced federal common law governing interstate pollution damages suits; after displacement, federal common law does not preempt state law. See Am. Elec. Power Co. v. Connecticut, 564 U.S. 410, 423-24, 131 S.Ct. 2527, 180 L.Ed.2d 435 (2011) (" AEP"); Bd. of Cnty. Comm'rs of Boulder Cnty. v. Suncor Energy (U.S.A.) Inc., 25 F.4th 1238, 1260 (10th Cir. 2022), cert. denied, ––– U.S. ––––, 143 S. Ct. 1795, 215 L.Ed.2d 678 (2023) ("[T]he federal common law of nuisance that formerly governed transboundary pollution suits no longer exists due to Congress's displacement of that law through the CAA."). We must only consider whether the CAA preempts state law. AEP, 564 U.S. at 429, 131 S.Ct. 2527 ("[T]he availability vel non of a state lawsuit depends inter alia on the preemptive effect of the [CAA].").

Third, the CAA does not preempt Plaintiffs’ claims. The CAA does not occupy the entire field of emissions regulation. See Merrick v. Diageo Ams. Supply, Inc., 805 F.3d 685, 695 (6th Cir. 2015) (determining that there is "no evidence that Congress intended that all emissions regulation occur through the [CAA's] framework"). There is no "actual conflict" between Plaintiffs’ state tort law claims and the CAA's overriding federal purpose or objective. See In re Methyl Tertiary Butyl Ether (MTBE) Prod. Liab. Litig. (MTBE ), 725 F.3d 65, 101 (2d Cir. 2013) (concluding that CAA did not preempt state tort law claims relating to a gasoline additive where it was possible to comply with both state and federal law).

Therefore, we affirm the circuit court's orders denying Defendants’ motion to dismiss for lack of jurisdiction and motion to dismiss for failure to state a claim.

II. BACKGROUND

A. Circuit Court Proceedings

1. Original complaint, removal, and remand

In March 2020, Plaintiffs filed their original complaint in the Circuit Court for the First Circuit alleging that for decades, Defendants knew their fossil fuel products caused greenhouse gas emissions and global warming, but they failed to warn consumers of the threat, and actively worked to discredit scientific evidence that supported the existence of global warming. In April 2020, Defendants removed the case to federal court. Defendants argued that removal jurisdiction was appropriate because federal common law governed, and the CAA and other federal statutes preempted Plaintiffs’ claims.²

On Plaintiffs’ motion, the federal district court remanded the case to state circuit court. The federal court explained that the Ninth Circuit, in City of Oakland v. BP PLC, 969 F.3d 895, 906-08 (9th Cir. 2020), recently rejected Defendants’ federal-common-law, federal-preemption, and federal-question-jurisdiction arguments. City & Cnty. of Honolulu v. Sunoco LP, No. 20-CV-00163-DKW-RT, 2021 WL 531237, at *2 n.8 (D. Haw. Feb. 12, 2021). The court explained that the "principal problem with Defendants’ arguments is that they misconstrue Plaintiffs’ claims." Id. at *1. "More specifically, contrary to Defendants’ contentions, Plaintiffs have chosen to pursue claims...