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In January, the US Supreme Court will hear arguments in one of the lawsuits filed against oil and gas companies for their alleged contribution to climate change. The Court’s ruling will likely have a significant impact on how climate change litigation will proceed and, consequently, on the exposure faced by the “Carbon Majors” – and their liability insurers.
The second wave of climate change lawsuits
In previous articles[1] addressing climate change litigation in the context of insurance and reinsurance, we have discussed the “second wave” of climate-related lawsuits being brought in the US since 2017-2018. State and local governments across the nation are suing oil and gas companies, alleging, in essence, as the Fourth Circuit put it, that these defendants “substantially contributed to climate change by producing, promoting, and (misleadingly) marketing fossil fuel products long after learning the dangers associated with them.”[2] Plaintiffs plead various causes of action under state law, such as public and private nuisance, failure to warn, and design defect. They seek monetary damages and other relief.[3]
State v. federal court
State and local governments filed these actions in state court, a venue that they feel is more advantageous. The Carbon Majors, however, removed the lawsuits to federal court, their preferred venue. Plaintiffs responded by moving to remand the cases back to state court.
Proceeding in state or federal court can be critical to the outcome of these climate change lawsuits. For example, a federal district court in California dismissed complaints filed by Oakland and San Francisco for failure to state a claim upon which relief can be granted.[4] In contrast, state courts are more likely to allow these actions to move past the pleading stage and into discovery.
It is therefore not surprising that climate change plaintiffs and energy companies are engaged in a fierce battle over the proper venue for the lawsuits. The question of removal is being litigated in around 20 federal cases nationwide. The issue has now reached the US Supreme Court.
The Baltimore case
In a case brought by the Mayor and City of Baltimore in Maryland state court, and removed by defendants to federal court on eight separate grounds, the district court rejected each of those eight theories and remanded the case to state court.[5] The Carbon Majors appealed, but in March 2020, the Fourth Circuit Court of Appeals affirmed the decision.
The Fourth Circuit held that under the applicable statute, 28 U.S.C. § 1447(d), it only had authority to review one of the eight asserted bases for removal; the seven other grounds were outside of the appellate court’s jurisdiction.[6] And, with respect to the single reviewable basis for removal, the so-called federal officer removal statute, the Fourth Circuit held that defendants failed to satisfy the requirements of that provision.[7]
Following this decision, the First, Ninth and Tenth Circuit Courts of Appeal have also remanded climate change lawsuits to state court.[8]
The Supreme Court steps in
In the Baltimore case, the...
