Insurer Implications As 3 Climate Suits Return To State Courts
By José Umbert and Jason Reeves (April 26, 2022, 4:28 PM EDT)
After years of litigation over the proper venue for climate change
lawsuits, several federal courts of appeal have recently sent those
cases to state courts across the nation, where they are now set to
move forward. This development has potentially significant
consequences for the energy company defendants and their liability
reinsurers.
Climate Change Lawsuits
Over the last few months, three federal appellate courts have issued
decisions affirming district courts' orders remanding climate change
lawsuits back to state courts.[1]
On Feb. 8, the U.S. Court of Appeals for the Tenth
Circuit decided Board of County Commissioners of Boulder County v.
Suncor Energy (U.S.A.) Inc. On April 7, the U.S. Court of Appeals for
the Fourth Circuit decided Mayor and City Council of Baltimore v. BP
PLC. And on April 19, the U.S. Court of Appeals for the Ninth
Circuit decided County of San Mateo v. Chevron Corp.
These lawsuits, and many other similar suits, were filed starting in
2017 by state and local governments around the country, primarily in
state court.
The government entities sued oil and gas companies, including
Chevron, ExxonMobil Corp., BP, Royal Dutch Shell PLC and others —
referred to as the carbon majors[2] — alleging in essence that
defendants "have contributed significantly to the changing climate" in
their jurisdictions "by producing, marketing, and selling fossil fuels," even though they
"knew these activities would change the climate dramatically," and that they "concealed
and/or misrepresented the dangers associated with the burning of fossil fuels."[3]
The plaintiffs assert, for instance in the Baltimore matter, that they have suffered climate
change-related injuries as a result of the carbon majors' conduct, including sea level rise
and associated impacts, and increased frequency and severity of extreme weather events
such as flooding, which have caused, among other things, infrastructure damage and public
health illnesses.[4]
Based on these allegations, the government entities have asserted several causes of action
sounding in tort against defendants, all under state law, such as public and private
nuisance, failure to warn, design defect, and trespass.[5]
Facing a proliferation of climate change lawsuits, the targets of these suits have turned to
their liability insurers. Energy companies generally have large, multilayered insurance
programs, providing hundreds of millions — and sometimes billions — of dollars in liability
insurance for, among other things, property damage and bodily injury caused to third
parties. The existence of coverage for climate lawsuits under these insurance programs will
turn upon the specific policy terms, conditions, limitations and exclusions, including pollution
José Umbert
Jason Reeves
