The Supreme Court of New Zealand recently removed some significant roadblocks to bringing private law claims against major corporate greenhouse (GHG) emitters with a decision made in the case of Smith v. Fonterra.
The decision marks what is seen as one of the first occasions where a court in common law recognized the possibility that private lawsuits can be used to challenge the greenhouse emissions of a privately held company.
In its unanimous decision, the New Zealand court overturned a lower court’s earlier decision to strike all three claims brought by a plaintiff against seven New Zealand corporate defendants and instead ruled that the tort claims of negligence, public nuisance, and even a novel tort entitled “climate system damage” would be allowed to go to trial.
While climate change has not traditionally been considered to belong within the purview of common law tort claims, the New Zealand Supreme Court’s decision not only questions that traditional thinking but may also end up providing a model for how courts in other common law countries like the United States handle private plaintiffs hoping to receive tort law remedies for climate-related damages.
Background
The plaintiff in Smith v. Fonterra is Michael Smith, a leader in the New Zealand tribes of Ngāpuhi and Ngāti Kahu. Smith brought his three tort claims against seven of New Zealand’s largest GHG emitters. The basis for his claims were that the defendants either operated a business that released greenhouse gases into the atmosphere or were distributors of products that released such gases when used. Specifically, he sued them for causing a public nuisance, for being negligent, and for breaching a climate duty they owed to the public. His argument was that he, as a tribal leader who relies on the use of New Zealand’s customary land, was harmed by the defendants’ actions to negatively affect the surrounding climate.
He sought from the court a declaration stating that the defendants had “unlawfully either breached a duty owed to him or caused or contributed to be a public nuisance, and have caused or will cause him loss through their activities.” In addition, his claim also sought an injunction forcing the defendants to reduce the amount of GHG they emitted into the atmosphere.
In March 2020, a lower trial court struck Smith’s claims for public nuisance and negligence, but ruled that his novel idea that the defendants’ owed a “climate change duty” could go to trial. Upon appeal, however, from the defendants, a New Zealand Court of Appeal struck that claim as well in October 2021.
Smith thereafter appealed the appellate court’s reversal to the New Zealand Supreme Court, which heard the appeal in August 2022.
The Supreme Court’s Decision
In its February 7 decision, the New Zealand Supreme Court unanimously overturned the lower appellate court’s decision and instead held that all three of Smith’s claims against the defendants could proceed to trial.
In reaching its decision, the Supreme Court applied New Zealand law which requires that claims be struck only if the plaintiff “discloses no reasonably arguable cause of action.” In the court’s view, public nuisance liability arises when a person or company either (1) does an act not warranted by law or (2) omits to discharge a legal duty and further, where “the effect of the action or omission is to endanger the life, health, property or comfort of the public or to obstruct the public in the exercise or enjoyment of rights common to all Her Majesty’s subjects.” To guide them in undergoing this analysis of the viability of this claim, the Supreme Court focused on four questions.
It first considered the extent to which Smith had plausibly identified public rights that were being interfered with by the defendants. The court found that he had sufficiently done so – the impacts of climate change would indeed engage rights that fit within the categories identified in existing case law. The Supreme Court next agreed with the appellate court’s finding that public nuisance does not only mean illegal activity. Instead, the fact that the defendants’ GHG emissions were not illegal was not a basis for striking out the claim. Third, the court considered the “special damage” rule, which requires that public nuisance claims only be brought by plaintiffs who are harmed in a way that is different from the harm impacting the general public. While first considering the continued viability of this rule in the first place, the Supreme Court concluded that Smith’s material and cultural interests as a tribal coastal landowner were at least plausibly “special” enough to meet the rule’s requirements.
And lastly, the Supreme Court looked at a standard element in many tort claims: causation. The Supreme Court’s decision highlights the difficulties inherent in showing a specific causal chain between a defendant’s emissions and the plaintiff’s harms. Smith did not allege, nor could he, that just one of the seven defendants was the sole cause of any of his harm. Instead, any defendant’s GHG emissions mix with the emissions of millions of others, contributing to a global problem. So, the Supreme Court grappled with that very question: how does a court differentiate the defendants’ actions from those of any other GHG emitters in New Zealand but elsewhere for that matter?
The court ultimately concluded that Smith had satisfied enough of these questions in his claim to allow it to proceed to trial. “Climate change,” the court concluded, “engages comparable complexities, albeit at a quantum leap scale of enlargement.” “Cumulative causation” problems presented by climate change should at least receive “evidence and policy analysis,” and should proceed to a full trial: “the common law must develop, if at all, in the fertile fields of trial, not on the barren rocks of a strike out application.”
Having found that Smith had done enough to show a reasonable public nuisance case, the court permitted the two remaining causes of action – negligence and the proposed novel climate duty – to also progress to trial. The court also rejected arguments that New Zealand’s statutory regime for climate torts displaced the common law claims.
What This Decision Means
This decision does not resolve Smith’s claims. It merely means that his three claims will see their day in court and likely in a trial. In light of the Supreme Court’s ruling, Smith’s case has been remanded back to the lower trial court for further case management.
Before he can reach a successful trial verdict, however, as the Supreme Court’s decision notes, Smith will have two significant obstacles standing in his way:
First, he will have to demonstrate why the seven defendants he named in his case deserved to be named as opposed to a number other defendants he could have named. As the Supreme Court noted, “[t]he respondents are not responsible for at least 99.8 per cent of global emissions” This problem, sometimes referred to as a “drop in the ocean” problem, is pervasive in climate litigation and can sometimes spell the end for similar lawsuits. Under New Zealand law, a party is liable in public nuisance only when their activities “substantially and unreasonably interfere with public rights.” Smith will have to demonstrate how the GHG emissions of these seven defendants created such a “substantial” interference.
After that, the next potential roadblock for Smith will focus on himself: he’ll have to successfully argue that New Zealand’s “special damage” rule applies to his claim.
The public nuisance test being grappled with in this New Zealand case is not unique to New Zealand, however. Similar public nuisance suits are frequently filed in the United States against private companies. But this decision represents one of the first times in the common law world where an appellate court recognized the potential possibility that tort law could be used to challenge the GHG emissions of a private company. At the very least, this decision should put corporations at risk that GHG emissions may soon put them in serious legal risk.
We will continue to monitor Smith’s case as it progresses through the New Zealand court system and its subsequent impact on U.S. cases.