Pollution Factory Smoke in Air with Sky Bad for the Environment

The Supreme Court Denies Fossil Fuel Companies’ Bid to Have the Climate Deception Cases in Federal Court

Since 2017, a number of state government entities from cities, counties, and states across the country have gone after fossil fuel companies in court charging them with violating state law by marketing their products as not harmful. These 11 cases have collectively been dubbed the “climate liability cases” or “climate deception cases.” Just a few weeks ago, the U.S. Supreme Court declined to hear a petition dealing with the issue of whether or not these climate deception cases should be heard in state court or at the federal level. Consequently, these 11 cases have been sent back to state courts, where they will be litigated. SCOTUS’ decision will also assist claimants in over a dozen other lawsuits by giving them the ability to argue their lawsuits should likewise be heard in state court and not at the federal level. SCOTUS’ decision is likely also to result in new state court filings. In the meantime, however, claimants in the 11 climate deception cases are claiming victory after a five-year battle to keep their lawsuits out of federal courts.

Let’s take a step back and see how we got here. Beginning in 2017, three cases got the ball rolling in California with claims against fossil fuel companies. Subsequent lawsuits followed in cities, counties, and states across the country. To date, at least 25 separate lawsuits were filed in 12 different states from California to New York. The overarching theme in all of them are allegations that the fossil fuel companies knew that their products could cause harm to the environment and that they used deceptive marking tactics to advocate that the products were safe, which allegedly resulted in tremendous monetary damages to the taxpayers of these states. The majority of the cases filed make claims that the fossil fuel companies either violated common laws related to public nuisance and failure to warn or that they violated state consumer protection laws.

Almost all of the climate deception cases were filed in state court but were subsequently removed to federal court by way of motions from the fossil fuel companies. The reason for the removal was apparent: the defendants felt they had a better shot of a dismissal with a federal court judge. The defendants argued that the plaintiffs’ claims are federal common law claims and federal common law climate claims, which have been displaced by the Clean Air Act 42 U.S.C. § 7401, et seq. The plaintiffs, on the other hand, argued that their lawsuits ought to stay in the hands of the state courts, where they posited that their climate nuisance claims are analogous to former state law-based efforts to punish businesses found to have used misleading claims about their products’ harms. Just ask the tobacco companies about this.

This jurisdictional argument has been litigated ever since the first lawsuit was filed in 2017. Notably, in May 2021 SCOTUS issued a decision on the issue of whether appellate courts could review all aspects of a federal district court’s remand order or whether instead the appellate courts were limited in their ability to review. In a victory for the fossil fuel defendants, SCOTUS held that appellate courts were permitted to review all grounds of the remand order and were not limited in their review.

This victory for the fossil fuel companies would not last, however, as five circuit courts subsequently affirmed lower court decisions that the cases should be remanded to state court. The fossil fuel defendants responded by filing petitions for a writ of certiorari to SCOTUS hoping that it would overturn those circuit court decisions.

One hoping to find SCOTUS’ reasoning for their April 2023 decision will likely be disappointed, however, as the decision contains none. What is clear is that Justice Samuel Alito decided not to participate in the decision. In addition, Justice Brett Kavanaugh indicated that he would have granted the defendants’ petition. The denial sends the case back to state court, pursuant to the Tenth Circuit Court of Appeal’s earlier decision.

Likely driving SCOTUS’ decision were several factors that led to their decision, including: (1) universal agreement among federal court judges that the 11 cases belong down at the state court level; (2) the fact that the 11 claimants had brought largely well-tailored state-law driven claims; and (3) the Department of Justice’s supporting brief arguing that the claims ought to stay in the state courts.

Factor 1: Multiple Appellate Courts Sending These Cases Back to State Court

During this jurisdictional fight, appellate courts in the First, Third, Fourth, Eighth, Ninth, and Tenth Circuits all published rulings remanding these climate deception suits back to state court. SCOTUS has historically based its decisions on whether or not to grant petitions of writs of certiorari partly on whether or not lower appellate courts are split on questions of law or are in agreement. Here, there was no apparent split view on the question of which courts should hear the cases. This consensus that the cases belong in the state court likely played a role in SCOTUS’ decision to deny the petition.

Factor 2: The Claimants All Asserted State-Specific Causes of Action in their Pleadings

A common theme in all of the appellate courts’ decisions to remand these cases to state court was the highlighting of the fact that these plaintiffs framed their lawsuits as state law claims and thus did not arise under federal law. Readers may be familiar with the Grable test, which is used to determine the issue of whether a claimant’s claims necessarily raise a disputed and substantial question of federal law or not. The Grable decision directs the courts to look at the actual claims asserted in the lawsuits. Here, in these cases, the plaintiffs all pled state law causes of action and strategically did not include any federal law claims in their lawsuits. The plaintiffs tailored their causes of action on issues that state courts routinely hear, namely state common law or state consumer protection laws. This focus on state claims appears to have persuaded each of the above circuit courts to agree that these claims did not raise questions of federal law, which would thus require federal court jurisdiction.

Factor 3: The Department of Justice’s Supporting Brief

Before issuing their April 24 decision, SCOTUS sent a request to the Department of Justice asking for their input on the defendants’ petition. The DOJ responded to their request on March 16 with an amicus brief. In their brief, the DOJ argues that the state courts are the proper jurisdiction to hear these plaintiffs’ lawsuits. In particular, the DOJ argued that “no federal issue is ‘embedded’ within respondents’ own articulation of their claims.” The DOJ felt the claims did not depend on their ability to prove violations of federal law. The DOJ also pointed out that there was near universal appellate court agreement that no split view on this issue existed. 

Now that the defendants’ petition has been denied, the focus of these climate deception cases will shift back to how they are litigated in the state courts. Of particular note is the case of Honolulu v. Sunoco, where the Hawaii Circuit Court made headlines as the first state court in America to hear and decide on a motion to dismiss filed in these climate deception cases. The Hawaii Circuit Court ultimately denied the motion to dismiss, which defendants immediately appealed to the Hawaii Supreme Court, and on March 31, that court agreed to hear the appeal.

Future hearings on similar motions to dismiss are sure to follow in the coming months. If they are also denied, these cases will move closer to trial after likely extensive discovery occurs.