New York’s attorney general filed a lawsuit against ExxonMobil claiming the company defrauded shareholders by minimizing the expected effect environmental regulations would have on their stocks’ value, an unprecedented attempt to hold oil companies responsible for climate change, legal experts say.
The novel approach of Wednesday’s litigation against ExxonMobil through a securities fraud claim, focusing on the impact of environmental regulation rather than filing an environmental public nuisance suit for example, peaked interest.
In the 96-page complaint, New York Attorney General Barbara Underwood does not attempt to hold Exxon responsible for a role in creating global warning. Instead, she makes what experts have called an aggressive use of the Martin Act: a sweeping investor protection state Henning calls “very prosecutor friendly.”
Securities fraud attorney Cody Harris of Keker, Van Nest & Peters LLP, said the suit is actually fairly straightforward and allows Underwood to avoid making complex arguments in an environmental nuisance suit.
For example, instead of having to prove a connection between ExxonMobil, its contributions to climate change and whether climate change has been harmful to the public, all the attorney general has to prove is the company should have known regulations would affect the value of the stock.
“In a case like that, all you need to do is show that there was a misrepresentation made to the market that’s material,” Harris said, “which is a lot easier than trying to show that in fact oil companies like ExxonMobil are causing climate change and that climate change is damaging people and should be turned into money damages.”