This week marks a win for energy manufacturers—and a crucial step in exposing the dishonest coordination behind some of the biggest abuses of the U.S. legal system.
In a petition filed yesterday in a Texas district court, ExxonMobil argued that there are glaring inconsistencies between claims made in lawsuits filed by seven California municipalities against energy manufacturers and the risks the municipalities disclosed to investors in their respective bond prospectuses.
As the petition clearly lays out, all seven municipalities described the catastrophes they expect as a result of climate change and for which they blame energy companies. For example, San Mateo County stated in its lawsuit that there is a 93 percent chance it will experience “a devastating three-foot flood before the year 2050,” and that sea level rise could “inundate thousands of acres of County land.”
But the County’s financial filings indicate that officials may not believe their own words. Despite being 93 percent certain that the County will experience massive floods in the future, they told investors they were “unable to predict whether sea level rise or other impacts of climate change or flooding from a major storm will occur, when they may occur, whether they will have a material adverse effect on the business operations or financial condition of the County and the local economy.”
As the recent court filing states, “none of the municipalities disclosed to investors such risks in their respective bond offerings, which collectively netted over $8 billion for these local governments over the last 27 years.”
According to one California-based law firm, “Municipal issuers must ensure that, in connection with the issuance and sale of municipal securities to the public, prospective purchasers are provided the information they need to make an informed investment decision, and municipal issuers can face suit or even civil or criminal penalties if the disclosure provided has material misstatements or omissions.” In this case, if the municipalities truly believe in the future harm they describe in their lawsuits, then it seems that they may have withheld information from their own investors.
Among the individuals ExxonMobil singles out in the petition is plaintiffs’ attorney Matt Pawa, a regular player in sweeping liability lawsuits against manufacturers, who is directly involved in two of the California lawsuits (Oakland and San Francisco). The petition succinctly details Pawa’s role in developing the La Jolla playbook, and his ties to Attorneys General Schneiderman and Healey, and even activist billionaire Tom Steyer. According to the petition, Steyer made a $30,000 campaign donation to the former mayor of San Francisco “only months before the city filed a tort suit against ExxonMobil.” The timing is suspect, to say the least.
The arguments in the municipalities’ lawsuits were clearly not made in good faith if the information was not important enough for investors. As MAP’s Linda Kelly pointed out in a statement, regardless of whether the lawsuits or prospectuses are viewed as correct, “the integrity of the lawsuits and the government officials and lawyers behind them has been called into question.”
The players involved in these lawsuits may have gotten the headlines they were looking to score, but they have misused the court system and jeopardized their own reputations in the process.