All posts tagged 'Kivalina v. ExxonMobil'

Dismissed Means Dismissed: Comer v. Murphy Oil, the First Climate Change Liability Damages Suit, Is Tossed Again

March 22, 2012 19:14
by J. Wylie Donald
In a case of surprising longevity, Comer v Murphy Oil USA, Inc., may finally have been laid to rest. In a decision filed Tuesday, Judge Louis Guirola, Jr., Chief Judge of the United States District Court for the Southern District of Mississippi, concluded that the plaintiffs in the first climate change liability damages suit were not entitled to a second bite at the apple. And even if they were, their case still failed. In the aftermath of Hurricane Katrina, numerous parties filed scores of lawsuits seeking to find some source to pay for the awful devastation. One suit, Comer, asserted through various amended complaints that electric utilities, coal companies, chemical companies and oil companies  were responsible for the increased ferocity of Hurricane Katrina because of their emissions of greenhouse gases and their alleged resultant contribution to global warming.   Following various iterations, plaintiffs ultimately alleged:  "Prior to striking the Mississippi Gulf Coast, Hurricane Katrina had developed into a cyclonic storm of unprecedented strength and destruction, fueled and intensified by the warm waters and warm environmental conditions present in the Atlantic Ocean, Caribbean Sea, and the Gulf of Mexico.  These high sea surface temperatures, which were a direct and proximate result of the defendants' green house gas emissions, increased the intensity and magnitude of Hurricane Katrina."   Amended Complaint, 1:11-cv-00220-LG-RHW, ¶ 17.  Plaintiffs also alleged risks of future harms as a result of effects of global warming. Motions to dismiss were filed, which ultimately led to judgment in favor of the defendants. Judge Guirola ruled that plaintiffs lacked standing and that the claims were non-justiciable under the political question doctrine.  2007 WL 6942285 (S.D. Miss. Aug. 30, 2007), Plaintiffs appealed and were initially successful before the Fifth Circuit, which reversed the district court and concluded:  "Like the district courts in [Connecticut v.] American Electric [Power Co., 406 F. Supp. 2d 265 (S.D.N.Y. 2005)] and [California v.] General Motors [, 2007 WL 2726871 (N.D. Cal. 2007)], the defendants begin with an assumption they cannot support, viz., that the adjudication of plaintiffs' claims will require the district court to fix and impose future emission standards upon defendants and all other emitters. Then, again in a fashion similar to those district courts, the defendants proclaim that it would be "impossible" for a court to perform such an obviously legislative or regulatory task so that the case must present a nonjusticiable political question. The defendants have failed to show how any of the issues inherent in the plaintiffs' nuisance, trespass, and negligence claims have been committed by the Constitution or federal laws "wholly and indivisibly" to a federal political branch."  Comer v. Murphy Oil USA, 585 F.3d 855, 879 (5th. Cir. 2009). That was the high water mark of the plaintiffs' bar's success in climate change liability cases. With the Second Circuit's decision in Connecticut v. American Electric Power Co., 582 F.3d 309 (2nd Cir. 2009), just one month earlier, the tide crested with the Fifth Circuit's decision in October.  Two federal courts of appeal had found standing for climate change liability plaintiffs, and rejected the political question doctrine.  Concurrently, however, a new climate change liability suit, Native Village of Kivalina v. ExxonMobil Corp., was dismissed at the end of September.  663 F. Supp. 2d 863 (N.D. Cal. 2009).  From the present perspective, Kivalina's dismissal marked the turning of the tide. The next dark moment for the plaintiffs occurred when the Fifth Circuit en banc accepted the appeal of Comer, automatically vacating the panel's decision. Then the en banc court's quorum dissolved, requiring the court to dismiss the appeal.  But with the panel decision already vacated, that meant the controlling law was Judge Guirola's 2007 dismissal. The Supreme Court refused to issue a mandamus order, which meant Comer was over.  It got darker.  The Supreme Court dismissed the plaintiffs' federal common law claims in American Electric Power; the gutted case was remanded to the Second Circuit (and plaintiffs ultimately dismissed voluntarily).  So as of June 2011 all the climate change liability suits had been disposed of. Well, not entirely.  Kivalina was pending on the Ninth Circuit's docket.  And the Comer plaintiffs refused to abandon the field and re-filed their claims, relying on a Mississippi statute purportedly permitting refiling. Judge Guirola, however, did not agree. Plaintiffs' claims were barred because the doctrines of res judicata and collateral estoppel applied. Slip op. at 12.   Plaintiffs had had a previous  opportunity to litigate their claims, which had been decided against them with prejudice.  Moreover, plaintiffs still lacked standing because they could not demonstrate that their alleged injuries were "fairly traceable" to the defendants' activities:  "As this Court stated in the first Comer lawsuit, the parties should not be permitted to engage in discovery that will likely cost millions of dollars, when the tenuous nature of the causation alleged is readily apparent at the pleadings stage of the litigation. The Court finds that the plaintiffs have not alleged injuries that are fairly traceable to the defendants’ conduct, and thus, the plaintiffs do not have standing to pursue this lawsuit."  Slip op. at 23.   In addition, the political question doctrine still applied:  " The Court finds that the claims presented by the plaintiffs constitute non-justiciable political questions, because there are nojudicially discoverable and manageable standards for resolving the issues presented, and because the case would require the Court to make initial policy determinations that have been entrusted to the EPA by Congress."  Slip op. at 29.   And just in case all that was not enough, Judge Guirola also ruled that 1) "the plaintiffs’ entire lawsuit is displaced by the Clean Air Act", slip op. at 30 (relying on American Electric Power); 2) the three-year statute of limitations applied to the Hurricane Katrina-based claims because the Mississippi "savings statute" did not apply, and the alleged continuing torts were not ripe, slip op. at 33; and 3) plaintiffs could not demonstrate proximate cause because "[t]he assertion that the defendants’ emissions combined over a period of decades or centuries with other natural and man-made gases to cause or strengthen a hurricane and damage personal property is precisely the type of remote, improbable, and extraordinary occurrence that is excluded from liability."  Slip op. at 35. Judge Guirola's decision is well-written and thorough.  Will it be enough? We expect so but we cannot be pollyana here.  A Fifth Circuit panel has wrestled with Judge Guirola's standing and political question analysis before, and reversed him.  This time, however, they will also need to avoid his res judicata, collateral estoppel, displacement, statute of limitations and proximate cause analyses.  That seems a tall order.  As for the the Second Circuit, its decision on standing is still valid law because that issue was not resolved by American Electric Power.  Indeed, the Supreme Court split 4-4 on the issue (Justice Sotomayor recused herself because of her participation in argument at the court of appeals).  Should Comer (or Kivalina) make it to the Court, the standing question could come out badly for the defense if Justice Sotomayor is the swing vote needed for a bare majority in favor of broader standing.  Last, we have Kivalina before the Ninth Circuit.  While undoubtedly the court will have read Judge Guirola's opinion, it will also have read the Fifth Circuit panel's decision.  Which will be more influential?  We'll make that decision then.

Carbon Dioxide | Climate Change Litigation

Looking Forward and Looking Back - Some Climate Change Response Perspectives and Predictions

December 2, 2010 07:44
by J. Wylie Donald
Another year done, another time to look back and to look forward. In the climate change space, the increasing tempo of regulation was halted, but that does not mean that there were not significant events. We catalog a few with accompanying predictions of the future:Without a doubt the big legal action this year will be the United States Supreme Court's decision in Connecticut v. American Electric Power, where States and public interest organizations seek to vindicate their ability to sue on a "carbon dioxide as public nuisance" theory. One should expect the Ninth Circuit to hold off an any decision in Kivalina v. ExxonMobil until after the Supremes render their decision. And climate change plaintiffs will husband their resources until the lay of the legal landscape is clear before filing any new suits. Our crystal ball, however, also hints that clarity may not be forthcoming. Justice Sotomayor has recused herself - there may be effectively no decision if the Court comes out 4-4. Hand-in-hand with climate change liability lawsuits goes climate change liability insurance coverage. That too is being litigated at an ultimate appellate venue. In Steadfast Insurance Co. v. The AES Corp., the Virginia Supreme Court will consider whether for the purposes of the duty to defend, an occurrence is alleged in Kivalina. Although Virginia is not the most popular of coverage litigation venues, that Steadfast is the first climate change coverage case ensures that the decision will be significant.While these are heady times for courts and litigators, those ready for the legislative "fix" for climate change will not find succor in 2011. Cap-and-trade advocates became quieter and quieter in the days leading up to the November 2010 mid-term elections. We win no points for our prescience when we predict that there will be no new federal legislation regulating carbon dioxide emissions in the coming year. Quieter even than domestic cap-and-trade supporters are those in favor of some international regime. COP 16 in Cancun achieved very little. It established a $100 billion Green Climate Fund, without any provisions to fund it. It did not extend the Kyoto Protocol, which expires in 2012. And China and the United States (the two largest greenhouse gas emitters) are still not part of any global climate change plan. COP 17 takes place in Durban, South Africa at the end of next year. With an American presidential race beginning, it is hard to imagine the Administration will butt heads with its Republican adversaries on anything contentious or innovative proposed at Durban. Even if legislation is going nowhere, that does not mean the administrative agencies will be quiet. The FTC Green Guides have proposed revisions to address carbon neutrality and renewable energy claims. Expect the proposals to be acted on in 2011. The SEC's guidance on climate change disclosure surfaced in February 2010. The guidance specifically requires analysis of domestic and international regulation. In light of the shift in the climate-change-regulation pendulum, it will be interesting to see if any reporting company states that it expects less restrictions, rather than more restrictions. And of course USEPA's greenhouse gas reporting rules required the first set of data to be turned in at the end of 2010, which undoubtedly will initiate further regulatory rules. Private parties will go where the money is, which will continue to be in heavily subsidized renewable programs. Will the Republican Congress recognize the market dislocations engendered by these subsidies and cut them? Or will different influences like jobs or constituents continue to make their presence felt? If the December enactment of the Tax Relief Act (which provided an extension of the 30% tax grant for renewable projects) is any guide, if a project can be supported with a tax subsidy, rather than a government payment, it will continue. And what can we say about the weather? 2010 was an above average hurricane year, but fortunately for the United States, damage was minimal. The hurricane experts at Colorado State University predict an equally busy year for 2011. Pay up those premiums. Best for the New Year!

Insurance | Climate Change | Supreme Court | Legislation | Carbon Emissions

AbCDE - Thoughts on an "Absolute" Carbon Dioxide Exclusion

October 27, 2009 17:28
by J. Wylie Donald
We trust that those of you following climate change litigation have heard the veritable tap dance of decisions emanating out of the federal courts in the last month.  First, Connecticut v. American Electric Power was reversed by the Second Circuit.  That was followed by the District Court for the Northern District of California dismissing Native Village of Kivalina v. ExxonMobil and rejecting the Second Circuit’s analysis.  The Fifth Circuit, not to be outdone, reversed the Comer v. Murphy Oil decision, but also provided a special concurring opinion where the judge advised that he would have affirmed on alternative grounds.  All of these cases are thoroughly discussed in the blogosphere. What has been less thoroughly ventilated, however, are the implications for insurance coverage for climate change liability claims.  We have discussed before the Steadfast v. AES coverage case filed in Virginia where the insurer seeks to avoid coverage for the Kivalina suit.  We thought originally that Kivalina’s dismissal might have made that suit go away.  However, with two climate change suits now headed back to the trial court (barring further appeal), we will be surprised if Kivalina is not appealed, and further surprised if Steadfast does not provide some law on climate change coverage. One subject that will not be addressed in Steadfast, however, is the efficacy of an "absolute"1 carbon dioxide exclusion.  Yes, you heard that correctly:  the AbCDE.  I regularly ask my insurer colleagues about their thinking on this and just as regularly am told that it is not in the works or even discussed.  The spoken reason is fairly straightforward:  if carbon dioxide is a pollutant under the terms of the policy, and damage from pollution is excluded, then claims arising from carbon dioxide emissions are already excluded by the so-called absolute pollution exclusion and the AbCDE is not needed.  The unspoken reason reflects the converse:  if a carbon dioxide exclusion is necessary, it must be the case that a policy without such an exclusion provides coverage for carbon dioxide liability - even if it has a pollution exclusion.  From an insurer’s perspective, that could be an expensive outcome and suggests a reason to avoid implementing the AbCDE.  History and policyholder experience suggest, however, a different outcome.  Many will recall the time when coverage for asbestos-related loss was hotly debated.  Where insurers lacked express asbestos exclusions, they sought refuge in pollution exclusions.  Success was mixed.  The New York Court of Appeals’ decision in Continental Casualty Co. v. Rapid-American Corp., 593 N.Y.S.2d 966 (N.Y. 1993), is typical.  Although the court concluded that asbestos could be a pollutant, irritant or contaminant within the meaning of the liability policy, it determined the policy’s pollution exclusion to be ambiguous in context and coverage for asbestos loss was found.  Ultimately, the insurance industry recognized the solution to its asbestos problems and decisions like Rapid-American was to adopt universally what is referred to by some as an absolute asbestos exclusion.  Just as with asbestos, there are infirmities in the pollution exclusion as applied to carbon dioxide (such as the doctrine of reasonable expectations, whether carbon dioxide is reasonably understood to be an irritant or contaminant, whether an agency’s classification of carbon dioxide as a “pollutant” has any relevance to a contract between two private parties, among others).  Indeed, one state supreme court has found that exhaled carbon dioxide was not a pollutant, and thus was not excluded by a comprehensive general liability policy’s absolute pollution exclusion.  Donaldson v. Urban Land Interests, Inc., 564 N.W.2d 728, 732 (Wis. 1997).  Unless carbon dioxide liability suits disappear (and the last month is not auspicious in that regard), it is inevitable that more coverage disputes will unfold and that policyholders will secure coverage victories in some cases.  Against the backdrop of those victories, can it be doubted that a carbon dioxide exclusion will take shape? 1We note that the term “absolute “ is somewhat of a misnomer for any exclusion.  A valuable discussion of this can be found at Ira Gottlieb, The Decline of the So-Called ‘Absolute’ Pollution Exclusion, Mealey’s Litig. Rep. (Feb. 12, 2002).

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