Climate change suits against oil companies can go forward in state court, plaintiffs’ preferred venue

California cities and counties that sued a host of energy companies for allegedly hiding the impact of climate change on their communities can pursue public nuisance lawsuits in state court, a 9th U.S. Court of Appeals panel ruled Tuesday in a pair of orders that are an early win for the plaintiffs.

The appellate ruling resolves a dispute between two federal judges in the Northern District of California who reached different conclusions over the energy companies' bid to remove the lawsuits to federal court after they were filed in state court.

The 9th Circuit ruling also is consistent with a 4th U.S. Circuit Court of Appeals ruling in March siding with Baltimore's effort to pursue a lawsuit against energy companies in state court despite the defendants' bid to remove it to federal court.

"Chevron believes the cases belong in federal court," said Sean Comey, a spokesman for the San Ramon-based energy giant.

"They present substantial issues of national law and policy which makes them inappropriate for state law. In whichever forum the cases are ultimately determined, these factually and legally unsupported claims do nothing to sensibly address the significant national, economic, legal and policy issues presented by climate change," he added.

The U.S. Supreme Court has allowed similar lawsuits by other municipalities across the nation to move forward in state court.

None of the rulings reach the merits of what could be far-reaching litigation by cities and counties accusing energy companies of deliberately concealing the impact of climate change and sea level rise on coastal cities and counties, even though they are alleged to have known about it since the 1970s.

It merely allows the plaintiffs to pursue the cases in state court, their preferred venue.

"It leaves the cities and counties some ability to have their day in court," said Darrin D. Gambelin, a partner with Downey Brand LLP who is not involved in the cases.

9th Circuit Judge Sandra S. Ikuta, writing for the panel in both cases, said the energy companies' argument they were acting under the direction of a federal government officer fails to establish the need to have the lawsuits decided in federal court.

"Rather than identify a legal issue, the energy companies suggest that the cities' state-law claim implicates a variety of 'federal interests,' including energy policy, national security, and foreign policy," Ikuta wrote. City of Oakland et al. v. BP PLC et al., 2020 DJDAR 4811 (9th Cir., filed May 26, 2020; County of San Mateo v. Chevron Corp. et al., 2020 DJDAR 4820 (9th Cir., filed May 26, 2020).

"The question whether the energy companies can be held liable for public nuisance based on production and promotion of the use of fossil fuels and can be required to spend billions of dollars on abatement is no doubt an important policy question, but it does not raise a substantial question of federal law for the purpose of determining whether there is jurisdiction under § 1331," she added.

The panel, which included Judge Morgan B. Christen and Kenneth K. Lee, affirmed U.S. District Judge Vince Chhabria's decision denying federal courts had subject matter jurisdiction while vacating U.S. District Judge William Alsup's 2018 decision to dismiss the lawsuit. Alsup said the suit would violate the separation of powers and raise foreign policy questions that shouldn't be handled by the courts.

The City of Oakland case went back to Alsup so the San Francisco-based judge can determine if there is an alternative basis for federal jurisdiction.

The U.S. Department of Justice weighed in on the case, agreeing with the energy companies and saying it shouldn't be decided by the courts.

Michael Rubin of Altshuler Berzon LLP, who represents Oakland and San Francisco, could not be reached for comment Tuesday. During oral arguments in February, he compared the lawsuits to California counties' lawsuit against several lead paint manufacturers, which was decided in state court and ultimately settled.

"The only relief in these cases that is sought is equitable abatement and only for localized harm," Rubin told the panel.

Theodore J. Boutrous Jr., a partner with Gibson, Dunn & Crutcher LLP who represents several of the oil companies, referred a comment to his clients.