A New Environment for Climate Change Litigation: Climate Change Tort Actions Split U.S. District Judges on Governing Law

As the federal executive rolls back Obama-era climate programs, those concerned about climate change have been turning to the courts for relief. Recently, two federal judges sitting in the Northern District of California addressed jurisdictional questions in a set of tort actions brought by California municipalities under California law, which were removed to federal court by the fossil fuel producer defendants. In People of the State of California v. BP p.l.c., 2018 WL 1064293 (N.D. Cal. Feb. 27, 2018) (“California cases”), Judge William Alsup denied a motion to remand but previewed a path forward under federal common law, having unexpectedly found that the relevant federal common law is not displaced by the Clean Air Act. In County of San Mateo v. Chevron Corp., 2018 WL 1414774 (N.D. Cal. Mar. 16, 2018) (“San Mateocases”), Judge Vince Chhabria granted a motion to remand, holding that the plaintiffs’ claims were properly pled under state law. If ultimately successful, these lawsuits could subject fossil fuel producers to enormous liability for harm to coastal communities in California and around the country. They could also pave the way for suits against other companies in the chain of fossil fuel production, or that make other products known to contribute to large-scale environmental harm.

Like Juliana v. United States, 217 F. Supp. 3d 1224 (D. Or. 2016), which we discussed recently in A New Environment for Climate Change Litigation,[1]these two California cases raise novel legal theories for climate change relief. While the Juliana plaintiffs argue for new rights under federal constitutional law, the California and San Mateo plaintiffs assert novel theories of California tort law.

I. People of the State of California v. BP p.l.c.

In September 2017, the cities of San Francisco and Oakland filed nearly identical complaints in state superior court against five of the world   s largest fossil fuel producers: BP, Chevron, ConocoPhillips, ExxonMobil, and Shell. Filing on behalf of the people of California, each city brought a single claim under California public nuisance law. They premised their claims on the theory that the defendants had engaged in decades of large-scale advertising and public relations campaigns to discredit climate change science, downplay the risks of climate change, and portray fossil fuels as environmentally responsible, despite full awareness that fossil fuel products pose severe risks to the global climate. The cities seek funds to pay for seawalls and other infrastructure needed to address rising sea levels.

The defendants removed the matters to federal court, asserting that the complaints arise under federal laws and treaties, present substantial federal questions, and are preempted by federal law. The defendants reasoned that their challenged conduct was inextricably linked with decision-making at the federal level, including national energy policy, national security, and the management of federal lands. San Francisco and Oakland moved to remand their cases to state court.

On February 27, 2018, Judge Alsup denied the motion to remand the California cases, agreeing with the defendants that the complaints are governed by federal common law. Unexpectedly, Judge Alsup also found that the relevant federal common law has not been displaced by the Clean Air Act, notwithstanding the U.S. Supreme Court’s seminal decision in American Electric Power Co. v. Connecticut, 564 U.S. 410 (2011) (“AEP”).

Judge Alsup explained that federal common law is appropriately fashioned where a federal rule of decision is necessary because “uniquely federal interests” are at stake. He noted that uniquely federal interests are typically implicated in interstate and international disputes, and that federal common law has long encompassed the general subject of environmental law.

However, the U.S. Supreme Court and the Ninth Circuit have held that the Clean Air Act displaced federal common law regarding greenhouse gas emissions that cause climate change. In AEP, the Supreme Court ruled that — in light of Massachusetts v. EPA, 549 U.S. 497 (2007) (holding that greenhouse gases are air pollutants under the Clean Air Act) — the Clean Air Act “speaks directly” to the issue of greenhouse gas emissions from domestic power plants. 564 U.S. at 424. The suit, brought by Connecticut and others against domestic greenhouse gas emitters and sought injunctive relief to curb the defendants’ emissions, therefore could not proceed under federal common law. The Court did not decide whether the Clean Air Act also preempted state common law claims. Id. at 429 (“In light of our holding that the Clean Air Act displaces federal common law, the availability vel non of a state lawsuit depends, inter alia, on the preemptive effect of the federal Act.”).

The following year, in Native Village of Kivalina v. ExxonMobil Corp., 696 F.3d 849 (9th Cir. 2012), the Ninth Circuit relied on AEP to hold that a Native Alaskan village could not recover damages for sea level rise and erosion caused by climate change, because their federal common law claims had been displaced by the Clean Air Act. The Ninth Circuit likewise did not decide whether the plaintiffs could proceed under state law.

Judge Alsup distinguished both cases. AEP and Kivalina, he found, dealt only with claims against domestic emitters of greenhouse gas emissions. According to Judge Alsup, neither case considered, nor does the Clean Air Act address, the defendants’ advertising and public relations campaigns or the foreign emissions from the defendants’ fossil fuel products. Judge Alsup concluded that the Clean Air Act did not displace the federal common law governing San Francisco and Oakland’s complaints. The rule that state law governs where federal common law has been displaced therefore did not apply.

Judge Alsup also rejected the plaintiffs’ argument that their products liability-type theory was necessarily a matter of state law. He considered the precise theory irrelevant to whether the case would reach uniquely federal interests. He distinguished National Audubon Society v. Department of Water, 869 F.2d 1196 (9th Cir. 1988), which applied state law to a case affecting air pollution in both California and Nevada, because the Ninth Circuit had considered the matter “essentially a domestic dispute” involving a California agency’s diversion of water from an entirely California source.

Judge Alsup did not agree that San Francisco and Oakland should be able to proceed under state rather than federal common law because that was how they pleaded their complaints. Quoting Illinois v. City of Milwaukee, 406 U.S. 91, 100 (1972), he held that a claim “‘arises under’ federal law if the dispositive issues stated in the complaint require the application of federal common law.” He emphasized that this did not necessarily mean that San Francisco and Oakland were entitled to relief, but that a national standard should govern the determination of whether they are entitled to relief. “[T]he scope of the worldwide predicament,” he reasoned, “demands the most comprehensive view available, which in our American court system means our federal courts and our federal common law.”

Judge Alsup certified his remand decision for interlocutory appeal, but San Francisco and Oakland did not appeal. On March 21, 2018, Judge Alsup held a “tutorial” to hear presentations by experts and counsel on the history of the scientific study of climate change — relevant to defendants’ historical awareness of fossil fuel and climate change risks — and on “the best science now available on global warming, glacier melt, sea rise, and coastal flooding.” He will hear the defendants’ motions to dismiss on May 24, 2018.

II. County of San Mateo v. Chevron Corp.

Judge Chhabria entered an order only three weeks later in the San Mateocases that reached the opposite conclusion on the issue of remand. The decision involved six related actions brought by three California counties (San Mateo, Marin, and Santa Cruz) and three California cities (Richmond, Santa Cruz, and Imperial Beach). As in the cases before Judge Alsup, the defendants in these actions are fossil fuel producers[2] and the plaintiff municipalities seek damages for climate change abatement measures under California public nuisance law. The main difference between the California cases and the San Mateo cases is that the latter allege claims for state-law negligence, products liability, and trespass, in addition to public nuisance. Although the six San Mateo actions were originally filed in state court, the defendants removed them to federal court arguing, among other things (as did the plaintiffs in the California cases), that the plaintiffs’ claims arise under federal common law.

Judge Chhabria remanded the San Mateo cases to state court. Unlike Judge Alsup, he rejected the defendants’ argument that the plaintiffs’ state-law claims are truly federal common law claims. He reasoned that nuisance claims regarding interstate air pollution cannot be brought under federal common law after AEP’s holding that the Clean Air Act displaced federal common law claims for abatement of greenhouse gas emissions. According to Judge Chhabria, “once federal common law is displaced by a federal statute, there is no longer a possibility that state law claims could be superseded by the previously-operative federal common law.”

Judge Chhabria explained that he disagreed with Judge Alsup about whether AEP and the Ninth Circuit’s decision in Kivalina were distinguishable from the cases at hand. Characterizing the plaintiffs’ claims as claims for damages due to rising sea levels and erosion caused by “the defendants’ contributions to greenhouse gas emissions,” Judge Chhabria found the plaintiffs’ claims to be “nearly identical in Kivalina and the current cases.” He concluded that Kivalina could not be distinguished based on the “particular source[] of emissions” — powerplants in Kivalina versus fossil fuel products in the San Mateo cases. To Judge Chhabria, AEP and Kivalina together show that “federal common law” in this area “no longer exists.” Therefore federal common law “does not govern the plaintiffs’ claims” and “does not preclude them from asserting state law claims.”

Judge Chhabria swiftly dismissed the other asserted grounds for removal. He held that removal was not warranted under the doctrine of complete preemption, because no applicable “statutory provision involves complete preemption”; rather, the Clean Air Act and Clean Water Act expressly preserve state causes of action.Responding to defendants’ argument that federal jurisdiction was proper because specific issues of federal law must necessarily be resolved to adjudicate the state law claims, Judge Chhabria explained the defendants had failed to identify any such issue, and instead had only “gesture[d] to federal law and federal concerns,” like foreign policy and energy policy, “in a generalized way.” Id. Finally, Judge Chhabria held that specialized removal provisions under the Outer Continental Shelf Lands Act, the bankruptcy code, and the federal enclave and federal officer doctrines did not apply.

On April 9, 2018, Judge Chhabria certified his remand decision for interlocutory appeal and granted a stay of the remand pending appeal. Unlike the plaintiffs in the California cases, the losing party (here, the defendants) appealed. The case is currently pending before the Ninth Circuit (Case Nos. 18-80049, -15499). Opening briefs are due on July 5, 2018.

III. Conclusion

Some commentators assume the jurisdictional analysis in these two decisions could affect case outcomes, presuming that California courts are more likely than federal courts to be receptive to novel tort theories. We are more cautious. Though the plaintiffs lost their motion before Judge Alsup, his order preserved a path forward under federal common law, which may be why the plaintiffs did not appeal.

In any case, all agree that the jurisdictional questions are only preliminary. The courts will next decide whether public nuisance theory, which succeeded in suits against tobacco companies and lead paint manufacturers, is viable under either state or federal law against fossil fuel manufacturers. If either set of cases proceeds, the plaintiffs will bear the substantial burden of proving their allegations, including that these defendants are individually responsible for climate change and that they are specifically responsible for the harms these California municipalities and counties allege.

For more information, please contact any of the members of our Climate Change team.

[1] The Juliana litigation continues to move forward. Since we last wrote about Juliana, the Ninth Circuit denied the federal government’s petition for writ of mandamus to stop the case. United States v. U.S. District Court (Aiken), 884 F.3d 830 (9th Cir. 2018). Trial in Juliana is scheduled for October this year.

[2] The defendants are Chevron, ExxonMobil, BP, Shell, Citgo, ConocoPhillips, Phillips 66, Peabody Energy, Total E&P USA Inc., Total Specialties USA Inc., Arch Coal Inc., ENI SpA, ENI Oil & Gas Inc., Rio Tinto, Statoil, Anadarko, Occidental, Repsol, Marathon, Hess, Devon, Encana, and Apache.

This article is not a substitute for legal advice. Please consult with your legal counsel for specific advice and/or information. Read our complete legal disclaimer.