Justices of the U.S. Supreme Court on Jan. 19 quizzed lawyers on both sides of a proceeding that could ultimately influence whether more than a dozen climate liability lawsuits brought against major fossil fuel companies are decided in federal or state court.
The case at hand, BP v. Baltimore (19-1189), involves a climate liability lawsuit initially brought by the mayor and city council of Baltimore against a number of large oil and gas companies including BP PLC, Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell PLC, ConocoPhillips and Phillips 66.
Baltimore accused the companies of violating state laws by using a campaign of deceit to hide how badly their petroleum products were hurting the climate. The city sought to have the companies pay for the resulting costs to the city of dealing with those physical impacts of climate change, such as flooding and other extreme weather events.
The outcome of the case could affect whether about 20 other state and city climate liability lawsuits against fossil fuel companies will remain in state court, a venue that the oil companies have sought to avoid. The lawyers for the fossil fuel companies also asked the Supreme Court to go one step further and rule that the climate liability lawsuit does not fall under state purview because the emissions are interstate in nature and subject to federal law.
When asked about this claim by Justice Brett Kavanaugh, Baltimore's lawyer Vic Sher of the law firm Sher Edling LLP responded that the "conduct complained of is fraud, deception, denial and disinformation and that those are traditional state foci and traditional state remedies for which, frankly, at this point, there is no federal analog."
Justice Amy Coney Barrett asked fossil fuel company lawyer Kannon Shanmugam of the firm Paul, Weiss, Rifkind, Wharton & Garrison LLP whether "it would be fairly aggressive for us to resolve the federal common law question here?"
"I don't think so," said Shanmugam, "because that issue really goes to the appropriate disposition in this court — whether the court should simply vacate and remand or reverse outright ... And the answer to that question is clear, because this court, for more than a century, has applied federal common law to claims seeking redress for interstate pollution."
Technically complicated case
While the implications of the case before the court are broad, the questions underlying it are quite technical.
At the heart of the case is how to interpret section 1447(d) of federal law, which offers two narrow exceptions — federal-officer or civil-rights removal claims — under which an entity can seek to have a case removed from state to federal court.
The question before the court is whether the law also limits the scope of issues the federal appellate court can consider to only the removal claims. In recent years, courts of appeals have had different interpretations on the scope of review.
Here, the fossil fuel companies had asked a federal district court to move their case to federal courts on the assertion the companies were acting as federal officers when they drilled and extracted fossil fuel products from federal lands. The district court found the companies had not shown they were acting as federal officers in those circumstances and remanded the case back to state court.
The companies appealed that remand to the U.S. Court of Appeals for the 4th Circuit, but the 4th Circuit only considered the federal officer finding of the lower court and upheld the lower court's decision.
Risk of opening the floodgates
During oral arguments, the eight Supreme Court justices — Justice Samuel Alito did not participate — focused most of their questions on whether the 4th Circuit had jurisdiction to review more than the federal officer removal issue.
Some justices challenged Baltimore's claim that allowing an appellate court to consider more than federal-officer or civil-rights removal claims would open the floodgates to savvy lawyers seeking to use that avenue to venue shop for their clients.
The federal-officer and civil-rights exceptions are "pretty specific grounds for removal. It's not like everybody's going to have a plausible (federal officer) ground, is it," asked Justice Elena Kagan.
The federal officer jurisdiction claim by fossil fuel companies has been rejected by four appellate courts and was "based on doctrines that have been soundly disapproved and rejected by this court ... But we see [the federal officer claim] asserted continually," Sher said.
The federal officer removal claim "has become a tactic of defendants in a wide range of cases, including environmental regulation, opioids, sub-prime lending in financial institutions, and others," Sher continued. "And in every one of those instances, these involve national industries heavily regulated by the federal government."
Some of the questions involved whether allowing an appellate court to consider all issues raised in the lower court would also significantly drag out litigation over those cases. But Justice Stephen Breyer suggested that the law already opened the door to appeal and that allowing the court to consider multiple issues would not be that much worse.
"The big waste, the big time-consuming thing, is getting the appeal in the first place," Breyer said.
Sher replied that the case has already been in limbo for three years and added that the record in the case involves 43 exhibits comprising more than 1,100 pages.
"To foist on the courts of appeals records of that extent and issues, it does not take a lot of extrapolation to understand how that would burden the courts of appeals," Sher said.
Ratification question
Another question multiple justices raised was whether Congress, in amending the law in 2011 to allow the federal officer removal exception, had effectively ratified decades of findings by courts that Section 1447(d) permits review of only the grounds for removal identified in the exception clause. The Baltimore parties had made this claim.
Lawyers for the fossil fuel companies argued that Congress could have been more specific if it meant to limit the review to just the federal officer removal claim when it amended the law in 2011. But Justice Sonia Sotomayor questioned that assertion.
"Don't you think that if I'm trying to figure out what Congress intended that I would look to what was ... in front of Congress in its understanding, number one?" said Sotomayor. "Number two, that when [Congress] told me that it didn't want appellate review of all issues and that it only wanted an appellate review of [federal officer] and [civil rights] issues, that our review should be limited to what it wanted?"
Shanmugam responded that "the law was hardly settled at the time of the 2011 amendment. It is certainly true that several circuits had adopted respondent's interpretation, but they did so with conclusory reasoning, and most of them predated this court's decision in Yamaha, where the Court construed a statute using materially identical language in the opposite direction."
Shanmugam was referring to Yamaha Motor v. Calhoun, a 1996 case involving a wrongful death lawsuit for a jet ski accident that killed a 12-year-old in U.S. territorial waters. As it relates to the fossil fuel liability case, the court held in Yamaha that the full order could be appealed rather than only the particular question formulated by a district court.
Sotomayor replied that "Yamaha had already been decided, counsel, and despite that, those circuit courts were ruling against you."
Justice Alito did not reveal why he recused himself from the case. But according to the non-partisan organization Fix the Court, he holds stocks in Phillips 66 and ConocoPhillips.
