California AG Launches Investigation into Fossil Fuel and Petrochemical Industries for Plastic Pollution

On April 28, 2022, the California Attorney General launched an investigation into the “fossil fuel and petrochemical industries for their role in causing and exacerbating the global plastics pollution crisis.”  As a first step, the CA AG issued a subpoena to ExxonMobil, “a major source of global plastic pollution, seeking information relating to the company’s role in deceiving the public.”  The stated purpose of the investigation is to “target companies that have caused and exacerbated the global plastics pollution crisis, their role in perpetuating myths around recycling, and the extent to which this deception is still ongoing.”

According to the CA AG, internal industry documents from the 1970s warned executives that recycling was not feasible and that there was “’serious doubt’ that plastic recycling ‘can even be made viable on an economic basis.’” The CA AG claims that this prediction came true by noting that the U.S. plastic recycling rate is 9% with the remaining 91% going to landfills, being incinerated, or released directly into the environment.

Indeed, Foley Hoag recently contributed to a report discussing the differing approaches of the United States and France in attempting to deal with the plastic pollution crisis.

This investigation will likely resemble those filed by various other state attorney generals into ExxonMobil’s knowledge, and alleged deception, of investors regarding fossil fuels impacts on climate change.  See our previous coverage on the NY and MA AG’s investigations.

The CA AG investigation will have to overcome an issue that plagued the other AGs: how to hold ExxonMobil responsible when the most compelling evidence is from the 1970s and well outside of all statutes of limitation.

In prior climate-related AG investigations, ExxonMobil used an extremely aggressive, yet ultimately unsuccessful, playbook, to prevent the investigations.

The highlights include:

  • Filing a preliminary injunction in the Federal District Court in the Northern District of Texas against the MA AG. Here, ExxonMobil attempted, unsuccessfully, to force an unprecedented deposition of another State’s Elected Attorney General.  This case was ultimately dismissed on jurisdictional grounds.
  • Filing a motion to set aside or modify the MA AG investigation demand in Massachusetts state court. Not only was ExxonMobil’s claim dismissed, the court granted the MA AG’s motion to force ExxonMobil to comply with the MA AG investigation demand.  This decision was upheld by the Massachusetts Supreme Judicial Court.
  • Filing a writ of certiorari to the U.S. Supreme Court of the MA Supreme Judicial Court, which was denied.
  • Losing a removal action in the MA Federal District court and losing the appeal in the First Circuit.
  • Having a case dismissed against the MA and NY AGs in S.D.N.Y. and losing the appeal in the Second Circuit.

Despite these losses and more, ExxonMobil ultimately won a bench trial in the New York State Supreme Court against the NY AG.  Brought under a theory of securities fraud, the court held that the NY AG “failed to prove by a preponderance of the evidence that ExxonMobil made any material misrepresentations that ‘would have been viewed by a reasonable investor as having significantly altered the “total mix” of information made available.’”

We don’t know how exactly how the CA AG investigation will proceed.  However, based on past actions, ExxonMobil is unlikely to willingly comply.  Indeed, on May 24, 2022, the Massachusetts SJC handed ExxonMobil another lose holding that the state’s anti-SLAPP statute does not apply to government enforcement actions brought by the Attorney General.

Stay tuned for our continuing series on climate change related state attorney general actions.

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