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Baltimore, Big Oil wage Supreme Court battle over climate change lawsuit

Anti-scaling fencing has been placed in front of the Supreme Court, which stands across the street from the U.S. Capitol, Sunday, Jan. 10, 2021, in Washington. (AP Photo/Alan Fram)

Anti-scaling fencing has been placed in front of the Supreme Court, which stands across the street from the U.S. Capitol, Sunday in Washington. An attorney for fossil fuel companies has asked the court to have Baltimore’s climate change lawsuit litigated in federal court rather than state court.  (AP Photo/Alan Fram)

An attorney for about two dozen fossil fuel companies urged the U.S. Supreme Court on Tuesday to have Baltimore’s climate change lawsuit against Big Oil litigated in federal rather than state court.

Kannon K. Shanmugam pressed the justices to rule that a U.S. appeals court applied too narrow a standard for federal court jurisdiction over a local lawsuit with national implications. Baltimore’s claim belongs in U.S. district court – rather than city circuit court – because the city’s allegations of environmental damage under Maryland law implicate the federal government’s role in regulating interstate emissions, Shanmugam told the high court.

Baltimore’s “claims necessarily arise under federal law,” said Shanmugam, of Paul, Weiss, Rifkind, Wharton & Garrison LLP in Washington. “This court’s precedents dictate the common sense conclusion that federal law governs claims alleging injuries caused by worldwide greenhouse gas emissions.”

But Baltimore’s attorney, Victor M. Sher, told the justices that the 4th U.S. Circuit Court of Appeals correctly upheld a federal judge’s decision that the litigation belongs in state court.

The 4th Circuit properly remanded the case to Baltimore City Circuit Court because the companies had not shown the necessary statutory element for federal jurisdiction — that they were acting at the direction of a U.S. official, or officer, said Sher, the city’s outside counsel.

The federal officer requirement for U.S. court jurisdiction is limited, leaving no room for defendants to “bootstrap” unrelated arguments in an effort to get into federal court, said Sher, of Sher Edling LLP in San Francisco.

“You either have it or you do not,” Sher said of the federal officer requirement. “The appeal has to be limited and focused on those grounds.”

The justices appeared to be as divided as the attorneys during the hour-and-fifteen minute argument, conducted remotely due to efforts to stanch the spread of the COVID-19 virus.

Chief Justice John Roberts said the remand statute can be read broadly — as the companies argued — because it states that U.S. district court remand orders are “reviewable,” with the federal officer’s role given as one of many possible reasons for a case to be heard in federal court.

But Justice Sonia Sotomayor called the statute narrow, with the federal officer’s role being the specific reason for having a case heard in federal court.

Allowing for a broader basis for federal court jurisdiction “could open the floodgates of appellate litigation in the federal system” over remand orders, which Congress likely intended to avoid under the remand statute, Sotomayor said.

Justice Clarence Thomas also voiced concern with the companies’ broad interpretation of the remand statute.

“It seems as though we are smuggling into appellate review other issues that are not front and center like federal officer,” Thomas said.

The outgoing Trump administration, in making its last argument before the Supreme Court, sided with the oil companies’ argument that Baltimore’s lawsuit belongs in federal and not state court.

The city’s “claims are inherently federal in nature,” said Assistant U.S. Solicitor General Brinton Lucas. “Its case still depends on alleged injuries to the city of Baltimore caused by emissions from all over the world and those emissions just can’t be subjected to potentially conflicting regulations by every state and city affected by global warming.”

Baltimore’s lawsuit alleges the fossil-fuel companies concealed from and misinformed the public about the dangerous contributions their energy-generating activities made toward climate change.

The lawsuit, filed in Baltimore City Circuit Court, seeks millions of dollars in damages for alleged violations of the Maryland Consumer Protection Act, as well as products liability, public nuisance and trespass.

The companies, which are facing similar litigation in many other states, deny the allegations.

The legal odyssey began when the companies sought to remove the city’s lawsuit to federal district court.

At the Supreme Court, Justice Brett Kavanaugh asked Shanmugam why the companies want the city’s case heard in federal court and asked Sher why the city wants the litigation to remain in state court.

But neither Shanmugam’s answer – that “the claims here arise under federal law” – nor Sher’s response – that “there is no federal claim to assert here” – seemed to satisfy Kavanaugh, who sought insight into their legal strategy.

“That’s your legal argument,” Kavanaugh said. “Fine.”

Civil litigators have opined that the companies believe they have a better chance for a pretrial victory in federal rather than state court, a belief shared by the city’s counsel.

U.S. District Judge Ellen L. Hollander remanded the case to Baltimore City Circuit Court in June 2019, saying the city’s state law claims did not implicate federal jurisdiction. The 4th Circuit upheld the remand, ruling in March that the companies had not shown they acted at the direction of a federal officer.

The companies sought review by the Supreme Court, arguing that appeals of remand orders are not limited to claims that the defendant seeking federal jurisdiction was acting at a federal officer’s direction.

Justice Samuel Alito recused himself from the case. Alito did not publicly disclose the reason for his recusal.

The companies being sued by Baltimore include BP America Inc., Chevron Corp., CITGO Petroleum Corp., ConocoPhillips Co., Exxon Mobil Corp.; Hess Corp., Marathon Petroleum Corp., Phillips 66 and Shell Oil Co.

The high court is expected to render its decision by June in the case, BP PLC et al v. Mayor and City Council of Baltimore, No. 19-1189.

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