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Baltimore’s climate change claim against Big Oil returned to state court

Baltimore’s multimillion-dollar climate change lawsuit against about two dozen fossil fuel companies belongs in state court rather than federal court, a U.S. appeals court ruled Thursday in a defeat for Big Oil.

The 4th U.S. Circuit Court rejected the companies’ argument that federal courts have jurisdiction over Baltimore’s claim because the city’s allegations of environmental harm are national in scope and involve not just state and local law but the federal Clean Air Act.

In its published 3-0 decision, the 4th Circuit said the CAA does not preempt cities from bringing claims alleging airborne harm to residents and no federal common law exists to give U.S. courts jurisdiction over claims of municipal injuries.

“The impacts of climate change undoubtedly have local, national, and international ramifications,” Senior Judge Henry F. Floyd wrote for the 4th Circuit.

“But those consequences do not necessarily confer jurisdiction upon federal courts carte blanche,” Floyd added. “In this case, a municipality has decided to exclusively rely upon state-law claims to remedy its own climate-change injuries, which it perceives were caused, at least in part, by defendants’ fossil-fuel products and strategic misinformation campaign. These claims do not belong in federal court.”

The 4th Circuit’s decision marked the second time it has sent Baltimore’s lawsuit back to state court.

Its first ruling was vacated by the Supreme Court, which ruled in May that the 4th Circuit had erroneously held that federal courts lacked statutory jurisdiction because the oil companies did not act at the direction of a federal officer.

The high court, however, did not automatically grant federal jurisdiction over Baltimore’s lawsuit, choosing to leave that decision in the first instance to the 4th Circuit – which held fast to its original order.

“Given the jurisdictional inquiry before us, we take no view on whether Baltimore will ultimately fail or succeed in proving its claims under Maryland law,” Floyd wrote. “We cannot decide those questions. But we are confident that Maryland courts can capably adjudicate claims arising under their own laws that fail to otherwise provide any federal jurisdiction.”

Sara Gross, chief of the city law department’s affirmative litigation division, hailed the decision as “a big win for Baltimore’s residents, workers, businesses and taxpayers.”

“We appreciate the 4th Circuit’s thorough review and forceful rejection of defendants’ ongoing attempts to mischaracterize our case and avoid accountability for the costs and harms their deception has imposed on Baltimore,” Gross said via email. “We filed our case in state court because that is where it belongs. And now, that is where it is headed.”

The oil companies’ appellate attorney, Kannon K. Shanmugam, did not immediately respond Thursday to a request for comment on the 4th Circuit’s decision and any plans to appeal.

Shanmugam chairs the Supreme Court and appellate practice group at Paul, Weiss, Rifkind, Wharton & Garrison LLP in Washington.

The lawsuit, filed in 2018 in Baltimore City Circuit Court, seeks millions of dollars in damages for the companies’ 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. They have sought to have Baltimore’s case heard in federal court, where civil litigators have opined that the companies believe they have a better chance for a pretrial victory than in state court.

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 2020 that the companies had not shown they acted at a federal officer’s direction.

But the Supreme Court, ruling in the companies’ appeal, said the federal statute governing removal of state cases to U.S. courts is not so narrow and sent the case back to the 4th Circuit.

Floyd was joined in the 4th Circuit’s decision by Chief Judge Roger L. Gregory and Judge Stephanie D. Thacker.

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 4th Circuit rendered its decision in Mayor and City Council of Baltimore v. BP PLC et al., No. 19-1644.