On April 13, 2018, Massachusetts’ highest court ended a significant chapter in Exxon’s long-running dispute with Attorney General Maura Healey. In 2015, Healey issued a Civil Investigative Demand regarding Exxon’s knowledge of the effects of fossil fuels on climate change. Exxon then undertook what a federal judge in New York last month called “a sprawling litigation involving four different judges, at least three lawsuits, innumerable motions and a huge waste of the [New York and Massachusetts] AGs’ time and money.” (You can read a full analysis of that decision by my colleague Seth Jaffe here.) Exxon’s actions in Massachusetts’ courts have been mercifully compact, involving only one hearing in Superior Court and one hearing at the SJC (which had taken the appeal directly on its own motion). The outcome is unsurprising, but the SJC’s opinion is worth analyzing as a loud and clear statement to would-be challengers of CIDs: they face a daunting task.
Massachusetts’ long arm statute allows out-of-state entities to be brought into court if they have sufficient ties to the state. Exxon alleged its ties were insufficient, citing a franchise agreement with roughly three-hundred Exxon-branded gas stations in Massachusetts but no direct business in the Commonwealth. The SJC, citing Exxon’s ability to control advertising of its products in the franchise agreement, held that Exxon’s contacts were enough, particularly because the AG’s apparent theory of liability rests in part on advertising. Exxon also argued that the CID was overbroad as to scope and time. Invoking the AG’s authority to investigate potential violations of the law, the SJC brushed aside these arguments with little discussion.
The SJC also analyzed Exxon’s allegations of AG bias, the centerpiece of Exxon’s case in New York and, prior to the transfer of the case, Texas. Exxon argued that statements by AG Healey at a March 2016 press conference disqualified the AG as a neutral prosecutor. The SJC’s rejection of Exxon’s argument, though brief, is important. “As an elected official,” the SJC wrote, “it is reasonable that she routinely informs her constituents of the nature of her investigation.” Such “inform[ing]” is not evidence of bias, but rather part of the inherently political prioritization of issues and investigations. An elected AG must inform prospective voters of her priorities for law enforcement.
Though the beginning of the “sprawling litigation” over the investigation is over, we anticipate that Exxon’s war will continue as the AG proceeds with the investigation in earnest.
On April 20, 2018, Exxon announced it would appeal the dismissal of its lawsuit in the Southern District of New York to the Second Circuit.