Massachusetts Supreme Court Permits Climate Related Action by Massachusetts State AG to Move Forward
Massachusetts highest court upheld a state trial court’s decision which allowed a closely watched climate-disclosure related challenge filed by Massachusetts Attorney General Maura Healey against ExxonMobil (Exxon) to proceed over Exxon’s objections.
The complaint alleges Exxon mislead consumers and investors about climate-related risks facing its fossil fuel business. Exxon unsuccessfully sought to dismiss the case on the grounds that it was motivated by Exxon’s “petitioning” – i.e., protected political activities -- and moved to dismiss the litigation using a state anti-SLAPP statute. “SLAPP is an acronym for “strategic litigation against public participation.” We will discuss this in greater detail below.) The Massachusetts Supreme Court also rejected Exxon’s SLAPP defense on the grounds that Massachusetts’s anti-SLAPP statutes does not apply to governmental enforcement actions.
The decision represents another victory for Massachusetts in long-running litigation it has pursued against Exxon related to climate issues. While Congress and federal regulators have dictated much of the agenda in the environmental space for decades, state regulators and non-governmental organizations have increasingly used a broader toolkit to attempt to compel businesses to address environmental issues.
While this decision focuses on a relatively novel issue, which is whether state anti-SLAPP provisions apply to public enforcement litigation, the claims raised by the Massachusetts Attorney General in the litigation focus on representations made by a corporation to the public and investors related to corporate management of environmental and social responsibility issues. Accordingly, it’s an important case to keep an eye on for its impact on ESG, specifically climate-related disclosures by companies in sectors with significant exposure to climate risks.
Some background on the case. The three-count amended complaint in this litigation alleged violations of Massachusetts state law stemming from Exxon’s alleged factual misstatements and failure to disclose information related to Exxon’s products and their impact on climate. The first count alleged that Exxon misrepresented or failed to disclose to investors material facts to Exxon investors related to climate change and its impact on Exxon’s businesses. The second count alleged that certain marketing and promotional materials mislead Massachusetts consumers as to the climate impact of Exxon’s products. The third count alleged that Exxon was misleading Massachusetts consumers through so-called “greenwashing” campaigns that imply that Exxon is working to address climate change and reduce carbon emissions in an effort to influence purchasing decisions.
Exxon moved to dismiss the Commonwealth’s claims on the grounds that the litigation stemmed from its efforts to “petition” the government and thus was barred by Massachusetts’ anti-SLAPP statute. The relevant portion of this provides that “[i]n any case in which a party asserts that the civil claims . . . against said party are based on said party’s exercise of its right of petition under the constitution of the United States or of the commonwealth,” the party may bring a motion to dismiss. Because some of the allegations here relate to Exxon’s marketing activities which were wholly separate from the government, a Massachusetts trial court judge denied Exxon’s motion to dismiss. In the lower court’s view, the anti-SLAPP statute only barred claims which were “solely based on” petitioning activity.
The Supreme Court of Massachusetts affirmed the decision for a different reason; the anti-SLAPP statute was wholly inapplicable to actions brought by the Attorney General because the Attorney General “is entrusted with the enforcement of the Commonwealth’s laws . . . through bringing civil enforcement proceedings . . . . ”
The Court stated that construing the anti-SLAPP statute to apply to the Attorney General “would place significant roadblocks to the enforcement of laws.” Further, the Court stated that the anti-SLAPP provision’s legislative history “makes clear that the motivation for the anti-SLAPP statute was vexatious, private lawsuits, especially ones filed by developers to prevent local opposition to zoning approval . . . . There is no suggestion in the legislative history that it was meant to address government enforcement actions.” The Court noted, no other states with anti-SLAPP statutes permitted them to be used to dismiss governmental enforcement actions. Accordingly, the Court concluded that Commonwealth’s litigation against Exxon should be permitted to proceed.
While government enforcement efforts related to climate disclosures may just be in their initial phases, these efforts will likely present unique challenges going forward.