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Greenwashing Lawsuits Against Oil and Gas Companies—What
Are They?
“Greenwashing” is the term for a company’s
exaggerated, misleading, or unsupported claims about its
environmental practices. In the oil and gas industry, allegations
of greenwashing typically arise when a company known for its
production of fossil fuels makes claims that it is working to
reduce its carbon footprint, advertising its use of renewable
energy technology, or utilizing a marketing campaign illustrated
with the color green, natural landscapes, and/or phrases such as
“eco-friendly.” You have probably seen these types of
statements on billboards while driving down the freeway, on
commercials while watching television, or even on social media
while scrolling on your phone. Outside of advertising, some oil and
gas companies have also made public commitments to reduce their
investment in extracting fossil fuels.
To combat greenwashing, states, municipalities, and climate
advocacy groups have been taking matters into their own
hands—and into the courtrooms. In recent years, there has
been a global uptick in lawsuits and complaints alleging that large
oil and gas companies have deceived the public and made misleading
statements about their impact on climate change. Until 2017, the
total number of climate litigation cases numbered 884 across 24
countries, with 654 of the cases in the United States. But by 2020,
this number nearly doubled to 1,550 cases across 38
countries.1 Oil and gas companies are not alone in
facing these types of lawsuits. Greenwashing lawsuits have also
been brought against airlines, restaurants, banks, retailers, and
car companies.
Greenwashing lawsuits typically assert causes of action
including state and federal claims of unfair and deceptive trade
practices, fraud, false advertising, and public and private
nuisance. In one example, an environmental group lodged a complaint
against one of the supermajor oil and gas companies for misleading
the public with an advertisement that focused on its low-carbon
energy products, when more than 96% of its annual spend was on oil
and gas. In a more recent example, climate activists brought suit
against a major oil and gas company, alleging that its rebranding
marketing campaign was misleading to consumers for suggesting it
could reach net-carbon emissions by 2050 while continuing to invest
in fossil fuels. While many of these lawsuits are still in the
early stages of litigation, courts have weighed in on two strategic
maneuvers used by oil and gas companies to defend against these
claims:
Attempts to Remove the Greenwashing Lawsuits to Federal
Court
In recent years, greenwashing cases brought under state consumer
protection laws against large oil and gas companies have been
stalled as a result of procedural arguments over the proper forum,
specifically, whether these lawsuits should proceed in state or
federal court. Attorney generals of Hawaii, Connecticut, and
Vermont and the Cities of Baltimore and Charleston remain stuck
fighting to keep their claims in state court while oil and gas
companies have sought to remove these cases to federal court. For
example, the journey for the proper forum in a lawsuit filed by the
City of Baltimore against twenty-six oil and gas companies has been
full of procedural twists and turns, taking almost four years to
resolve. The city filed its complaint in state court in July of
2018; the companies removed the case to the Maryland federal
district court; the federal court remanded the case to state court;
the companies appealed; the Fourth Circuit affirmed the decision;
the companies appealed to the U.S. Supreme Court who granted
certiorari; the Supreme Court vacated the Fourth Circuit’s
decision and required the panel to review all bases for removal;
and finally, in April of 2022, the Fourth Circuit remanded the case
to state court.
The Ninth and Tenth Circuits, as well as federal district courts
in Connecticut and New Jersey, have ruled similarly, allowing for
state consumer protection law claims against oil and gas companies
to proceed in state court. The federal courts reason that there is
no substantial federal question to support federal jurisdiction
over these types of cases. Final venue decisions here are
significant for two reasons: (1) these types of cases will likely
move beyond the initial pleading phase and into the discovery phase
of litigation; and (2) states, municipalities, and advocacy groups
may be more likely to bring greenwashing claims against oil and gas
companies now that a forum in state court is more certain.
Attempts to Invoke First Amendment Free Speech Protections
On May 24, 2022, a state court denied one of the world’s
largest publicly traded international oil and gas company’s
attempt to dismiss a greenwashing lawsuit by relying on a free
speech statute. In Massachusetts v. ExxonMobil
Corp.,2 Massachusetts’ Attorney General
alleged that Exxon misled investors as to the effect burning fossil
fuels had on climate and misled consumers by its promotional
materials boasting that the company was taking steps to reduce
carbon emissions. In doing so, the Attorney General asserted
various violations of Massachusetts’ consumer protection
laws.
Exxon moved to dismiss the case under the state’s
anti-SLAPP3 statute, arguing that the lawsuit was
motivated by its “petitioning” activity. The court
determined that the anti-SLAPP statute could not be used to end the
litigation because it applies only to private lawsuits, not civil
enforcement proceedings brought by an attorney general. The court
reasoned that including the attorney general in the statutory word
“party” would prevent her from achieving her
“critical” function: seeking enforcement of
Massachusetts’ laws.
Adjacently, several years ago, a number of California
municipalities sued a major oil and gas company regarding its
allegedly false statements about climate change. The oil and gas
company theorized that the California cities and counties
wrongfully brought the lawsuits in an attempt to silence the
company as a political actor. In response, the oil and gas company
filed a pre-litigation4 petition in a Texas state
court to investigate potential violations of the company’s
First Amendment rights—identifying those same municipalities
as defendants. The court ultimately held that Texas did not have
personal jurisdiction over the California cities and counties and
denied the oil and gas company’s attempt at investigating
possible First Amendment claims.
Greenwashing Lawsuits Against Oil and Gas
Companies—What’s Next?
While oil and gas companies have strategically attempted to
either dismiss these lawsuits in their early stages or litigate the
lawsuits in federal courts, they may have few tools left to avoid
moving into the discovery phase of the lawsuit. States, localities,
and advocacy groups have successfully discovered how to bring
greenwashing lawsuits against major oil and gas companies in their
preferred forum and survive dismissal. Such a result is likely to
increase greenwashing litigation and could ultimately result in oil
and gas companies proceeding to trial over statements regarding
their environmental practices. Businesses concerned about the
possibility of greenwashing lawsuits need to take a critical look
at their public statements and marketing campaigns against evolving
case law, statutes, and regulations to ensure that there is
evidence and data to support their statements.
Footnotes
1. Subodh Mishra, The Rise of Climate
Litigation, Harvard Law School Forum on Corporate Governance
(Mar. 3, 2022).
2. Commonwealth v. Exxon Mobil Corp., 489
Mass. 724, 187 N.E.3d 393, 394 (2022).
3. SLAPP stands for “strategic lawsuits
against public participation.” Anti-SLAPP statutes are state
statutes aimed at preventing litigation (or threats of litigation)
designed to intimidate people using their First Amendment
rights.
4. Texas Rule of Civil Procedure 202 is commonly
used to identify defendants and avoid trial. Under Rule 202, a
party can submit a petition to the court requesting authorization
to take a pre-litigation deposition of a person or entity to
investigate a potential suit and/or procure testimony for use in an
anticipated suit.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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