Trial Court Absolves ExxonMobil
On December 10, 2019, following twelve days of trial and testimony, Judge Barry R. Ostrager of the Supreme Court of the State of New York, New York County, denied the State of New York’s claims that ExxonMobil engaged in securities fraud by either violating the Martin Act or Executive Law 63(12). New York had claimed that ExxonMobil failed to make proper public disclosures related to how ExxonMobil accounted for past, present and future climate change risks.
The trial court’s decision resolved over three years of investigation and pre-trial discovery that required ExxonMobil to produce millions of pages of documents and dozens of witnesses for interviews and depositions. During the investigation and pre-trial discovery phase of the case, ExxonMobil produced, voluntarily and at the Court’s direction, reams of proprietary information relating to its historic and contemplated investments. Multiple nonparties, including various financial institutions, were interviewed or deposed.
Citing to the 1976 U.S. Supreme Court opinion in TCS Industries, the Court concluded in this securities fraud case that:
Nothing in this opinion is intended to absolve ExxonMobil from responsibility for contributing to climate change through the emission of greenhouse gases in the production of its fossil fuel products.
ExxonMobil does not dispute either that its operations produce greenhouse gases or that greenhouse gases contribute to climate change. But, ExxonMobil is in the business of producing energy, and this is a securities fraud case, not a climate change case.
Applying the applicable legal standards, the Court funds that the Office of the Attorney General failed to prove by a preponderance of the evidence that ExxonMobil made any material misrepresentations that “would have been viewed by a reasonable investor as having significantly altered the ‘total mix’ of information made available.” TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976). [Emphasis added]