Clifford Chance

In a blow to defendants, on April 24, 2023, the US Supreme Court declined to consider five cases in which fossil fuel companies argued that climate change-related tort claims should be heard in federal, and not state, courts.

In five cases originally filed in state courts against fossil fuel companies for alleged tort damages from the impacts of climate change, defendants urged the Supreme Court to allow the claims to be heard in federal court where, they argued, federal common law would pre-empt the state law claims and end the lawsuits. Following the Court's decision, those cases return to state court for further proceedings.

The cases are: (i) Suncor Energy, Inc., et al. v. Board of County Commissioners of Boulder City, et al.; (ii) BP P.L.C., et al. v. Mayor and City Council of Baltimore; (iii) Chevron Corp., et al. v San Mateo County, et al.; (iv) Sunoco LP, et al. v. Honolulu, et al.; and (v) Shell Oil Products Co., et al. v. Rhode Island.

The cases are part of a wave of lawsuits by states and municipalities across the US aiming to hold the fossil fuel industry accountable in state courts for allegedly causing or exacerbating climate change-related harms. The plaintiffs' strategies are varied and evolving. Some rely on state consumer protection laws – for example, the complaint filed by the Mayor and City Council of Baltimore, which alleges that fossil fuel companies deceived and misled consumers about causal links between fossil fuels and climate change that were known to, but not disclosed by, those companies. Other complaints – such as those filed by San Mateo County, Honolulu, and Rhode Island – make use of nuisance, trespass, and negligence theories. The Boulder County complaint includes a cause of action for unjust enrichment.

To avoid facing countless lawsuits and potentially conflicting outcomes under a multiplicity of state and local laws in trial courts around the country, defendants have sought to "remove" the cases from state courts to federal courts, which many perceive as being more receptive to their claims that federal law overrides, or "pre-empts," the state claims. The plaintiffs in turn have fought to keep the cases in state courts – and while plaintiffs have generally won thus far, the rulings have been subject to appeal. As a consequence, for years now, the cases have been tied up in procedural battles in state and federal courts across the country, with little action on the substantive claims.

In their petitions to the Supreme Court, defendants argued that federal common law governs claims tied to the harms of interstate greenhouse gas emissions, and that federal courts have jurisdiction over such claims even if filed in state court and framed as arising under state law. The plaintiffs counter-argued that they have the right to pursue their state law claims in state court, and that well-established doctrine does not allow defendants to remove the cases to federal court based on a preemption defense. The Supreme Court's denial of certiorari leaves the preemption arguments—and, if the arguments fail, the substance of plaintiffs' state and local law claims—in the hands of state courts.

Whether those state courts will permit plaintiffs to use state and local laws to hold energy companies responsible for climate change remains to be seen. There is some prospect that local government plaintiffs have an advantage in making their case before local judges and juries, and it is virtually certain that a profusion of local cases will result in varied and conflicting outcomes.

Outside the US, claimants are gaining traction in some courts as they pursue energy corporations for various forms of redress. In two civil law jurisdictions, individual plaintiffs seek damages for the alleged proportion of individual companies' contributions to global greenhouse gas emissions. In Germany, a Peruvian farmer is suing a German energy company for USD 18,000, alleging that its emissions contributed to the melting of mountain glaciers near his hometown of Huaraz. In May 2022, judges, court-appointed experts, and counsel conducted a site visit to Huaraz. An oral hearing is expected later this year to consider the experts' findings.

Similarly, in Switzerland, four inhabitants of Pari Island, Indonesia sued a Swiss-based cement company, seeking (i) alleged proportional compensation for climate change-related damages on Pari totaling $16,000, (ii) financial contribution to adaptation measures on Pari, and (iii) a reduction of the company's CO2 emissions by 43% by 2030.

From a common law perspective, the Supreme Court of New Zealand is shortly expected to issue its judgment in Fonterra - where the defendants have applied to strike tort claims made by a landowner against several companies in sectors including agriculture, energy, mining, and manufacturing for alleged climate-related harm. The claims, which seek injunctions requiring the companies to reduce emissions to zero, are based on theories of nuisance, negligence and a novel category of tortious duty.

Other jurisdictions have also permitted private claimants to pursue actions against major corporations alleging climate-related harm, including France (alleging claims under the "duty of vigilance" law relating to environmental and human rights harms from deforestation), the Netherlands (alleging a company is subject to a duty of care under Dutch law requiring it to reduce emissions by 45% relative to 2019 by the end of 2030 (now under appeal)), and Australia (alleging "clean energy" claims relating to natural gas are misleading).

Now in the US, with one major procedural hurdle for plaintiffs resolved for the time being, state judges may be addressing—and companies may be defending—a wide variety of similar claims under state and local laws in an increasing number of state courts across the country.