Puerto Rican cities sue fossil fuel companies in major class-action, climate fraud case

Municipalities aim to hold industry liable for damages from catastrophic 2017 hurricanes.

244
SOURCEDeSmog Blog
Image credit: U.S. Department of Defense Current Photos

Nearly 25 years ago, oil major Shell predicted in an internal 1998 report that a class-action lawsuit would be brought against fossil fuel companies following “a series of violent storms.” That prediction is finally coming true: A group of Puerto Rican communities, which were ravaged by Hurricanes Irma and Maria in 2017, are suing Shell and other fossil fuel producers in a first-of-its-kind, class action climate liability lawsuit.  

The groundbreaking case — filed November 22 in the U.S. District Court for the District of Puerto Rico — is the first climate-related class action lawsuit in the United States filed against the fossil fuel industry to target the industry with federal charges of racketeering. It alleges that the fossil fuel defendants engaged in a coordinated, multi-front effort to promote climate denial and defraud consumers by concealing the climate consequences of fossil fuel products in order to inflate profits.  

Sixteen Puerto Rican municipalities are suing as a class or representatives on behalf of the more than 60 municipalities on the island that all experienced devastating losses from the 2017 hurricanes. The case demands that fossil fuel companies pay for damages associated with catastrophic storms, beginning with the 2017 hurricanes, and their lingering impacts, arguing that these disasters are worsened by climate change.

The more than 200-page complaint alleges that fossil fuel companies’ products and deceptive conduct greatly accelerated global warming, including warming oceans. Climate models predict that as oceans warm, hurricanes will become more intense, leading to more turbocharged storms like Maria and Irma. 

The 2017 Atlantic hurricane season, in which both Irma and Maria hit, saw six major hurricanes and resulted in nearly $300 billion of damage. In Puerto Rico, Maria alone caused almost 3,000 fatalities and more than $120 billion in damages, destroying the island’s power grid and devastating other critical infrastructure like roads and health care facilities. This September, almost five years to the day after Maria hit, Hurricane Fiona slammed Puerto Rico, again impacting infrastructure and compounding damages from the 2017 storms. With mounting climate-related disaster costs, the question becomes, how can Puerto Rico pay for this? 

Through this new litigation, the island’s municipalities are trying to compel some of the world’s largest oil, gas, and coal companies to pay for the consequences of the climate crisis their products have fueled. As explained in a press release announcing the lawsuit, the companies’ “failure to disclose the truth about their products had disastrous effects for Puerto Rico, which was defenseless against the historically strong hurricanes that hit the island in 2017.” The Global Climate Risk Index report from 2020 noted that between 1999 and 2018, Puerto Rico was the country most affected by climate change, due in part to “exceptionally devastating” storms.

Companies named as defendants in the lawsuit include BP, Chevron, ConocoPhillips, ExxonMobil, Shell, Occidental Petroleum, Motiva Enterprises, BHP, Arch Resources, Peabody Energy, and Rio Tinto. All are among the 90 corporate entities, or “carbon majors,” that research indicates are responsible for nearly two-thirds of carbon emissions since the Industrial Revolution; the companies listed above together account for about 40 percent of industrial emissions from 1965 to 2017, according to the complaint. 

The complaint, supported by excerpts from industry communications, delves into how oil companies knew over half a century ago about the potential catastrophic impacts of a warming planet, and that this warming resulted from the use of their products. It also details how they deliberately acted to conceal what they knew about climate impacts and to publicly disseminate disinformation, fund climate denial, and obstruct policy responses and attempts to shift to alternative energy sources. 

“Instead of acting to limit the potential greenhouse gas emissions, they mobilized with the coal and fossil fuel dependent industries to manufacture and spread propaganda and deception about climate science, contrary to their own internal scientific conclusions, in order to ensure unabated emissions and the sale of their products to consumers worldwide and in Puerto Rico,” the complaint contends.

As part of their disinformation and deception campaigns, fossil fuel companies funded various “free market” think tanks and front groups to amplify their misleading messaging. The lawsuit calls out a handful of these organizations, including the Competitive Enterprise Institute (CEI), which received more than $2 million from Exxon, the Heritage Foundation, the Heartland InstituteFrontiers of Freedom, and Committee for a Constructive Tomorrow (CFACT), which took funding from Exxon, Chevron, and Peabody. 

Another group that the complaint alleges was central to the deception campaign was the Global Climate Coalition, an industry lobby organization formed in 1989 by companies and trade associations in carbon-intensive sectors such as fossil fuels, chemicals, automobiles, and electric utilities, to undermine climate science and thwart climate policies. The complaint details the GCC’s obstructionist role, which included the formation of a communications task force that in 1998 created the infamous “victory will be achieved when” internal memo that outlined the coalition’s objective to manipulate the public’s understanding of climate science. 

Such conduct demonstrates an orchestrated attempt to obfuscate and obstruct, and this misleading behavior is ongoing, according to legal counsel for the municipalities. 

“This is a laid out, multifaceted plan that was decades in the making that is still being perpetuated to this day,” Melissa Sims, an attorney with the law firm Milberg Coleman Bryson Phillips Grossman PLLC, which is representing the Puerto Rican communities, told DeSmog. 

A “New Front in the Climate Liability War”

The lawsuit brings more than a dozen legal claims under federal and Puerto Rican law, such as consumer fraud, violation of Puerto Rican consumer protection rules, and violation of federal antitrust law. Notably, it also alleges violations under the Racketeer Influenced and Corrupt Organizations (RICO) Act, a federal statute designed to fight organized crime or other corrupt conduct. 

RICO has been successfully used to hold the tobacco industry accountable for lying about the health hazards of their products, and has been applied in litigation against opioid and auto manufactures. Until now, it had yet to be asserted in a climate liability lawsuit, although several Democratic senators have previously called for a federal probe of Big Oil that could result in potential racketeering litigation. 

Patrick Parenteau, emeritus professor of law and senior fellow for climate policy in the Environmental Law Center at Vermont Law and Graduate School, said he had been expecting a RICO claim to arise in climate liability litigation. 

“I think this opens a whole new front in the climate liability war,” he told DeSmog via email. “It sends yet another signal to the financial markets that fossil is a bad investment.” 

Parenteau acknowledged that a racketeering claim adds extra challenges, since plaintiffs will need to prove collusion between the defendants. “But it ups the ante in terms of potential remedies and damages,” he explained. 

Additionally, Parenteau explained that since the lawsuit was filed in federal court, it can avoid the venue disputes that have delayed the other climate liability lawsuits targeting fossil fuel companies. 

Representatives for several of the oil company defendants said in emailed statements that this litigation is a “baseless distraction” and that climate solutions must be reached through “smart policy from governments” rather than courts. 

“Addressing a challenge as big as climate change requires a truly collaborative, society-wide approach. We do not believe the courtroom is the right venue to address climate change,” Shell spokesperson Anna Arata said in a statement. 

A lawyer for Chevron also described the climate crisis as a societal challenge resulting from “worldwide conduct” of consumers, including Puerto Ricans.

“Residents and public officials in Puerto Rico rely every day on oil and gas to live and work on the island, power their homes, become a tourist destination, and grow their economy. This lawsuit is one in a series of suits that attempt to punish a select group of energy companies for a challenge that is the result of worldwide conduct stretching back to the beginning of the Industrial Revolution,”  said Theodore J. Boutrous, Jr., of Gibson, Dunn and Crutcher, counsel for Chevron Corporation. 

2021 peer-reviewed study by Harvard researchers Naomi Oreskes and Geoffrey Supran, however, suggests that these kinds of statements are part of a misleading narrative framing that downplays the gravity of the climate crisis, normalizes dependency on oil and gas, and focuses blame on individual consumers. According to the study, which examined communications from ExxonMobil, “These patterns mimic the tobacco industry’s documented strategy of shifting responsibility away from corporations—which knowingly sold a deadly product while denying its harms—and onto consumers.”

ExxonMobil did not respond to a request for comment on the new lawsuit from Puerto Rico.

Boutrous added: “Chevron believes the claims alleged are legally and factually meritless, and will demonstrate that in court.”

But if the federal racketeering litigation that determined that tobacco companies had committed fraud on a massive scale is any indication, the fossil fuel companies could be in real legal peril with this new RICO litigation.

“Tobacco opened the door to using RICO, and let’s face it—RICO was enacted to fight organized crime,” said Sharon Eubanks, an attorney who previously led the U.S. Justice Department’s successful RICO litigation against Big Tobacco in United States v. Philip Morris USA, et al. “That seems to be what we have here with Big Oil as well.”

FALL FUNDRAISER

If you liked this article, please donate $5 to keep NationofChange online through November.

COMMENTS