Case Name:                City of New York v. BP p.l.c.

Jurisdiction:               United States

Type of claim:            Motion to dismiss

Summary of result:  Motion to dismiss granted (case dismissed)

Judgment final:          Yes

Court instances:

Court	Type of decision	Summary of decision
US District Court, Southern District of New York Decision of 19 Jun 2018 325 F. Supp. 3d 466	Decision on motion to dismiss the case	Motion to dismiss granted

US Court of Appeals, Second Circuit Decision of 1 April 2021 File. No. 18-2188

Appeal of decision on motion to strike

Appeal dismissed (the Court affirmed the decision to dismiss the City’s claim)

Source of claims:      State common law of private and public nuisance and trespass, federal common law

 

Summary of Judgment – First Instance

Plaintiff’s arguments

The plaintiff in this case is the city of New York. In its initial claim, New York sued 5 major oil and gas producers (BP, Chevron, ConocoPhillips, Exxon Mobil, Royal Dutch Shell) for their role in producing, marketing and selling “massive quantities of fossil fuels… despite knowing that the combustion and use of fossil fuels emit greenhouse gases.”[1] The lawsuit was “based upon the fundamental principle that a corporation that makes a product causing severe harm when used exactly as intended should shoulder the costs of abating that harm.”[2] New York argued that the defendants’ actions, both in the past and present, have contributed to climate change effects that are harming New York due to rising temperatures, rising sea levels, increased severity of storms and precipitation events, and that these events are projected to worsen over the coming decades.[3] New York is particularly vulnerable to climate change due to its location adjacent to 520 miles of coastline.[4] To combat these effects, the city must invest in billions of dollars in climate adaptation infrastructure.[5]

For these reasons, New York sued the defendants for damages for costs the City had already incurred for climate change adaptation measures, as well as damages for costs for the climate change adaptation measures the City is currently implementing, and needs to implement in the future. Furthermore, New York sought an injunction (in other words, for the Defendants to stop producing and selling their products in the state) in the case that the Defendants failed to pay the court-determined damages.”[6]

New York argued that although the defendants’ actions have not been unlawful, they should be held liable for the effects of their actions, especially since they have been aware of the risks of climate change for decades.

New York argued three different causes of action, all under state common law (not federal common law).

First, New York argued that the defendants committed a public nuisance because their production and selling of fossil fuels contribute to climate change. Climate change has adverse impacts on the health, safety and welfare of a considerable number of people residing in New York City. In this way, the defendants’ conduct interfered with public rights and property. [7].”

Second, the plaintiff argued that the defendants committed private nuisance because their actions “constitute[d] a substantial and unreasonable interference with the City’s rights to the use and enjoyment of its property.” Specifically, city-owned “property… is being harmed… by sea level rise, increased storm surge flooding, extreme heat, and other climate change impacts.”[8]

Third, the plaintiff argued that the defendants committed trespass because their conduct “constitute[d] a continuing, unauthorized intrusion and a continuing trespass onto the City’s property… [which] has caused, and will continue to cause, substantial damage to the City.”[9]

The likely reason the city brought these claims under state law is that there was a higher likelihood the claims would be successful. In applying federal common law, the courts have previously ruled that the Clean Air Act is the main federal statute for regulating greenhouse gas emissions, and on this basis the statute has displaced any claims relating to the emission of greenhouse gases under federal common law. This precedent made the chance that New York’s claims against the oil and gas producers would be successful very slim.

Defendants’ arguments

In response, the defendants filed a motion to dismiss New York’s complaint. They argued that the broad nature of the plaintiff’s claims went beyond state borders because the emission of greenhouse gases contributes to climate change in all states and internationally. This is why the defendants argued that the plaintiff’s claim should be brought under the federal common law.[10]

If the claims were to arise under federal common law, the defendants further argued that they should fail due to the displacement doctrine. The displacement doctrine states that, where Congress has passed a law regulating a certain subject, common law claims regarding this subject are extinguished (“displaced”). With regard to greenhouse gas emissions, the US Supreme Court had previously held that Congress had passed the Clean Air Act and had delegated any authority to regulate greenhouse gases to the Environmental Protection Agency (see Kivalina v. Exxon Mobil Corp). This is enough to displace federal common law claims, even if the Environmental Protection Agency has in fact not regulated greenhouse gas emissions so far.

The defendants further argued that alternatively, even if Congress had not displaced the federal common law with legislation, New York’s arguments were too speculative and New York could not prove that there was a causal link between the conduct of the defendants and the alleged harm. This is because billions of factors contribute to global warming, making it impossible to show that a specific harm was caused by the defendant’s emissions.[11]

The defendants also brought up numerous US legal doctrines to support their arguments. First, they argued that allowing New York’s claim to proceed would inevitably affect the business practices of the defendants. This would infringe on US foreign policy because oil and gas is a major part of the US’ trading regime and contributes to their GDP. This makes the regulation of these products the domain of Congress and not the judiciary.[12]

Second, the “Commerce Clause” states that a US state cannot interfere with the commercial activities of other states. New York’s claims, if successful, would have the effect of state common law regulating the commercial activities of other states and thus violate the Commerce Clause.[13]

Third, the defendants argued that under “due process”, states cannot punish defendants for lawful conduct that is occurring or has occurred in the past.[14] In other words, the defendants conducted their activities in accordance with government approvals and regulations.

Finally, the defendants argued that New York’s claims were not justiciable because they deal with questions of a political and legislative nature (i.e. how to control greenhouse gas emissions and the effects of climate change), outside of the purview of the courts. The courts are typically hesitant to wade into non-justiciable issues out of respect for the balance of power between different levels of government.[15]

First Instance Judgment

The US District Court sided with the defendants and granted their motion to dismiss New York’s complaint. The court agreed that based on previous Supreme Court jurisprudence, federal common law, rather than state common law, should apply to the City’s claims.[16] The court stated that climate change was an interstate and global issue, making it inappropriate for state law to control.[17]

Further, the Court agreed with the defendants that the Clean Air Act had displaced New York’s common law claims of nuisance and trespass because Congress had explicitly addressed the question of the regulation of greenhouse gas emissions.[18]

Finally, the Court stated that judicial caution is necessary in situations where US foreign policy may be affected, concluding that New York’s “claims implicate countless foreign governments and their laws and policies” and that to “litigate such an action for injuries from foreign greenhouse gas emissions… would severely infringe upon the foreign-policy decisions that are squarely within the purview of the political branches of the U.S. Government.”[19]

Appeal

The City of New York appealed the District Court’s decision. In its appeal brief, New York asked the Second Circuit to review the following three issues, arguing that (1) federal common law did not displace the City’s state law claims, (2) the City’s claims were not displaced by the Clean Air Act; and (3) that the “separation-of-powers concerns” between the different branches of government did not warrant dismissal of its claims.[20]

To the first point, New York argued that since they were seeking damages from harms solely confined to New York, state common law was appropriate in this case because “New York law provides that manufacturers… can be liable in nuisance and trespass for selling products with the knowledge that those products will cause environmental harm.”[21]

Second, the City argued that the Clean Air Act does not displace claims about seeking damages for local effects of climate change. Therefore, the City can proceed with its claim under state common law.[22]

Third, New York argued that because they are only seeking damages and not to regulate or control the defendants’ business practices, a judgment in New York’s favour would not have an impact on US foreign policy or the policies of the other branches of government. The City also argued that while there were political aspects to this case, past case law indicated that the courts still have authority to hear cases with political elements if the dominant focus of the case was legal in nature.[23]

Second Instance Judgment

The Second Circuit Court dismissed New York’s appeal on all grounds.

The Court found that in this case, because the City’s claims deal with global greenhouse gas emissions (and not simply the production and sale of fossil fuels), state common law cannot apply.[24] If producers of fossil fuels located outside the state were liable for damages under state law, this would naturally influence their behaviour regarding productions and sales.[25] If every state were to apply its own laws to this situation, this would result in a “patchwork” of different legal obligations.[26] Thus, New York must bring these claims under federal common law.

The Court affirmed the district court’s judgment that the Clean Air Act displaced any potential federal common law claims here because this case ultimately is about the effects of greenhouse gas emissions, which Congress has addressed through the Act.

However, the Court stated that the Clean Air Act does not regulate emissions that occur outside of the US. Thus, “the Clean Air Act cannot displace the City’s federal common law claims to the extent that they seek recovery for harms caused by foreign emissions.”[27] However, the Court decided to exercise judicial caution in this case, stating that “federal courts must proceed cautiously when venturing into the international arena so as to avoid unintentionally stepping on the toes of the political branches.”[28]

At the time this summary was published, there are no indications[29] as to whether New York plans to further appeal this to the United States Supreme Court.

 

[1] New York initial complaint dated 9 Jan 2018 at 1.

[2] Ibid.

[3] New York initial complaint at 5.

[4] New York initial complaint at 6.

[5] New York initial complaint at 6-7.

[6] New York initial complaint at 7.

[7] New York initial complaint at 60.

[8] New York initial complaint at 61-62.

[9] New York initial complaint at 63.

[10] Motion to dismiss at 8.

[11] Motion to dismiss at 15.

[12] Motion to dismiss at 18.

[13] Motion to dismiss at 19.

[14] Motion to dismiss at 21-22.

[15] Motion to dismiss at 32.

[16] First instance judgment at 10.

[17] First instance judgment at 10.

[18] First instance judgment at 13 and 18.

[19] First instance judgment at 22.

[20] Appeal brief dated at 3.

[21] Appeal brief at 12.

[22] Appeal brief at 14-15.

[23] Appeal brief at 64.

[24] Second Circuit judgment at 20.

[25] Second Circuit judgment at 22.

[26] Second Circuit judgment at 6.

[27] Second Circuit judgment at 44.

[28] Second Circuit judgment at 49-50.

[29] May 2023.