Last week, plaintiffs’ attorneys filed documents in two separate court cases that aim to make energy companies pay billions of dollars for climate change. But the filings reveal an inconvenient truth for the litigants: they ascribe costs and damages to the defendants that are either undefined or do not exist.
One of the filings was a memo from Hagens Berman, the law firm representing San Francisco and Oakland in their lawsuit. The memo argues that the judge need not consider the “utility” of fossil fuels or whether those benefits outweigh their “costs.”
David Bookbinder, the attorney behind a set of climate lawsuits in Colorado, filed the second document in a related case brought by New York City, which is also represented by Hagens Berman. An investigation by Energy In Depth found that Bookbinder may have misled the public about his involvement in the climate cases taking place outside of Colorado, as evidence suggests he has been coordinating with Hagens Berman on their lawsuits.
The two key flaws in the filings are highlighted below.
Argument #1: What Cost?
Bookbinder: “No matter how useful fossil fuels may be, it is unfair to impose their hidden costs on property owners. … [Defendants] face only the simple choice of whether, when producing their products, to internalize their costs or to foist them onto the public.”
Hagens Berman: “In the terminology of the economies, these tortfeasors should be forced to internalize costs of their operations rather than be allowed to externalize them onto property owners or the public.”
Left unsaid is what, exactly, is the cost these lawyers want the companies to internalize. There is no agreement nationally, internationally, or even among states on what the cost of carbon should be, or whether such a cost is even appropriate. How are individual companies supposed to determine and uniformly “internalize” the “hidden” cost of carbon dioxide emissions in the absence of government regulation or a uniformly determined price?
Even in regions where carbon pricing is in effect, such a cost is applied to carbon dioxide emitters, not producers.
Argument #2: Real Cash, Speculative Damages
Bookbinder: “In the end, imposing damages liability on Defendants simply requires them to pay for the injuries caused by their products.”
Hagens Berman: “…while some activities are valuable enough to society that they should not be enjoined, they should nevertheless ‘pay their own way’ by compensating victims for harms inflicted.”
Once again, the “injuries” and “harm” are rhetorical, even though the payout that the trial lawyers stand to reap is in billions of real dollars. Indeed, the harms are “projected” to happen in 50 to 100 years, based on modeling that is notoriously bad at predicting the future.
Judge William Alsup, who is overseeing the San Francisco and Oakland lawsuits, has questioned how the cities could sue for damages that have not yet – and may never – occur, echoing comments from a federal judge in Boston in a related case.
In fact, a former Securities and Exchange Commission (SEC) official inadvertently admitted that some of the plaintiffs may even be exaggerating the risks of climate change in their lawsuits, based on a report she wrote on behalf of several California municipalities. The former SEC official, Martha Haines, was hired to discredit allegations that some of the California communities had committed securities fraud by failing to disclose the risks of climate change in their municipal bonds. In her report, Haines repeatedly emphasized the inability to predict the effects of climate change far into the future, writing, “…disclosures of speculative information or projections, when included [in municipal bonds], are appropriately accompanied by cautionary language in order to emphasize their uncertainty.”
Haines also observed that while some impacts may occur in the future, they will not happen in the short-term: “…in the case of sea-level rise and certain other climate impacts, municipal entities generally will not be greatly affected for decades…”
In a May 24, 2018, hearing in the San Francisco and Oakland cases, Judge Alsup also pushed back against the cities’ argument that fossil fuels are a public nuisance, noting that fossil fuels have played an irreplaceable role in advancing society and growing the global economy.
“If we didn’t have fossil fuels, we would have lost that war (World War II) and every other war,” Judge Alsup said. “Planes wouldn’t fly. Trains wouldn’t run. And we’d be back in the Stone Age.” He also asked Hagens Berman and the energy companies to file briefs arguing whether he needed to consider the benefits of fossil fuels against the costs.
“If I were using a balancing test, I would normally say we reaped a huge benefit from fossil fuels,” Judge Alsup added. Hagens Berman’s filing was their attempt to convince him that such a test was inappropriate.
Next week, the New York City case will have its first day in court when Hagens Berman attorneys present their oral argument. Will they double down on asking energy companies to pay costs that neither they nor regulatory authorities have adequately calculated, and for damages that have not occurred?