Remember when the New York Attorney General’s (NYAG) office surprised everyone during their closing arguments last month during trial when they dropped two of the four charges against ExxonMobil?
Well, tomorrow New York Supreme Court Justice Barry Ostrager will hear oral arguments on a motion brought by ExxonMobil against the NYAG on their 11th hour decision. The company is arguing that the court should still make a ruling on the charges so that ExxonMobil can clear its name and establish in the record that the NYAG did not present any evidence to prove its fraud charges.
NYAG “show trial” ends with political stunt
The NYAG’s office dropped their common law fraud and equitable fraud charges – the two most salacious accusations brought against the company. The NYAG made unfounded accusations in its original complaint against ExxonMobil in an effort to justify these claims, alleging that the company “intentionally, knowingly, or recklessly” defrauded investors with its disclosures that outlined how the company incorporated climate impacts into its business decisions. Further, the NYAG alleged that “Exxon’s investors suffered damages in connection with purchasing and retaining securities that were the direct and proximate result of Exxon’s fraud.”
After twelve days of trial, however, the NYAG failed to provide any evidence to support these claims. Fearing defeat, the office withdrew these charges to avoid confirming that this case was a politically motivated stunt to malign a company, rather than an evidence-based attempt to redress harmed investors. As ExxonMobil explained in a post-trial filing,
“[The] NYAG crafted a narrative ready-made for the press, bursting with rhetorical flourishes and righteous indignation. Only one thing was missing: evidence… NYAG’s request to drop those counts speaks volumes about the hollowness of its case.”
ExxonMobil rebukes 11th hour circus
In its post-trial motion, ExxonMobil asked the court for an order “dismissing with prejudice the two fraud counts,” and “stating that the evidence at trial did not establish fraudulent intent or reliance on any alleged misstatement.” Simply put, the company wants Justice Ostrager to say – on the record – that the NYAG didn’t provide any evidence during trial that supported, much less proved, its charges of common law fraud and equitable fraud.
In the filing, ExxonMobil argued that the NYAG “directly and repeatedly impugned the corporate reputation of ExxonMobil and the personal reputations of its employees.” By dropping its two most egregious claims, the NYAG is attempting to deny ExxonMobil and its employees the opportunity to be publicly exonerated of these baseless allegations.
Such an order would not only benefit its defense against future cases – like the recently announced case brought by the Massachusetts AG – leveling the same charge against the company, but also help clear ExxonMobil and its employees’ reputations after being dragged through the dirt during a four-year fishing expedition by the NYAG’s office.
The NYAG “seeks to rewrite history”
In response to ExxonMobil’s post-trial motion, the NYAG’s office retroactively concocted a new rationale for its decision to drop its fraud counts during summation:
“Because additional elements must be adjudicated in order to find liability for equitable fraud and common law fraud, and all of the relief that the OAG seeks is available under the Martin Act and Executive Law § 63(12), the OAG saw no compelling reason not to withdraw counts 3 and 4 in the interest of efficiency.”
Essentially, the NYAG’s office is alleging its decision to drop half of its case was made in the spirit of efficiency, not because of a lack of evidence. Furthermore, the NYAG’s office argues that if Justice Ostrager decides he will make a ruling on these charges, it would have to “waste additional resources” to argue that they did, in fact, prove these claims. Both of these rational are ironic, given the state’s flagrant abuse of taxpayer dollars to present a case that was criticized by the court for not being able to fill the allotted time with witnesses supporting their case.
In an even more preposterous stretch, the NYAG argued that, by failing to move for judgement directly following the NYAG’s decision to rest their case, the company somehow “conceded” that the evidence presented by the NYAG “was sufficient” for their equitable fraud and common law fraud claims, and “that Exxon was therefore not entitled to judgment on those claims as a matter of law.”
OK, NYAG
In response to the NYAG’s retroactive spin on its decision to drop half of its case, ExxonMobil explained how these actions set a dangerous precedent of prosecutorial abuse:
“[A]t the time, NYAG offered no rationale whatsoever for the decision. But now it claims that those charges were dropped for convenience, not lack of proof. This is exactly the type of disingenuous posturing that ExxonMobil warned the Court about: rather than concede its inability to prove fraud, NYAG now opts to spin a tale ‘that no ruling was issued’ on the fraud counts and that it ‘just dismissed those claims for strategic reasons.’ If NYAG’s gamesmanship is permitted, regulators will have free rein to indiscriminately charge investigative targets with trumped up causes of action in the media—only to drop them after the close of evidence in court.”
Further, ExxonMobil responded to the outlandish assertion that ExxonMobil had no right to a judgement on these fraud claims:
“That is a false and frankly perplexing claim, given the complete absence of testimony concerning (i) fraudulent intent on the part of ExxonMobil, or (ii) reliance by a single investor on any purported misstatement.”
Despite the NYAG’s claim that the company should have asked for a judgement in the middle of trial, ExxonMobil “had no obligation to move for JMOL [judgement as a matter of law], which would have offered NYAG a more lenient legal standard both at trial and on appeal.”
In the end, the NYAG’s attempt to rewrite the history of their broadly criticized case against ExxonMobil “collapses under scrutiny.”
Bottom line: even if Justice Ostrager rules in favor of the NYAG on this motion – meaning he upholds the charges being dismissed – that still means half of the NYAG’s entire case is wiped off the board before an overall ruling on the case has been handed down, and no amount of retroactive spin by the NYAG can change that fact.
