Friday, November 06, 2015

Estopping Exxon

I was noodling over some legal background relative to Exxon today when the NY State Attorney General trumped me, announcing an investigation into whether Exxon lied to the public or its investors about the relationship between the oil business and climate.

The legal issues around investors could be interesting, with former CEO Lee Raymond pretty much stating that long-term investors should not view climate change as a scientifically-established problem for those in the carbon business. Even more interesting I think is what the AG's subpoenas end up discovering.

So while that's happening, I was looking at estoppel. Basically it's a legal tool that prevents someone who did or said bad things from relying on technicalities to escape responsibility, and instead holds them to what they said. Where it could be relevant to Exxon is if the company were to argue that statements by Lee Raymond and the denialists Exxon funded are irrelevant because everyone has access to the science of the time. A court might say that Exxon by its behavior in supporting denialism is estopped from now saying its previous denialism doesn't count.

Here are some estoppel descriptions:

"The plaintiffs pled that defendants were estopped to take advantage of the statute. The doctrine of equitable estoppel is based upon the principle that a person is held to a representation made or a position assumed when otherwise inequitable consequences would result to another who, having the right to do so under all the circumstances, has in good faith relied thereon. (Maurer v. J.C. Nichols Co., 207 Kan. 315, 485 P.2d 174 [1971].) "This court has further said:

"'The doctrine of equitable estoppel requires consistency of conduct, and a litigant is estopped and precluded from maintaining an attitude with reference to a transaction involved wholly inconsistent with his previous acts and business connection with such transaction.' (Browning v. Lefevre, 191 Kan. 397, Syl. ¶ 2, 381 P.2d 524 [1963].)

"'. . . One who asserts an estoppel must show some change in position in reliance on the adversary's misleading statement. . . .' (In re Morgan, 219 Kan. 136, 137, 546 P.2d 1394 [1976].)

"'. . . Equitable estoppel is the effect of the voluntary conduct of a person whereby he is precluded, both at law and in equity, from asserting rights against another person relying on such conduct. A party asserting equitable estoppel must show that another party, by its acts, representations, admissions, or silence when it had a duty to speak, induced it to believe certain facts existed. It must also show it rightfully relied and acted upon such belief and would now be prejudiced if the other party were permitted to deny the existence of such facts. . . .' (United American State Bank & Trust Co. v. Wild West Chrysler Plymouth, Inc., 221 Kan. 523, 527, 561 P.2d 792 [1977].)"

So if people could have in good faith relied upon statements by Raymond and the denialist organizations, then Exxon is going to have trouble saying the courts should ignore what Exxon said. Seeing as Raymond was speaking officially on behalf of Exxon, said in all seriousness about a core business interest in which Exxon asserted it had expertise, then it seems like a good faith argument could apply here.


UPDATE:  I'll add something I put in the comments -

The legal issue is that having done some of the science themselves with results that fit squarely in the mainstream consensus, Exxon was lying when it said via its CEO and via denialists it funded that the science is uncertain/the science is wrong, respectively. Supposedly this is a distinction between Exxon and other fossil fuel companies that plausibly believed their own nonsense. I'm not so sure, however.

 What truly distinguishes Exxon is that it produced science on the issue, unlike the other companies, but what's legally relevant is that it understood the overall science. We know that it understood because of the science it produced and because of internal documents being released. The other fossil fuel companies may also have understood the science - we just don't know that yet. If they did their own internal reviews, and reached the same conclusion Exxon did, they stand in the same fragile legal position.

21 comments:

Gingerbaker said...

Hmmm... what did the Bard say about the law?

Sad that it is Exxon's previous actions which bear legally on the fact that they knowingly and deliberately funded a campaign of false propaganda which will result in the deaths of millions of people and species, and will cause economic harm in the tens or hundreds of trillions of dollars.

That they were briefed on the science in the 1970's really doesn't make campaign of the last twenty-five years any worse.

wheelism said...

Uhhh...what? I thought the issue was that they PRODUCED that science, and then paid people to publicly subvert it in official testimony.

Gingerbaker said...

"Uhhh...what? I thought the issue was that they PRODUCED that science, and then paid people to publicly subvert it in official testimony."

Yes - that is, somehow, important to the legal issue.

My point, obviously not expressed very well, is that Exxon's own internal scientific reports seem to me to be irrelevant to the larger issue - that they knowingly did their utmost to subvert the consensus work of experts in the field, an effort resulting in harm to the public.

These nice folks, and others, already have the blood of millions on their hands according to a U.N. study, and why they have yet not been frogmarched to the ICC at The Hague is a sad tale indeed.

8c7793aa-15b2-11e5-898a-67ca934bd1df said...

The opeds memes of 'Climate Change Is Just Like Tobacco' are already starting to fly. That will be their next defense on this. Minimization.

wheelism said...

Thanks for the clarification, Gingerbaker. Sorry I misinterpreted you.

I would think that Exxon's representatives lying about the company's findings (or, perhaps, "lying about evidence that was reflected in their findings") would be the larger legal issue, but only because it strikes me as more "iffy" ("icky?") from an ethical standpoint.

Brian said...

Wheel and GB - the legal issue is that having done some of the science themselves with results that fit squarely in the mainstream consensus, Exxon was lying when it said via its CEO and via denialists it funded that the science is uncertain/the science is wrong, respectively.

Supposedly this is a distinction between Exxon and other fossil fuel companies that plausibly believed their own nonsense. I'm not so sure, however.

What truly distinguishes Exxon is that it produced science on the issue, unlike the other companies, but what's legally relevant is that it understood the overall science. We know that it understood because of the science it produced and because of internal documents being released. The other fossil fuel companies may also have understood the science - we just don't know that yet. If they did their own internal reviews, and reached the same conclusion Exxon did, they stand in the same fragile legal position.

Russell Seitz said...

Did they produce a climate sensitivity estimate ?

wheelism said...

(Thank you, Brian.)

Aaron said...

Circa 1974, ANY Chemical Engineer that knew enough to design an oil refinery or plastics production facility knew enough of the science to know that global warming was a real issue.

Such people had spent a lot of time doing infrared spectrophotometry, which rather rubbed one's nose into the interactions between between the atmosphere and various carbon compounds.

Exxon may have been the only one that published, but they all knew. As documents from companies that Exxon bought come to light, this will be revealed.

Jeffrey Davis said...

Brian @4:09 "The other fossil fuel companies may also have understood the science - we just don't know that yet. If they did their own internal reviews, and reached the same conclusion Exxon did, they stand in the same fragile legal position."

Which is basically what got the tobacco companies in trouble. Their internal documents said one thing and their public remarks said the opposite.

Gingerbaker said...

Who cares what their own scientists said? Did they even publish through peer review? If not, and even if they did, it is just in-house opinion -or- the opinion of only 3 or 4 scientists. Exxon management surely has the freedom to ignore the internal opinions of 3 or 4 of their 40,000 employees.

What is important here, and evidently the Law does not understand this, is that Exxon ignored the consensus opinion of virtually every climate scientist on the planet and then paid bad actors to undermine that opinion through a decades-long campaign of propaganda that has resulted in injury to people and property.

Regardless of what their in-house scientists said, they KNEW that their propaganda was lies from the get go.

The last time a propaganda campaign caused any where near this much injury, the propagandist was charged with crimes against humanity. His name was Joseph Goebbels, and if convicted, he was to be hanged.

Brian said...

GB - under the law, fraud requires the intent to deceive, and figuring out the intent of an artificial person (a corporation) isn't necessarily simple. So you're right, several Exxon scientists reaching a conclusion doesn't mean that Exxon as an entity reached that conclusion.

OTOH, their conclusion was spread throughout the upper management and AFAIK there was no pushback. If there's an as-yet unreleased Exxon Board of Directors transcript that sounds like Republican Senators saying the Bible proves that climate change is impossible and they flatly disbelieve it, that would actually help them out. My impression is that's not how Exxon operated, though.

And btw, Goebbels murdered his children and committed suicide just before the end of the war. I don't think he was charged by the Allies.

Russell Seitz said...

Is Brian happy with subordinating the First Amendment to the criminal prosecution of the misrepresentation of science to the public ?

8c7793aa-15b2-11e5-898a-67ca934bd1df said...

How does that compare to prosecuting scientists who yell 'crowd' in a crowded theater, and then calmly announce to the crowd that there is a big fire many miles down the road that they might want to be aware of.

Brian said...

Russell, I assure you that the First Amendment isn't a defense against a fraud allegation.

(Actually one Supreme Court justice did think that it was, but none of his colleagues agreed).

cRR Kampen said...

A weak result, but something: http://insideclimatenews.org/news/10112015/peabody-coal-climate-change-settlement-new-york-ag-exxon-subpoena-investigation .

"These nice folks, and others, already have the blood of millions on their hands according to a U.N. study, and why they have yet not been frogmarched to the ICC at The Hague is a sad tale indeed."

Hear, hear!

snarkrates said...

Actually, the issue wrt the Exx-Mob is not whether they have the right to misrepresent the science to the public, but whether they have the right to misrepresent what the science implies for their shareholders. Two very different things.

cRR Kampen said...

Same documents will have to surface, snarkrates.
But this case is not the big calibre we may expect later.

Gingerbaker said...

"Actually, the issue wrt the Exx-Mob is not whether they have the right to misrepresent the science to the public, but whether they have the right to misrepresent what the science implies for their shareholders. "

But their shareholders must be very pleased indeed with their propaganda efforts - it is why they still continue to sell carbon that is burned.

And you all don't get it, yet. This is not an issue of free speech. It is an issue of harm - physical, economic, biologic and of harm to the Democratic process.

This is also about evil. What Exxon-Mobil et al have done is evil at its highest level. This is a case of poisoning not just the biosphere, but of the democratic process, of our civilization's future, and the process of rationale debate - for the sake of profiteers. This is about the murder in slow motion of millions if not billions of people and species so a few could become even more wealthy. This is about a crime against humanity, which may be:

"...particularly odious offenses in that they constitute a serious attack on human dignity or grave humiliation or a degradation of human beings. They are not isolated or sporadic events, but are part either of a government policy (although the perpetrators need not identify themselves with this policy) or of a wide practice of atrocities tolerated or condoned by a government or a de facto authority..."

I would point out that crimes against humanity do not have to be associated with war crimes. And again, I would point out the case against Goebbels - who physically never harmed any Jew. He was, simply, a propagandist who helped to harm people.

FLwolverine said...

Brian: "under the law, fraud requires the intent to deceive, and figuring out the intent of an artificial person (a corporation) isn't necessarily simple."

Except in this case the statute in question apparently does not require proof of intent to deceive.

"Under the (1921) Martin Act, the state must prove that a company deceived the public by misrepresenting or omitting a material fact in the offering of securities. Lawyers say the act is unique in that no proof of intent to deceive is required to bring a claim, and prosecutors do not even need to show that anyone was in fact defrauded. The act allows for criminal as well as civil charges."

http://www.reuters.com/article/2015/11/07/us-exxon-mobil-climatechange-case-idUSKCN0SW01M20151107#wrqOKoefq1KxmyYc.99

Brian said...

Thanks for the correction, FLw - shows what I know about New York state law. Have to be careful with this stuff.

Snarkrates - I think there might be a wire fraud issue here, and misrepresentation to the public under various Business and Profession codes. But again, not my legal field.