A town in Puerto RICO has brought an interesting class action against the major oil companies to recover the costs of recovery from recent hurricanes to hit the island. The theory of the case laid out in Municipalities of Bayamon et al. v. Exxon Mobil Corp. et al., (D. Puerto Rico) in a 275- page complaint is that the oil companies engaged in a long- running scheme to mislead the public about the danger from global warming. This was done by issuing false statements downplaying the danger from increasing carbon dioxide levels caused by burning fossil fuels. The Complaint goes into extreme detail to show the oil companies knew the real danger posed by fossil fuel emissions for many years and chose to mislead the public and anyone who raised the subject with them through false statements.
If the suit stated a good RICO claim it could have big implications for the oil companies. The case is on behalf of every municipality in Puerto RICO. The damages would be in the hundreds of millions of dollars, perhaps much more. And a successful case of this type would open the defendants to many more similar cases around the nation.
But there are at least two major flaws that will very likely result in dismissal early on. The first is that the false statements were not made to the plaintiffs, the municipalities. They were made to the public. Courts require that false statements be made to the plaintiff or a third party and that someone rely on them. In order to meet this requirement the municipalities would have to show that they relied on these false statements to their detriment. This will be difficult to show. Basically they are going to have to show they chose not to take any action to address the growing danger of climate change because of the oil companies’ statements that there was no problem and not because of other factors such as the cost of acting, which might have been prohibitive. After all, what exactly were the municipalities supposed to do to prevent climate change? How can small towns act on their own, or collectively, to take on such a massive problem? They probably did not rely on the oil companies’ false statements about the problem. Global warming is the type of problem that is addressed by state or federal governments. The Complaint just does not show that the municipalities were actually misled by the oil companies supposedly false statements. Rather it suggests they were passive by virtue of their size in relation to the problem.
The other big problem for the plaintiffs is that the Complaint does not show that the damages, the costs of post-hurricane clean up, were proximately caused by the false statements. This is a variation on the first problem. Yes, the municipalities have been saddled with massive clean- up costs. But the municipalities must show that they would have taken steps that would have averted these storms if the oil companies had not made the statements. This will require them to show they could have taken some measures which would have actually prevented the storms from happening if the oil companies had not made false statements about the problem. The Complaint does not specify what steps they would have taken, and this is probably a fatal flaw in the theory of damages. The Supreme Court and the lower courts have been tough in requiring a showing of close (proximate) causation between the RICO violations and the damages in a RICO complaint. This Complaint is very long but comes up short in this regard.
So this very creative case is going to have great difficulty surviving motions to dismiss.