Oil industry climate change litigation could spill to manufacturers of all petrol products

If the US plaintiff bar can make mounting allegations that the oil industry should pay damages to combat the effects of climate change stick, any manufacturers of products that consume petroleum, including the motor industry, could also be in line for heavy claims, a leading lawyer has warned. Clyde & Co’s Neil Beresford said a US federal court decision on 24 May will shed light on the future direction of the latest round of climate change-related claims against the oil industry. The most interesting allegation against the oil industry is that petroleum is a defective product, said Mr Beresford at Clyde & Co’s Resilience – Addressing the Protection Gap event. The argument goes that petroleum does its job but, in Co2, has a side effect that has caused climate change. “The theory is that if petroleum does the job it is intended to do but has a side effect, is that any different from asbestos? Is that any different from cigarettes? Is that any different from thalidomide, which is very good at curing morning sickness but produces birth defects?” he said. If the oil industry is found guilty of this charge it may face huge costs, but so too could many other sectors that manufacture goods that use petroleum, warned Mr Beresford. “If the plaintiffs make their allegations stick that the oil company knew of side effects and kept it from the public, then they are potentially onto something. And if they make the allegation stick that petroleum is a defective product, then not only is the oil industry going to face claims but any industry that manufactures a product that consumes petroleum could be in line for these claims. The motor industry must be a prime candidate for that, particularly after the Volkswagen saga,” he told delegates. Mr Beresford explained that climate change litigation is not new and predominantly a US phenomenon. The first wave against the oil industry came during George Bush senior’s presidency, but at that time science was insufficient for law firms to put the cases in front of a jury. But there is a new wave of civil claims against the oil industry in the US, predominantly from coastal cities but also those inland. Their targets extend across the whole oil industry. Most claims focus on compensatory damage for dealing with future climate change. “People are seeking to offset the next 100 years’ cost of dealing with climate change against oil industry profits. That is why they are looking at disgorgement and punitive damages,” said Mr Beresford. “It’s about moving the cost of the public response onto the private sector,” he added. The key allegations and strategies come “straight out of the big tobacco textbook”, continued Beresford. It is alleged that since 1965 the oil industry defendants extracted a substantial percentage of raw fossil fuel; caused a quantifiable percentage of global fossil fuel-related Co2 emission; wrongly promoted their fossil fuel products; concealed known hazards associated with the use of those products; championed anti-regulation and anti-science campaigns; and failed to pursue less hazardous alternatives available to them. “One key argument of the plaintiffs is that internal science committees, the heads of research at these oil companies, were reporting to their boards as early as the 1970s that there is a problem that needs to be investigated with carbon emissions. The plaintiffs compare that with the public domain material that the oil companies were putting out at that time to say that climate change science is a myth. There are pages and pages and pages of that in the 240 pages of complaints. So the allegation is these two streams of knowledge met in the oil companies’ boardrooms and they knew that there was concern over carbon dioxide and yet were putting things in public domain material to suggest that climate change science was a myth,” said Mr Beresford. Adding: “Another big line of argument for plaintiffs is that oil companies made cities and the people that live in them dependent on fossil fuel products by their failure to invest in new technologies and suppression of new technologies over the last fifty years.” The allegations are split between those on the coast that focus on rises in sea levels, coastal erosion and flooding, and those that are concerned with extreme inland weather events. Mr Beresford said the coastal erosion and sea level claims are more likely to be successful because they are easier to prove, whereas extreme weather events caused by climate change are less easily proved until more specific science is produced. Mr Beresford explained that the main fighting ground is currently California, where two judges have reacted very differently. “They seem to take very different views of climate science. In Santa Cruz and Richmond, the judge has sent the case back to state court and told state courts to get on with it. State court is what defendants in these cases want least. In San Francisco and Oakland, the judge has sent the cases straight to federal court,” said Mr Beresford. The defendants have appealed in Santa Cruz and Richmond, with that likely to be heard in the next year or two. In San Francisco and Oakland there will be a hearing to dismiss the claim on 24 May, which should shed a lot of light on how things will play out in these cases. “That will be the first occasion on which the substance of these claims has been tested by a court. It will be very interesting. It is possible that those two cases will then take the lead in the substantive direction of these cases,” said Mr Beresford. He also stressed that there are moves in North America to hold oil companies accountable through legislative moves. “A private members bill has been tabled in Ontario, Canada to achieve precisely the same purpose as these civil claims, to disgorge the profits of oil companies and apply them to future urban remodelling,” he explained.

Oil industry climate change litigation could spill to manufacturers of all petrol products

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