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By Dennis Anderson and Deepa Sutherland
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On April 24, the U.S. Supreme Court dealt a heavy blow to Big Oil defendants seeking to remove climate change cases to federal court by refusing to hear appeals in five high-profile cases.

Forum disputes have been one of the main obstacles holding up climate lawsuits throughout the U.S., and the Supreme Court's ruling not only ensures that these cases — and others like them — will be litigated before potentially hostile state judges and juries, but also moves such cases one step closer to the actual litigation of substantive climate change claims and defenses, and all the consequences that may follow.

The Big Oil defendants in these cases and many others now face the prospect of protracted litigation in state courts around the U.S., with each case presenting the risk of an adverse verdict and damages in the billions.

Meanwhile, the insurance industry should expect that Big Oil insureds will make every possible effort to shift the burdens of defense costs and damages awards to their insurers and reinsurers.

The Supreme Court's ruling concerned five cases: California's Chevron Corp. v. San Mateo County; Colorado's Suncor Energy Inc. v. Board of County Commissioners of Boulder County; Hawaii's Sunoco LP v. City and County of Honolulu; Maryland's BP PLC v. Mayor and City Council of Baltimore; and Shell Oil Products Co. LLC v. Rhode Island.

The plaintiffs filed their climate change lawsuits in state courts, and the fossil fuel industry defendants removed the cases to federal courts perceived as friendly to corporate interests.

In all five cases, federal district court judges ruled that the claims must be sent back to the state courts where they were originally filed and, following appeals by the defendants, federal appellate courts affirmed those rulings.

In last-ditch efforts to shift their cases to federal courts, the Big Oil defendants petitioned the Supreme Court to review the appellate decisions. By rejecting these five petitions, the Supreme Court has effectively resolved the forum disputes that have been delaying substantive climate litigation in the U.S. for the last several years.

The significance of these decisions in the evolution of U.S. climate change litigation cannot be overstated.

Over the past two decades, state and local governments across the U.S. have filed dozens of lawsuits seeking to hold fossil fuel producers accountable for their products' impacts on climate change. Big Oil defendants have removed such cases to federal courts, which are regarded as industry-friendly fora for litigation of environmental claims.

Efforts by plaintiffs to remand climate lawsuits back to state courts were generally unsuccessful because the cases asserted legal claims implicating federal environmental regulations and laws, cross-border treaty obligations, and other matters that triggered federal court jurisdiction.

However, in 2017, three complaints filed in California employed a new strategy that ultimately held the key to remanding such cases to state courts.

In City of Imperial Beach v. Chevron, County of Marin v. Chevron, and County of San Mateo v. Chevron, the plaintiffs alleged, in complaints filed in California Superior Court, that by producing and selling fossil fuels while simultaneously concealing their known hazards, the defendants had violated state laws prohibiting — among other things — deceptive marketing.[1]

Chevron and the other defendants removed all three cases to the U.S. District Court for the Northern District of California, where motions to remand were consolidated before a single judge. The judge remanded the cases to state court, reasoning that the claims were based solely on state law, and did not implicate the federal regulations, federal laws and federal interests that had triggered federal jurisdiction in earlier cases.[2]

Other state and local governments followed suit — literally.

In 2018, local governments in Colorado filed Boulder County v. Suncor Energy in Colorado District Court,[3] alleging that the energy industry defendants had produced, promoted and sold fossil fuels "while concealing and misrepresenting the dangers associated with their intended use."

The legal claims in the suit are based on Colorado consumer protection statutes and other state laws. Like the California cases, Boulder County v. Suncor Energy was removed to federal court only to be remanded back to the state court where it was filed.[4]

Later in 2018, City of Baltimore v. BP was filed in the Circuit Court for Baltimore City,[5] and Rhode Island v. Chevron was filed in the Rhode Island Superior Court.[6]

In 2020, Minnesota, Delaware and Hoboken, New Jersey, joined the fray, filing Minnesota v. American Petroleum Institute in Minnesota District Court,[7] Delaware v. BP in Delaware Superior Court[8] and City of Hoboken v. Exxon in New Jersey Superior Court.[9]

All of these cases were also removed to federal court by the Big Oil defendants, only to have the federal district courts remand them back to the state courts where the plaintiffs had filed them. Not surprisingly, the defendants in all cases appealed the remand rulings. By August 2022, in every case except Minnesota v. API — which remained to be decided — the relevant federal appellate courts had affirmed the remand orders.

Thus, attention turned to the U.S. Court of Appeals for the Eighth Circuit, which was considering whether to affirm Minnesota's remand win. On March 23, the Eighth Circuit did just that. Rejecting all the defendants' removal arguments, the court noted:

Minnesota is not the first state or local government to file this type of climate change litigation. Nor is this the first time that the [fossil fuel industry has] made these jurisdictional arguments. But our sister circuits have rejected them in each case. ... Today, we join them.

With this decision, all 13 of the federal district courts and all six federal appellate courts that had considered these state law-based cases had unanimously held that they should be heard in the state courts where they were originally filed.

Attention then turned to the Supreme Court and whether it would grant certiorari to review any of these remand disputes.

Commentators speculated that Big Oil's chances of persuading the Supreme Court to do so had diminished in light of the unanimity among the appellate courts. Furthermore, the Supreme Court invited U.S. Solicitor General Elizabeth Prelogar to submit a brief regarding whether the court should grant review in one of the cases, Boulder County v. Suncor Energy.

On March 16, Prelogar responded with a brief arguing that the U.S. Court of Appeals for the Tenth Circuit's remand order in that case was correct, and the Supreme Court need not review it because it does not conflict with any other federal appellate court ruling.

The solicitor general speaks as the official voice of the federal government on matters of Supreme Court litigation, and her responses to such invitations are often seen as bellwethers for how the Supreme Court will rule. But the question of whether the Supreme Court would grant review still remained open.

On April 23, the Supreme Court answered that question by declining to review the five remand decisions before it. Finally, after years of inaction while plaintiffs and defendants fought over the question of forum, the Supreme Court has ensured that these cases — and presumably others of the same type — will play out in state courts rather than federal ones.

That means future procedural issues — as well as the substantive issues — will be decided by state court judges invested in upholding the state laws at issue, and by juries composed of the people who are protected by those same laws, and who may be hostile to the Big Oil defendants who allegedly violated them.

This is precisely the outcome Big Oil has been fighting to avoid for the last five years.

Insurers and reinsurers who have taken a wait-and-see approach now face the prospect of their policyholders being involved in protracted, complex and expensive litigation.

To the extent there is any coverage for such claims under liability policies — which remains to be seen — the exposure to carriers could be very significant.

As the general direction of travel is clearly unfavorable to the fossil fuel industry, and any one of these cases could potentially result in billions of dollars in adverse judgments, insurers may face both runaway defense costs and runaway judgments.

Insurers and reinsurers would be wise to consider their potential exposure to these types of suits sooner rather than later.

Dennis C. Anderson is a senior associate and Deepa Sutherland is counsel at Zelle LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] The cases are captioned in California state court as City of Imperial Beach Chevron Corp. et al., California Superior Court, County of Contra Costa, Case No. C17-01227; County of Marin v. Chevron Corp. et al., California Superior Court, County of Marin, Case No. CIV 1702586; and County of San Mateo v. Chevron Corp. et al., California Superior Court, County of San Mateo, Case No. 17 CIV 03222.

[2] County of San Mateo Chevron Corp. et al., 32 F.4th 733 (9th Cir. 2022).

[3] Board of County Commissioners of Boulder County et v. Suncor Energy (U.S.A.) Inc. et al., Colorado District Court, County of Boulder, Case No. 2018CV30349.

[4] Board of County Commissioners Suncor Energy (U.S.A.) Inc., 25 F.4th 1238 (10th Cir. 2022).

[5] City of Baltimore BP P.L.C. et al., Circuit Court for Baltimore City, Case No. 24-C-18- 004219. Federal district court remand order affirmed sub nom. Mayor and City Council of Baltimore v. BP P.L.C, 31 F4th 178 (4th Cir. 2022).

[6] State of Rhode Island Chevron Corp. et al., Rhode Island Superior Court, Providence County Case No. PC-2018-4716. Federal district court remand order affirmed sub nom. Rhode Island v. Shell Oil Prods. Co., LLC, 35 F.4th 44 (2022).

[7] See footnote 1, supra.

[8] State of Delaware BP America Inc. et al., Delaware Superior Court Case No. N20C-09- 097-AML CCLD. Federal district court remand order affirmed after consolidation sub nom. City of Hoboken v. Chevron Corp., 45 F.4th 699 (3rd. Cir. 2022).

[9] City of Hoboken Exxon Mobil Corp. et al., Superior Court of New Jersey, Law Division: Hudson County, Case No. HUD-L-003179-20. Federal district court remand order affirmed sub nom. City of Hoboken v. Chevron Corp., 45 F.4th 699 (3rd. Cir. 2022).