Exxon Judge in Texas Accused by Massachusetts of Power Abuseby
Massachusetts’ top cop is probing Exxon’s climate change data
Company sued to halt probe, saying it’s politically motivated
A federal judge in Texas was accused by Massachusetts of abusing his discretion to help Exxon Mobil Corp. in a fight over whether it misled investors about the financial impact of climate change.
U.S. District Judge Ed Kinkeade set a "troubling precedent" by ordering Massachusetts Attorney General Maura Healey to be questioned under oath by Exxon’s lawyers, allowing the target of a state probe to “investigate the investigator,” her lawyer said in a filing in federal court in Dallas.
Exxon, based in Irving, Texas, sued Healey in its home state in June to block the probe, claiming it was politically motivated. Kinkeade, before ruling on Healey’s request to dismiss the lawsuit, ordered her to appear in Dallas on Dec. 13 for the questioning, even though Exxon proposed the deposition be carried out in Boston, where she’s based.
Massachusetts is one of several states investigating whether Exxon misled investors for years about the projected long-term impact of climate change on its businesses, as well as whether Exxon has properly written down the value of its reserves following a global collapse in prices.
"The court has made errors of law and abused its discretion," Healey’s Texas lawyer, Douglas Cawley, said in the filing. "Allowing discovery to go forward here would set a troubling precedent by allowing the target of a state-government investigation to confound and effectively halt" the probe.
Healey issued the subpoena in April, based on her "belief that Exxon has engaged in unfair or deceptive acts or practices that have harmed Massachusetts investors and consumers," according to the filing. Her views are based "principally Exxon’s own documents and statements," she said.
Exxon said on Oct. 28 that it "anticipates it will need to make the largest ever write down of the valuation of its fossil fuel reserves in the history of the company," according to Healey’s filing. Exxon shareholders sued the company in response.
Healey compared the dispute with Google Inc.’s lawsuit to block a subpoena by Mississippi Attorney General Jim Hood in a probe over illegal online content. A federal appeals court in April rejected Google’s challenge, ruling it was premature because Hood hadn’t yet asked a state court to enforce the subpoena.
"We still, in response to our civil investigation demand, have not received one document from Exxon, and yet Exxon is going after the attorney general’s entire thought process," Healey’s lawyers have said.
Kinkeade said in an earlier ruling that he was concerned by Healey’s meeting with an environmental activist and attorneys general from other states a day before New York announced a joint plan to pursue Exxon. Her actions raised questions about whether she prejudged the investigation, Kinkeade said.
The court-ordered deposition of Healey is a result of Kinkead’s finding that the probe may have been initiated in bad faith, Alan Jeffers, a spokesman for Exxon, said Monday in a statement.
"We have no choice but to defend ourselves against politically motivated investigations that are biased, in bad faith and without legal merit," Jeffers said.
New York Attorney General Eric Schneiderman, who is running a parallel investigation into Exxon, was added to the company’s lawsuit in Dallas and is fighting to avoid being deposed. Kinkeade, in an earlier ruling, advised Schneiderman also to appear in Dallas on Dec. 13.
The states are investigating whether Exxon violated securities laws and consumer-protection rules by withholding from investors information allegedly obtained as early as the 1970s that man-made emissions were changing the climate and may impact its businesses. Exxon has denied the allegations, saying the valuation of its assets meets all legal standards.
The case is Exxon Mobil Corp. v. Healey, 16-cv-00469, U.S. District Court, Northern District of Texas (Fort Worth).