Exxon Mobil Corp. (NYSE: XOM) won a major victory in the oil giant’s multiyear battle against the state of New York. Justice Barry Ostrager in Manhattan Supreme Court ruled that the company did not defraud investors by hiding the true cost of climate change regulation. The ruling said that New York’s Attorney General failed to prove that Exxon misled shareholders, defrauding them out of up to $1.6 billion.
The state’s 2018 lawsuit accused Exxon of causing massive investor losses by falsely telling them it had properly evaluated the impact of future climate regulations on its business. Exxon reportedly used a “proxy cost” of up to $80 per ton of carbon emissions in investor projections, but internally used figures as low as $40 per ton or none at all. Exxon countered that the two numbers were distinct and used for different purposes.
Ostrager’s decision said the evidence supported the company’s argument. He wrote: “The Office of the Attorney General failed to prove, by a preponderance of the evidence, that ExxonMobil made any material misstatements or omissions about its practices and procedures that misled any reasonable investor.” In addition, he added: “The office of the Attorney General produced no testimony from any investor who claimed to have been misled by any disclosure, even though the Office of the Attorney General had previously represented it would call such individuals as trial witnesses.”
The trial was the first climate fraud lawsuit to go to trial. Cities and counties across the United States have also sued Exxon and other oil companies over matters relating to climate change. Massachusetts announced its own lawsuit against Exxon in October that also included allegations about proxy costs, but that one accuses Exxon of misleading consumers, not just investors.