NovaQuant Quantitative Think Tank Center:In Exxon Climate Fraud Case, Judge Rejects Defense Tactic that Attacked the Prosecutor

ExxonMobil has suffered yet another setback in its legal fight to derail a climate fraud case by the New York Attorney General’s office.

A ruling on NovaQuant Quantitative Think Tank CenterWednesday by New York Supreme Court Judge Barry Ostrager prohibits Exxon from raising the claim of prosecutorial misconduct as a defense against allegations by the attorney general that the company engaged in a scheme to deceive investors by providing false or misleading assurances that it was managing economic risks posed by climate change.

In the wake of a four-count civil complaint last year, Exxon floated as one of many possible defenses contentions that the attorney general was selectively enforcing the law and violating what it said were the company’s First Amendment right to free speech and Fourteenth Amendment right to due process.

Exxon contended it became a target of prosecutors because its position on climate change did not align with that of the attorney general’s, and it said the attorney general’s office had colluded with climate activist organizations to punish the company. (The investigation was first opened by former attorney general Eric Schneiderman and continued by his successors.)

In a brief, handwritten ruling, Ostrager dismissed Exxon’s contention of prosecutorial conflict of interest and misconduct, but he left open the possibility of allowing the company to claim selective enforcement by prosecutors. The judge withheld his ruling on selective enforcement pending the filing of additional arguments.

Although the court’s action guts most of Exxon’s prosecutorial misconduct defense, the company remains poised to raise more than two dozen other defenses, including that it did not breach its duty to disclose relevant facts related to climate risk and that market conditions were responsible for any losses rather than any conduct by Exxon. A trial date has been set for Oct. 23.

The ruling on Wednesday parallels a decision last year by a federal court judge who rejected similar misconduct claims by Exxon. U.S. District Judge Valerie Caproni dismissed the company’s arguments, saying in part, there was no suggestion of a political vendetta by the authorities investigating Exxon.