Did California’s attorney general and several other groups defame Exxon Mobil when they sued the oil giant last year over its role in widespread plastic pollution?
That was the question looming over an Aug. 20 hearing in federal court in Beaumont, Texas, where Exxon Mobil has countersued Attorney General Rob Bonta of California and the nonprofit groups, accusing them of mounting a conspiracy to destroy its recycling business. Exxon’s aggressive move signaled a sharp escalation by the oil giant as it tries to ward off similar suits in the future.
During the daylong hearing, lawyers for Mr. Bonta and the nonprofit groups tried to persuade Judge Michael J. Truncale to toss the case, or at least transfer it to California so it could be adjudicated alongside the original lawsuits. The lawyer for Exxon, Michael P. Cash, shot back that the “attack” had been aimed squarely at Texas and the matter should be litigated there.
He summarized the case this way for the judge: “We have advanced recycling down here, we make plastics down here, we do a good job of it, and you’re messing with our customers and you’re messing with their livelihood in Texas by lying about us.”
To illustrate his position, Mr. Cash displayed a graphic showing a missile aimed at Texas from California. At another point, he juxtaposed images of the TV show “The Sopranos” with a screenshot of a news conference held by Mr. Bonta and the nonprofits.
Mr. Bonta sued Exxon in California state court in September, accusing it of deceiving Californians by “promising that recycling could and would solve the ever-growing plastic waste crisis.” Four nonprofit organizations — the Sierra Club, Baykeeper, Heal the Bay and Surfrider Foundation — filed a parallel suit the same day. The suits alleged violations of state nuisance and unfair-competition laws and sought damages that Mr. Bonta estimated would amount to “multiple billions of dollars.”
“The company has propped up sham solutions, manipulated the public and lied to consumers,” Mr. Bonta said at the news conference. “It’s time Exxon Mobil pays the price for its deceit.”
Exxon Mobil produces polymers used to make single-use plastics and has invested millions of dollars in recycling facilities in Baytown, Texas, about an hour’s drive from the courthouse. The lawsuit took aim at the process known as advanced recycling, which Exxon says it has used to process more than 100 million pounds of plastic waste to date.
Traditional recycling methods typically involve shredding, melting or otherwise reusing plastic material but not necessarily altering the chemical makeup. Advanced recycling takes a different approach: It uses techniques that break down plastics into liquid and gas molecules.
The technology has sometimes struggled to deliver on its promises. But its supporters say the process produces new materials that can then be used in products such as fuels or “high performance chemicals and plastics,” according to the Exxon lawsuit. The company also noted that advanced recycling can take on a greater array of hard-to-recycle materials such as chip bags, motor oil containers or artificial turf.
In January, Exxon hit back with its Texas lawsuit. It accused Mr. Bonta and the nonprofit groups of defamation, tortious interference and civil conspiracy, and sought damages and an injunction to force the defendants to retract their statements.
Days later, the company’s chief executive, Darren Woods, discussed the suit on CNBC. He said Mr. Bonta’s action was part of a growing trend of activists and state attorneys general “hijacking and abusing legitimate processes to advance their own selfish agendas.”
“The way we’ve looked at it, if not us, then who, who stands up to stop the abuse?” he said.
The suit argued that the California proceedings had been engineered by an Australian mining billionaire who wanted to damage Exxon’s business. It alleged an elaborate conspiracy in which the billionaire, Andrew Forrest, acted through a charity called the Intergenerational Environment Justice Fund. That group, based in Australia, had hired a California law firm, Cotchett, Pitre & McCarthy, to enlist the nonprofit groups as proxies and file the lawsuit against Exxon, according to the complaint. The suit also pointed to donations from Cotchett, Pitre & McCarthy to Mr. Bonta’s election campaign.
Niall McCarthy, a partner at the firm, called Exxon’s lawsuit “smoke and mirrors” at the time. He said its goal was to “distract people from the allegations in the California lawsuit.”
The Australian charity was also named as a defendant in the Texas lawsuit. A lawyer for the charity, Joshua Matz, said during the hearing that, in the American legal system, it is commonplace for litigation to be funded by third parties, but that did not mean the law firm was directing the nonprofit groups. Exxon had “nothing to show that they were controlling the nonprofits,” he said. (The law firm is not a defendant in the case.)
The claims in both cases fundamentally revolve around speech: Did Exxon mislead people with deceptive marketing, as California has alleged? And did Mr. Bonta and the nonprofit groups defame Exxon with their statements, as Exxon alleges?
During last week’s hearings, Scott Gant, a lawyer for Sierra Club, made this point. He noted that the judge in the California case, Richard Seeborg, had previously said that Exxon had put itself in an “ironic position” by arguing the company’s statements should be protected by free speech laws, while suing other organizations for defamation over their statements.
Mr. Gant argued that there were many reasons to transfer the Texas case to California, including that Sierra Club could not compel its volunteers to attend depositions in Texas. Judge Truncale asked him and other lawyers to weigh a question about the venue: If a gun is fired in Louisiana and the bullet crosses the state line and hits someone in Texas, where did the violation occur?
Will Setrakian, a lawyer for Mr. Bonta, also argued that the attorney general should have immunity from the lawsuit because he was carrying out his official duties. (The lawsuit was against Mr. Bonta in his personal capacity.)
Paul Nolette, a professor at Marquette University in Milwaukee and author of a book on state attorneys general, said that a company filing a defamation lawsuit against an attorney general was highly unusual. He said it was most likely a tactic to push back on what he described as the “soft power” that state attorneys general possess, such as the ability to pursue legal investigations and make public statements that can influence public opinion and potentially pressure corporate defendants.
He also noted the similarities between Mr. Bonta’s plastics lawsuit and another batch of litigation: the roughly three-dozen suits filed by state and local governments since 2017 against oil companies over their role in climate change. Those cases allege that the oil companies covered up what they knew about global warming to protect profits.
The climate change lawsuits are generally being filed by states led by Democrats, Mr. Nolette noted, which has the effect of making them look more political, which in turn encourages companies like Exxon to push back more aggressively.
He added that he thought Exxon was trying to raise the costs of bringing plastics-related litigation to discourage other states from following California’s lead. There have been lawsuits related to plastics pollution filed by officials in New York and Minnesota, for example, but they are far fewer in number than climate change lawsuits.
“It’s something of a branch off of the existing climate litigation,” Mr. Nolette said of the plastics lawsuit. “I think, from the company’s perspective, once the genie is out of the bottle, or whatever cliché you want to use, then it becomes a lot more difficult for them to to deal with these claims. So they’re trying to push back early.”
James Tierney, a former attorney general of Maine who directs the Attorney General Clinic at Harvard Law School, said he saw the case as a strategic move by the defendant to move the discussion of the case to Texas. “These lawsuits are really public policy debates,” he said. “Debates that, in a better time and place, would be held in Congress. But it’s not, so they’re transported over into the judicial system.”
Judge Truncale did not offer a time frame for his ruling on whether to dismiss or transfer the case. He noted the balance he needed to strike — in protecting a litigant’s right to their day in court without allowing a case to continue unnecessarily — and acknowledged his awareness of the legal precedent he could be setting.
“I’m not thinking just about Exxon here,” he said, but of the possibility that other organizations might well try to file similar lawsuits in the future, “in my court or some other court.”
Karen Zraick covers legal affairs for the Climate desk and the courtroom clashes playing out over climate and environmental policy.
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