Exxon Mobil Corp. v. Schneiderman

Citation: 316 F. Supp. 3d 679Docket: 17-CV-2301 (VEC)

Court: District Court, S.D. Illinois; March 29, 2018; Federal District Court

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Exxon Mobil Corporation has initiated legal action against the Attorneys General of Massachusetts and New York, challenging their investigations into whether Exxon misled investors regarding its awareness of climate change and its potential impacts on business operations. Exxon claims these investigations are retaliatory due to its stance on climate change, violating its constitutional rights. The company seeks extraordinary relief from federal courts to halt the state investigations, citing weak allegations primarily based on statements from a single press conference and meetings with climate activists. The AGs have moved to dismiss Exxon's complaint on multiple grounds, including lack of personal jurisdiction, ripeness, and failure to state a claim. They have also indicated that other defenses may be raised in future motions. Exxon opposed the motion and sought permission to amend the complaint, which the AGs argue would be futile. The court has determined that while jurisdiction exists, Exxon's claims lack plausibility and must be dismissed for failure to state a claim, with the dismissal being with prejudice. Additionally, Exxon's lawsuit against the Massachusetts AG is barred by res judicata. The court did not address potential abstention under Colorado River doctrine. The background details include a subpoena issued by the New York Attorney General in November 2015, seeking documents related to Exxon's knowledge of climate change and communications regarding it, as part of an investigation into possible fraudulent conduct under New York law.

The New York Attorney General (NYAG) is investigating Exxon for potentially misleading historical securities filings that did not disclose internal projections of climate change-related costs. The investigation includes a subpoena requiring Exxon to produce documents regarding its climate change research and communications dating back to 1977, as well as its marketing materials. Following disputes over the subpoena's scope, Exxon submitted over 1.4 million documents. The NYAG also requested additional documents related to the "stranded assets theory," which posits that Exxon may have overvalued its oil and gas reserves by failing to consider the economic impact of new emissions regulations. The investigation also examines potential asset impairment and whether Exxon's disclosures reflect that impairment.

In parallel, the Massachusetts Attorney General (MAG) issued a Civil Investigative Demand (CID) focusing on similar allegations of fraud under state law, requesting internal documents since the 1970s, communications with energy companies and policy groups, and specific reports and public statements regarding climate change. Exxon’s lawsuit against the CID and subpoena claims they are part of a conspiracy to silence climate change debate, involving a coalition of state attorneys general known as "AGs United for Clean Power." The lawsuit was filed shortly after Exxon received the CID and subpoena.

On March 29, 2016, the AGs United for Clean Power held a conference in New York featuring former Vice President Al Gore, where they announced a plan to address climate change through "progressive action." New York Attorney General Schneiderman emphasized the need for creative enforcement of laws against the fossil fuel industry, identifying climate change as the "most important issue" and noting the collaboration of states to tackle it aggressively. He criticized federal inaction, attributing it to external pressures from well-funded interests. Massachusetts Attorney General Healey echoed the urgency of addressing climate change, pointing out public misconceptions perpetuated by certain industries regarding its reality and impacts. She referred to ongoing investigations into Exxon, highlighting a disconnect between what the company knew about climate risks and what it disclosed to investors and the public.

Exxon challenged the AGs' intentions, arguing that their political rhetoric and assertions of public confusion aimed to suppress dissenting views and indicated a predetermined bias against Exxon. The complaint claims that the conference resulted from a coordinated effort by climate activists, including Peter Frumhoff and Matthew Pawa, who have advocated for litigation against fossil fuel companies to expose internal documents and shift industry practices on climate issues. Pawa and Frumhoff reportedly presented strategies at the conference, though Pawa was advised not to confirm his attendance when approached by the media. The supplemental allegations detail a scheme from a 2012 conference designed to promote litigation against Exxon to reveal its internal climate change communications and influence its public stance.

In January 2016, activists at a Rockefeller Family Fund conference explored potential legal actions against Exxon, assessing strategies involving state attorneys general (AGs) and the Department of Justice (DOJ) to determine which had the most promising prospects for successful litigation and discovery. Exxon links this strategy to meetings with various state AG staff and communications with the New York Attorney General (NYAG). An April 2016 Harvard Law School conference addressed state causes of action against major carbon producers, including consumer protection and public nuisance claims.

Exxon argues that the investigations are politically motivated, citing the flawed legal theories presented by the AGs as indicative of animus rather than genuine concern for legal violations. Exxon highlights that the NYAG's document requests extend beyond the applicable six-year statute of limitations, suggesting harassment rather than a legitimate investigation. Additionally, Exxon states that it has had limited business activity in Massachusetts relevant to the investigations and claims that the AGs' requests for communications with oil and gas interest groups reveal political bias.

Exxon also points to a shift in the NYAG's legal theories, arguing that the change from examining misleading climate change disclosures to assessing the value of potentially stranded assets indicates an improper investigative purpose. Exxon contends that this stranded assets theory contradicts SEC guidance on reserve disclosures. The company claims the NYAG and Massachusetts Attorney General (MAG) are retaliating against it for its statements on climate change policies.

Exxon presents seven legal claims: conspiracy to deprive constitutional rights under 42 U.S.C. § 1985; violations of free speech and protection against unreasonable searches under the First and Fourth Amendments; due process violations under the Fourteenth Amendment; violations of the Dormant Commerce Clause; preemption of state laws conflicting with SEC regulations; and common law abuse of process.

Exxon seeks extensive legal relief in the SAC, including a declaratory judgment asserting that the investigations by the AGs infringe upon its constitutional rights and an injunction to restrict these investigations. Following the filing of a federal lawsuit in Texas against AG Healey, Exxon also petitioned the Massachusetts Superior Court to invalidate a Civil Investigative Demand (CID) and to disqualify Healey from the case. In its petition, Exxon claimed the CID contravenes the Massachusetts constitution by violating free speech and unreasonable search protections, and argued that it is not subject to jurisdiction in Massachusetts. The petition mirrored the Complaint's factual allegations, asserting that the CID aims to suppress Exxon's free speech and is politically motivated. Exxon requested a stay of the Massachusetts proceedings pending the federal suit's outcome to avoid duplicative rulings and promote judicial efficiency. The Massachusetts Attorney General cross-moved to compel compliance with the CID. On January 11, 2017, the Massachusetts Superior Court denied Exxon's petition and granted the AG's motion, confirming Exxon's jurisdiction in the state through its franchisees. The court also dismissed Exxon's claims of arbitrariness and capriciousness in the CID issuance, affirming that the AG had reasonable grounds for her actions based on concerns regarding Exxon's potential misrepresentation to consumers. Additionally, the court found no bias in Healey's comments during a press conference, stating they were appropriate for informing the public about the investigation's basis.

The Superior Court declined to consider Exxon's free speech claim, ruling that any misleading or deceptive speech was not protected, and found that the CID was not issued in bad faith to suppress Exxon's free speech rights. Exxon appealed this decision on February 8, 2017, and the case has been transferred to the Massachusetts Supreme Judicial Court, where it remains pending. In New York, Exxon initially complied with subpoenas, producing over 1.4 million pages of documents by November 2016. However, the New York Attorney General's office later sought to compel compliance in the New York Supreme Court. The parties have had conflicting views on whether Exxon's compliance was voluntary, though it was suggested that a compromise was reached under Justice Barry Ostrager. While no formal opinion has been issued by the New York court regarding the subpoenas, evidence indicates that Justice Ostrager did require Exxon to comply with the initial subpoena and subsequent requests. The New York Attorney General’s position during oral arguments and the record from various hearings support the notion that Exxon's compliance was compelled. Additionally, Exxon filed a case against Healey in Texas on June 15, 2016, seeking a preliminary injunction, while Healey moved to dismiss based on jurisdictional issues and improper venue. The district judge ordered jurisdictional discovery to consider the applicability of the "bad faith" exception to Younger abstention.

On October 17, 2016, Exxon filed an amended complaint to include New York Attorney General Schneiderman and the New York investigation in ongoing Texas litigation. Subsequently, a court order regarding discovery was stayed, and the parties were directed to address personal jurisdiction over the AGs. On March 29, 2017, Judge Kinkeade transferred the case to a different court, suggesting potential personal jurisdiction in that district, and ordered the parties to rebrief motions to dismiss according to Second Circuit law. During oral arguments on November 30, 2017, the court requested supplemental briefing on the adequacy of the Complaint. Exxon sought to amend its complaint on January 12, 2018.

The discussion revolves around the ripeness doctrine, which is derived from Article III's limitations on judicial power and prudential considerations. The constitutional aspect assesses whether a case constitutes a valid case or controversy, while the prudential aspect allows courts to decline jurisdiction based on whether a case is better suited for future resolution. The AGs moved to dismiss based on prudential ripeness, which involves a two-step inquiry: evaluating the fitness of the issues for decision and the potential hardship to the parties if the court withholds consideration. The fitness inquiry examines whether issues may become clearer over time or are dependent on future events, while the hardship analysis looks at direct and immediate dilemmas posed to the parties by withholding a decision. A precedent from the Second Circuit (Schulz v. IRS) illustrated the application of prudential ripeness, where a lawsuit to quash IRS summonses was deemed not ripe because the IRS had not yet sought to compel document production.

Schulz's lawsuit was deemed not ripe, as the IRS had not initiated enforcement against him, meaning he faced no imminent injury or penalties for non-compliance. Should the IRS later enforce summonses, Schulz would have recourse through the procedures in the Internal Revenue Code. The Fifth Circuit's decision in Google, Inc. v. Hood echoed this reasoning, stating that a Mississippi state subpoena was also not ripe for review since it required judicial intervention before documents could be compelled. The court noted that a state's non-self-executing subpoena should not differ from a federal one regarding ripeness.

In contrast, Exxon has been compelled to comply with subpoenas from the New York Attorney General (NYAG), recognizing that Exxon is subject to court orders mandating document production and testimony. Should Exxon fail to comply, it risks contempt sanctions under New York law. Although the Subpoena was not self-executing, the NYAG can compel compliance through the courts. Exxon's failure to comply with the Massachusetts Superior Court's order to produce documents also indicates that its claims are ripe, as it faces immediate sanctions for non-compliance, except due to a stipulation with the NYAG.

Regarding personal jurisdiction, Healey's motion to dismiss rests on the argument that the court lacks jurisdiction over her. Exxon must establish personal jurisdiction, which requires only a prima facie showing through affidavits and written materials before trial.

The Court conducts a two-step analysis to determine personal jurisdiction over defendants. First, it assesses whether plaintiffs have established a prima facie case for personal jurisdiction under forum state laws, and second, whether exercising that jurisdiction aligns with the Due Process Clause of the Fourteenth Amendment. All pleadings and affidavits are viewed favorably towards the plaintiff, while legal conclusions and argumentative inferences from either party are not accepted as true.

Exxon claims that the Court has specific personal jurisdiction over Healey based on N.Y. C.P.L.R. 302(a)(1) and (a)(2), which grants jurisdiction over a non-domiciliary who transacts business within the state. To establish jurisdiction under section 302(a)(1), the plaintiff must show the defendant's business activities in New York are connected to the cause of action. Jurisdiction is valid if the defendant's activities were purposeful and substantially related to the asserted claim. There is no requirement for a single event to connect the defendants to New York; rather, the totality of contacts must support jurisdiction.

In this case, Exxon argues that Healey's participation in a March 29, 2016, kickoff conference for the AGs United for Clean Power in New York establishes personal jurisdiction. The sufficiency of a single meeting hinges on its significance to the claim and its relation to the alleged wrongful act. A single meeting can suffice for jurisdiction if it plays a significant role in the parties' relationship. The complaint suggests that the March 29 meeting was pivotal in formalizing a conspiracy against Exxon, as described in statements made prior to and during the conference. Email communications corroborate that this meeting was a foundational event for the coalition targeting Exxon, which included discussions of a campaign against the company.

Allegations establish personal jurisdiction under Section 302(a)(1) based on a single meeting, meeting the Due Process Clause requirements. Such cases where Section 302(a) jurisdiction exists but lacks minimum contacts under Due Process are uncommon. A single meeting related to a conspiracy may suffice for jurisdiction, as seen in Licci and In re Magnetic Audiotape Antitrust Litig. Exxon claims that state attorneys general, including Healey, conspired to suppress Exxon’s speech during a New York meeting, supporting jurisdictional claims. The reasonableness of jurisdiction is assessed using five factors: the burden on the defendant, the forum state's interests, the plaintiff's convenience, the efficient resolution of the controversy, and the states' shared interests in social policy. While Healey may face a burden defending the case in New York, accommodations such as conducting depositions in Massachusetts could mitigate this. Modern communication and transportation further reduce potential burdens. New York is a suitable forum, with relevant conduct occurring there. Concerns about state sovereignty in bringing a state official into federal court are acknowledged, yet prior cases suggest that coordination with forum state officials can establish jurisdiction. Consequently, Exxon has shown that Healey is subject to personal jurisdiction under New York's long-arm statute, leading to the denial of Healey's motion to dismiss for lack of personal jurisdiction.

Regarding preclusion, Healey argues that the Massachusetts Superior Court's enforcement of the CID precludes relitigation of issues in this case. The Full Faith and Credit Act mandates that the Court recognizes the Massachusetts decision as it would under Massachusetts law.

Massachusetts law prohibits the relitigation of issues previously determined in an earlier action when the same issue arises in a later action involving the same parties or their privies. For issue preclusion to apply, three conditions must be met: (1) there must be a final judgment on the merits in the prior case, (2) the party against whom preclusion is asserted must have been a party in the prior case, and (3) the issue in the prior case must be identical to the current issue. Healey argues that a prior Massachusetts decision concluded that the CID was issued without bad faith and was not overbroad or unreasonable, asserting these issues were litigated in the Superior Court.

Despite similarities in the factual arguments between Exxon's current complaint and the Massachusetts proceeding, the court finds that Healey is not entitled to issue preclusion. This is because issue preclusion does not apply if the current proceeding involves a different or lower standard of proof compared to the prior adjudication. The court cites various cases illustrating that a determination in a previous proceeding does not preclude relitigation if the burden of proof differs significantly.

Additionally, Massachusetts law allows the Superior Court to set aside a CID for "good cause," with the burden on the movant to demonstrate this. The standard for "good cause" grants considerable discretion to the Superior Court, akin to motions for protective orders under Mass. R. Civ. P. 26(c), which also provides broad discretion to trial judges. Massachusetts courts have established that a party seeking to set aside a CID carries a heavy burden in doing so.

The trial judge's discretion is constrained by the requirement that provisions of 93A be interpreted liberally in favor of the government. An abuse of discretion standard, which is deferential, applies on appeal, as established in Hudson v. Comm'r of Corr. This standard is more stringent than the preponderance standard relevant to the current action. The case at hand is similar to Sprecher, leading the Court to determine that issue preclusion does not apply.

Regarding claim preclusion, Healey asserts that Exxon's claims are barred under res judicata, arguing the Massachusetts Decision constitutes a "final" judgment. Healey contends that Exxon's claims are either the same as those previously presented in Massachusetts or could have been litigated there. Specifically, Exxon's federal claims under the First, Fourth, and Fourteenth Amendments correspond to state constitutional claims already litigated, while Exxon's other claims—common law abuse of process, preemption, and violations of the dormant commerce clause—could have been raised in Massachusetts.

Under Massachusetts law, res judicata requires: 1) identity or privity of parties in both actions, 2) identity of the cause of action, and 3) a prior final judgment on the merits. Unlike issue preclusion, claim preclusion allows for claims that could have been litigated in the prior proceeding to be barred, emphasizing the need to present all legal theories supporting a claim at once. The Court notes that the res judicata implications of a decision regarding compliance with a CID are a novel issue under Massachusetts law, with no precedents cited by either party. However, the Court concludes that the claims could and should have been raised in the Massachusetts proceeding, thus establishing the applicability of claim preclusion. The parties involved are confirmed to be the same as in the Massachusetts case, satisfying the first requirement, while the second and third requirements—final judgment and identity of claims—are also met.

Massachusetts law does not necessitate a "final judgment" in the traditional sense; instead, courts assess the finality of a decision based on whether the parties were fully heard, if the judge's decision is reasoned, and whether the prior opinion was subject to review. The Massachusetts Decision meets these criteria, as the parties were fully heard with extensive briefing, and the decision backed by a reasoned opinion that upheld the Attorney General's (AG) authority to issue a Civil Investigative Demand (CID) due to concerns about Exxon's potential misrepresentations. This decision is also appealable and is currently pending appeal. The court agrees with the AG that the current case and the Massachusetts proceeding involve the same claim for res judicata purposes, as both are transactionally related, requiring the same evidence and addressing similar facts. Exxon argues that the investigation is not in good faith and infringes on its First Amendment rights, asserting that both actions rely on the same allegations regarding the CID and Healey's involvement in related events, with Exxon acknowledging the overlap during court proceedings.

Claim preclusion applies to transactionally-related claims that could have been raised in a prior proceeding, even if not asserted. A judgment in the initial case extinguishes all rights to remedies concerning the transactions involved. It is not necessary for claims to share the same elements or legal basis; rather, they must be related by the same transaction. A different form of liability does not constitute a separate cause of action if it arises from the same transaction and seeks redress for the same wrong. Parties cannot evade claim preclusion by seeking an alternative remedy or presenting the claim in a different procedural form. The relevant test assesses whether the same parties sought a remedy from the same transaction, with minor procedural variations insufficient to establish separate causes of action. Exxon contends that significant procedural differences between the Massachusetts case and the current civil case should preclude claim preclusion, but this argument lacks supporting case law. Unlike issue preclusion, which has different burdens of proof considerations, claim preclusion aims to prevent resource waste and harassment from piecemeal litigation. Cases cited by Exxon are not applicable since they involve situations where relief was unavailable in the prior proceedings, which Massachusetts law allows for relitigation.

The tort plaintiff in Heacock filed her claims prior to the commencement of divorce proceedings and did not opt to separate her claims. Exxon, while arguing that the Massachusetts proceeding was limited, failed to justify why it had to pursue federal claims in Texas and state claims in Massachusetts. It is acknowledged that the Superior Court could have addressed Exxon's federal constitutional claims, unlike the probate court in Heacock. Exxon's relief request in federal court is essentially the same as that sought in state court—an injunction to quash the CID. Unlike Heacock's tort plaintiff, Exxon strategically chose to split its claims and did not provide cases applying Heacock to a similar situation. Exxon contended claim preclusion was inapplicable due to a supposed greater opportunity to litigate in its case compared to Massachusetts, but the court clarified that issue preclusion may be influenced by evidence development opportunities, while claim preclusion focuses on whether a party improperly split claims, forcing repeated litigation. Exxon did not pursue discovery in Massachusetts, and its decision not to do so was tactical, which does not exempt it from res judicata principles. The court noted that Exxon's claims under Section 1983 do not necessitate a federal forum, as state courts are competent to handle federal rights claims, and the potential for preclusion is inherent in this system. Additionally, the court found no due process violations in the Massachusetts proceedings that would undermine preclusive effect. As Exxon had a full opportunity to present its case, the motion to dismiss based on claim preclusion is granted, alongside a failure to state a claim.

The New York Attorney General (NYAG) and Massachusetts Attorney General (MAG) have filed a motion to dismiss Exxon's Complaint, arguing it fails to adequately state a claim. They contend that Exxon's assertions of improper motives behind their investigations are implausible. To succeed, Exxon must provide facts that allow the court to reasonably infer the AGs are aware their investigations lack merit yet pursue them for ulterior motives. This is central to Exxon's claims, as each constitutional tort asserted requires evidence that the AGs acted with bad faith, motivated by a desire to retaliate against Exxon’s protected First Amendment speech.

During oral arguments, the court emphasized the need to assess whether the Complaint states a valid claim. While all factual allegations in the Complaint must be accepted as true and reasonable inferences drawn in Exxon's favor, the Complaint must still present sufficient factual matter to demonstrate a plausible entitlement to relief. Plausibility does not equate to certainty, and factual allegations must raise the right to relief above mere speculation. The court is not required to accept legal conclusions presented as factual allegations.

The court has also considered the allegations in conjunction with a proposed Second Amended Complaint (SAC). Under Rule 15(a) of the Federal Rules of Civil Procedure, amendments should be allowed freely unless there are good reasons to deny them, such as futility or bad faith. An amendment is deemed futile if it cannot withstand a motion to dismiss.

While none of the involved parties have specified the elements of Exxon's constitutional claims, they agree that allegations of improper motive are crucial to each claim. Specifically, adverse governmental actions taken in retaliation for free speech are established violations of the First Amendment.

Exxon's Fourth Amendment violation claim hinges on the assertion that the New York Attorney General (NYAG) and Massachusetts Attorney General (MAG) investigations lack a legitimate purpose, as stated in their supplemental opposition. They argue that these investigations are politically motivated, aimed at coercing ExxonMobil into adopting specific climate change policies favored by the AGs. A press conference held on March 29, 2016, featuring the AGs and former Vice President Al Gore, is central to Exxon's allegations, which claim the AGs expressed discriminatory intent against opposing views on climate change.

Exxon contends that the investigations were initiated without a good faith basis and are linked to political agendas. However, the NYAG's comments during the press conference, when considered in context, suggest that the investigation was warranted due to Exxon's internal knowledge of climate science and public misinformation efforts. The NYAG emphasized that the First Amendment does not protect fraudulent behavior and reaffirmed that the investigations are legitimate law enforcement actions against fraud, dismissing any claims that the investigations were mere publicity stunts.

Charges have been raised regarding attempts to influence media reporting and public perception related to an ongoing investigation into Exxon. Following a subpoena, Exxon claimed that the public report contained selectively chosen documents taken out of context. The investigation, led by NYAG Schneiderman, aims to thoroughly review all documents, contrasting with journalistic practices. He emphasized the early stages of the inquiry, noting that numerous documents have been received and are under review without prejudging the outcome. Regarding potential damages, Schneiderman acknowledged that financial damages are significant, especially in light of the billions spent by taxpayers addressing climate change consequences, but stated it is premature to draw conclusions.

Exxon alleges that the NYAG's investigation is retaliatory rather than factual. However, the comments made by Schneiderman do not imply any improper motives nor support Exxon's claims of unfounded investigation. The NYAG's belief that climate change is settled science does not negate the possibility of believing that Exxon may have committed fraud, which hinges on what Exxon knew and when. The assertion that Exxon profits from public confusion about climate change constructs a narrative that may imply misleading statements by Exxon rather than mere political hyperbole. The investigation's legitimacy is not undermined by Schneiderman's views on climate change, as there is no evidence that the NYAG believes Exxon is confused about the issue.

Healey's comments at the press conference regarding Exxon were limited, with her only reference to the company being a statement about the urgent need for action on climate change and the potential deception by fossil fuel companies concerning its risks. She emphasized the importance of accountability for companies like Exxon that may have misled investors and the public. Healey expressed concerns about Exxon failing to disclose relevant information to Massachusetts consumers, suggesting possible violations of state law, but her remarks did not indicate bias or a political retaliation against the company. The allegations in the SAC imply that Healey and other Attorneys General (AGs) may have prejudged their investigation of Exxon, influenced by climate change activists. However, the SAC does not provide sufficient evidence to support claims that these AGs shared any improper motives with activists or that their investigations would be frivolous. Additionally, claims regarding meetings among Exxon's political opponents aimed at litigation to access internal documents do not establish direct connections to the AGs' actions, as there are no allegations of their attendance at these meetings.

The SAC lacks factual allegations indicating that activists Pawa and Frumhoff, along with their associates, doubt that Exxon has committed fraud. The meetings referenced merely suggest that these activists may see potential benefits in the discovery process for their public relations efforts, as they could expose discrepancies between Exxon's public statements on climate change and its internal documents. This does not imply that the activists, or the Attorneys General (AGs), lack a reasonable basis for investigating Exxon for fraud. Exxon tries to connect the activists with the AGs by citing various communications and events, such as discussions between the NYAG and climate activist Tom Steyer regarding campaign contributions, and meetings with the Rockefeller Family Fund about companies' climate actions. 

Presentations made by Frumhoff and Pawa to the AGs prior to a March 2016 press conference, focused on urgent climate action and litigation, lack detailed content in the SAC, making it speculative to claim they aimed to promote unfounded investigations of Exxon. Even if the activists did push for investigations without a belief in wrongdoing, it does not follow that the NYAG and MAG agreed to conduct investigations without a good faith belief in their validity. The SAC also asserts that investigative journalism, funded by the Rockefeller Family Fund, prompted the CID and Subpoena against Exxon, which Exxon argues is used as pretext for the AGs' inquiries. However, Exxon provides no factual support for this claim, and its own characterization of the articles suggests that they align with the AGs' theory that Exxon's internal research contradicted its public statements. Without factual allegations indicating the AGs' disbelief in the legitimacy of the articles, the Court cannot conclude that the state investigations are pretextual.

A common-interest agreement among the Green 20 is cited as evidence of a concealed "political agenda" related to climate change litigation. Exxon argues that this agreement, which addresses various litigation areas such as investigations into corporate representations about fossil fuels and legal actions to enforce federal measures on greenhouse gas emissions, is being mischaracterized. The agreement's preamble emphasizes the AGs' goal of ensuring accurate information about climate change, which Exxon claims indicates a willingness to infringe on First Amendment rights. However, the definition of "accurate information" is vague, and the goal of disseminating such information aligns with legitimate investigative efforts rather than retaliatory motives. The court has indicated that false statements are not protected speech, supporting the AGs' right to investigate potential fraud.

Exxon further contends that the AGs' reluctance to produce the agreement suggests concealment, labeling this inference as speculative. Moreover, Exxon interprets the AGs' document requests, which include materials from beyond the statutes of limitations and communications with external groups, as circumstantial evidence of improper motives. Despite claiming that these requests are frivolous, Exxon did not challenge their validity in New York Supreme Court but limited its dispute to the relevance of accounting records requested.

The Massachusetts Superior Court upheld the validity of the Civil Investigative Demand (CID), stating it is based on a reasonable foundation and seeks records similar to those requested in a prior Subpoena. The court clarified that the request for historical documents, even beyond the statute of limitations, does not indicate pretext, as past misrepresentations by Exxon could be relevant to assessing its current intent and possible ongoing misconduct. Exxon's communications with external entities are also deemed relevant, particularly if they pertain to climate science and messaging strategies that conflict with Exxon's internal views on climate change.

Exxon argued that the shifting investigative theories of the New York Attorney General (NYAG) indicated pretext; however, the court found that such shifts are a natural response to new information and do not substantiate claims of improper motives. The court determined that Exxon's allegations did not provide sufficient evidence of improper intent by the Attorney General and dismissed Exxon's claims related to violations of the First, Fourth, and Fourteenth Amendments, along with state law claims and conspiracy allegations, denying leave to amend.

Regarding the Dormant Commerce Clause, the court noted that state "blue sky" laws, including the Martin Act, have historically been upheld against such challenges. The Martin Act regulates securities transactions within New York and does not violate the Dormant Commerce Clause, as it only affects local transactions. Exxon’s assertion that the CID and Subpoena unlawfully regulate interstate commerce by targeting political speech was dismissed, as the requests themselves do not explicitly regulate speech.

Exxon's dormant commerce clause claim is based on the assertion that the Subpoena and CID are covert regulations with an improper purpose. The Court rejects this argument, stating that Exxon has not plausibly alleged essential elements of the claim, particularly failing to demonstrate how the document demands discriminate against out-of-state businesses or unduly burden interstate commerce. The dormant commerce clause prohibits such discrimination and undue burdens, but Exxon did not provide sufficient evidence to support its claims, leading to the dismissal of the dormant commerce clause claim.

Regarding Exxon's preemption claim, the Court notes that challenges to a subpoena's enforcement are typically not the appropriate forum for asserting preemption defenses. Courts usually defer to agency determinations regarding their own investigative authority. An exception exists if a subpoena exceeds an explicit statutory limitation or shows a clear lack of jurisdiction. Exxon's cited cases do not apply here, as they pertain to different contexts. Exxon argues that SEC regulations on reporting reserves preempt the AGs' inquiries into "stranded assets," but fails to identify any specific SEC provision that prohibits such requests. The Court emphasizes that Exxon's internal documents could be pertinent to various theories, including its understanding of climate change in relation to its disclosures to investors and the public. Consequently, Exxon's preemption claim is also dismissed.

Motions to dismiss have been granted, and Exxon's motion for leave to amend has been denied as futile. The Complaint is dismissed with prejudice, and the Clerk of the Court is instructed to close specified docket entries and terminate the case. The Attorney General of Massachusetts is Maura Tracy Healey, while Eric Tradd Schneiderman serves as the Attorney General of New York. Claude Walker, the Attorney General of the Virgin Islands, initiated an investigation into Exxon, issuing a subpoena that was later withdrawn after Exxon filed a lawsuit against him in Texas state court, which was dismissed. Exxon claims that the New York Attorney General is no longer investigating its historical knowledge of climate change. The court assumes the truth of allegations in the Complaint and the proposed Second Amended Complaint (SAC). 

Schneiderman indicated a settlement with Peabody Energy concerning financial disclosures related to emissions costs and stated that the NYAG is pursuing similar claims against Exxon. He emphasized that the First Amendment does not protect fraudulent activities, asserting that all attorneys general handle fraud cases similarly. The Complaint references a March 29, 2016, conference and includes public statements from Schneiderman about the necessity of addressing climate change denial. The involved Attorneys General have a common interest agreement with a confidentiality clause, which Exxon argues indicates an intent to suppress free speech. Exxon alleges inappropriate collaboration between environmental activists and AG staff during meetings in June 2015 and on the day of the March conference. The initial request for an injunction against the CID and Subpoena has been revised. The court may recognize the Massachusetts Decision and related court transcripts as judicial notice.

Judicial notice of public records is appropriate as the facts are verifiable and not subject to reasonable dispute, maintaining the distinction between a motion to dismiss and a motion for summary judgment. The New York Attorney General (NYAG) moved to compel PwC's compliance with a subpoena, which PwC and Exxon contested based on "accountant-client" privilege, but Justice Ostrager ordered compliance, with the decision currently under appeal. Unlike the initial complaint, the Second Amended Complaint (SAC) seeks to enjoin the broader NYAG investigation, diminishing the relevance of the subpoena issue. Both Exxon and PwC are compelled to produce documents and testimony in response to other NYAG subpoenas. The AGs are seeking to stay court orders while pursuing mandamus relief in the Fifth Circuit. Judge Kinkeade, despite transferring the case, offered his views on Exxon's allegations, which, although noted by Exxon, are considered irrelevant dicta. Under Ex Parte Young, a litigant need not risk enforcement actions to challenge executive actions unless those actions are not self-enforcing. The original complaint did not specifically plead personal jurisdiction in New York, but the current allegations are sufficient for jurisdiction. The parties involved are the same as those in a related Massachusetts proceeding, which is influenced by the Second Circuit's ruling in Temple of the Lost Sheep, where state court adjudications preclude relitigation in federal court. The SAC also seeks an injunction against the Massachusetts investigation, countering Exxon's claim that such relief was unavailable. Exxon sought injunctive relief in Massachusetts, requesting disqualification of Healey and her office, but did not provide case authority indicating that the Massachusetts court could not enjoin the investigation itself. The perceived harshness of the outcome is attributed to Exxon's strategic litigation choices.

Exxon's assertion of a right to a federal forum for its federal claims is rebutted by the fact that state courts are qualified to handle such claims, as evidenced by case law, including In re Yankee Milk, Inc. Having opted for a state forum and litigated state law claims there, Exxon cannot now claim it has lost the chance to present related federal claims, as res judicata principles prevent this type of claim splitting. The standard applicable to Exxon's claims remains the general plausibility standard, and both parties agree that Exxon must plead the absence of objective, reasonable suspicion supporting the Subpoena and CID. The Court notes that Exxon's argument hinges on whether the New York Attorney General's investigation is objectively unjustifiable, acknowledging that prior cases establish a relationship between the justification for a subpoena and the plausibility of claims of improper purpose. The Court assumes that principles from enforcement actions are applicable at the investigatory stage. Additionally, it does not need to resolve the AGs' argument regarding Exxon's failure to show an actual impact on protected speech, but highlights that First Amendment retaliation claims can be based on harms beyond just chilled speech. Exxon claims significant time and resources have been spent responding to the AGs' document demands, and references public comments made by the AGs regarding significant policy issues, arguing that such comments do not suggest improper motives. The allegations of criticism against the AGs by other officials and committees are deemed irrelevant to assessing the AGs' motivations.

Elected officials critiquing investigations by their counterparts does not inherently indicate improper motivations, as this could lead to a standstill in state law enforcement due to a "heckler's veto." Exxon’s argument about relevance in this Court versus the New York Supreme Court suggests a contradictory and problematic strategy that risks federal interference in state matters, resulting in extensive litigation and resource waste. The Massachusetts Superior Court affirmed jurisdiction over the CID, and Exxon has not contested the New York Attorney General's (NYAG) jurisdiction. Exxon's concerns regarding procedural requests from the NYAG do not undermine the good faith of the investigations. The Eleventh Amendment bars Exxon's state law claims, and its Section 1985 claim fails due to the lack of a defined "class" for discrimination. The Court refrains from deciding on abstention under Colorado River, although it notes that the ongoing parallel state-court and federal proceedings involve similar parties and issues, particularly in Massachusetts, where Exxon has raised similar legal arguments. While recent discussions suggest this case may not fit the typical abstention framework, no single court could consolidate all of Exxon's claims against the state attorneys general. There is no risk of inconsistent judgments as both parties accept that this court's decision would be binding.