“Arjuna has eliminated any case or controversy between the Parties here,” U.S. District Judge Mark Pittman wrote. “Exxon’s claim is moot and must be dismissed without prejudice.”
A federal court in Texas has dismissed a lawsuit filed by ExxonMobil against shareholders who had demanded that the oil and gas company change its practices and reduce greenhouse gas emissions.
According to The Guardian, the complaint—filed against defendant Arjuna Capital—was dismissed after an attorney for the defendant organization said that the group would no longer seek to advance its climate-related goals during annual shareholder meetings.
“Arjuna has eliminated any case or controversy between the Parties here,” U.S. District Judge Mark Pittman wrote. “Exxon’s claim is moot and must be dismissed without prejudice.”
ExxonMobil’s original complaint had targeted both Arjuna Capital and Follow This, a Netherlands-based group of “green shareholders.” Together, both groups had asked that Exxon make a concerted effort to lower its carbon dioxide emissions.
Although the district court had given ExxonMobil permission to continue litigating claims against Arjuna Capital, it had dismissed the lawsuit against Follow This on jurisdictional grounds.
But, in his Monday ruling, Pittman said that Arjuna Capital’s apparent “unconditional and irrevocable” pledge to maintain silence on climate science-related issues effectively strips Exxon of any reason to keep its case in court.
“Arjuna was caught between a rock and a hard place,” Pittman noted in his decision. “Arjuna is a boutique wealth management firm with offices in North Carolina and Massachusetts. Exxon is one of the largest multinational conglomerates on the planet.”
Pittman also suggested that Securities and Exchange Commission rules on shareholder resolutions—which allow companies to prohibit demands that deal with a company’s standard business operations—are overdue for an update.
“The SEC is behind the ball on this issue,” Pittman wrote. “But the Court cannot advise Exxon of its rights without a live case or controversy to trigger jurisdiction.”
A spokesperson for ExxonMobil has since cast the dismissal as a victory.
“Our lawsuit put a spotlight on the abuse of the shareholder-access system,” it said in a statement. “The court has made absolutely clear that Arjuna cannot continue abusing the process. Shareholder democracy is only as strong as the rules that govern it, which must be fairly and consistently applied.”
Follow This, in contrast, said that the court’s decision to dismiss the claim—rather than let ExxonMobil continue fighting shareholder activism—avoided setting a dangerous precedent.
“The dismissal of Exxon’s lawsuit against shareholders is a victory for all investors who want to safeguard the long-term future of U.S. oil and gas companies and the global economy in view of the climate crisis,” Follow This founder Mark van Baal said.
“The right for shareholders to file proposals has not been compromised as no precedent about the application of the SEC rules and use of shareholder rights has been created, which was the ultimate goal of pulling our proposal,” he said.
Sources
Judge tosses Exxon Mobil lawsuit against activist shareholder Arjuna over climate proposal
Texas court dismisses Exxon’s lawsuit against climate activist shareholders
Join the conversation!