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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 2: Climate deception lawsuits have been brought by states against the

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Speaker 2: big oil and gas companies across the country, but the

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Speaker 2: cases are currently locked in legal battles over whether federal

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Speaker 2: or local judges should hear them. And that was exactly

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Speaker 2: the question before the DC Federal Appellate Court. Does the

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Speaker 2: District of Columbia's climate liability lawsuit against Exxon Mobil, BP, Chevron,

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Speaker 2: and Shell belong in federal court or state court? My

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Speaker 2: guest is environmental law expert Pat Parento, a professor at

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Speaker 2: the Vermont Law and Graduate School. Pat tell us a

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Speaker 2: little about these so called climate deception lawsuits.

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Speaker 3: Yeah, DC's lawsuit is based on its consumer protection law,

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Speaker 3: and there are several other cases. Minnesota, Massachusetts, Connecticut have

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Speaker 3: filed similar cases based on both their state statutes that

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Speaker 3: protect consumers from deceit or fraud and also common law

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Speaker 3: claims for the same sort of deception. There's another class

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Speaker 3: of cases that's actually bigger. There's more of them that

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Speaker 3: are more classic torque cases. They began as nuisance cases.

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Speaker 3: They've now sort of morphed into deception and failure to

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Speaker 3: warn type cases. So, all of these climate liability cases

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Speaker 3: against the oil companies, some of them have included coal,

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Speaker 3: some of them have even included plastics manufacturers, but the

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Speaker 3: bulk of the cases are suing the big oil companies,

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Speaker 3: the so called carbon majors, and some of them are

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Speaker 3: seeking compensation sort of cost recovery for the costs of

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Speaker 3: adapting to what we now see, are you on rushing

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Speaker 3: impacts of climate change, sea level rise, storm surge, and

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Speaker 3: so forth. The District of Columbia case is a little different.

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Speaker 3: It's the making penalties for deception, false advertising, and so forth, greenwashing,

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Speaker 3: and it's also seeking what's called disgorgement of profits. So

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Speaker 3: it's seeking to recover. You know, oil companies have been

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Speaker 3: raking in win fall profits right lately, and they're seeking

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Speaker 3: to recover some of those profits to be distributed to consumers.

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Speaker 3: In this case, it would be within the District of

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Speaker 3: Columbia and the other states would be in those states

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Speaker 3: as kind of a rebate back to consumers. So fascinating

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Speaker 3: cases all around.

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Speaker 2: Yeah, So, the attorney for DC said the claims are

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Speaker 2: based on the deceptive conduct of the fossil fuel companies,

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Speaker 2: not on the admissions or production of fossil fuels.

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Speaker 1: He said, quote, we have no quarrel in this.

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Speaker 2: Litigation with their emitting greenhouse gases. We don't even have

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Speaker 2: a quarrel with them marketing their products in the District

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Speaker 2: of Columbia.

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Speaker 1: As long as they don't.

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Speaker 2: Market their products in a deceptive or misleading way, that's

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Speaker 2: our quarrel in this case.

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Speaker 1: So what's happening here?

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Speaker 2: As in other cases against the fossil fuel industry, they're

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Speaker 2: locked in battles over whether federal or local judges should

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Speaker 2: ultimately hear the merits of these cases.

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Speaker 1: Does his argument go to whether it's federal or local?

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Speaker 3: Yes, it does, And he's right to the extent that

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Speaker 3: these cases are based strictly in the District of Columbia case.

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Speaker 3: They're based strictly on laws ordinances that have been enacted

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Speaker 3: by the District of Columbia, which of course is not

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Speaker 3: a state. It wants to be, but it's not a state,

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Speaker 3: and so there's no federal connection whatsoever to the claims.

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Speaker 3: There are causes of action that the District of Columbia

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Speaker 3: has filed against the oil companies. The oil company's arguments

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Speaker 3: are completely spurious on that point about where they belong.

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Speaker 3: They belong in this case in the District of Columbia

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Speaker 3: court system. There's one thing though about what the DC

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Speaker 3: lawyer is saying that's not quite one hundred percent, and

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Speaker 3: that is when it comes to the measure of damages, right,

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Speaker 3: how much are you actually going to charge the company

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Speaker 3: as the damage from the deception that has to do

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Speaker 3: with the impacts of climate change, which of course are

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Speaker 3: related to the emissions. So you see what I mean.

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Speaker 3: There's a little bit of this ingenuity here in saying

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Speaker 3: it has nothing to do with emissions. Of course it does.

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Speaker 3: It goes to the question of if you win your argument,

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Speaker 3: as I think they will, by the way that the

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Speaker 3: companies have been deceptive and have misled consumers, what's the

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Speaker 3: damage from that? In other words, what would have happened

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Speaker 3: had you not been deceptive, had you not lied? Would

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Speaker 3: things be any different? Would they be any better? Would

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Speaker 3: consumers have stopped buying gas guzzling cars, would they have

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Speaker 3: been able to afford electric vehicles? You see what I mean.

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Speaker 3: So when you get into the to the sort of

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Speaker 3: second phase of these cases, which is what's the real

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Speaker 3: damage from all this, that's when it's going to get

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Speaker 3: very interesting.

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Speaker 2: So this first phase jurisdiction, what was the industry argument

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Speaker 2: for trying to get this into federal court? Why did

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Speaker 2: they think it should be in federal court? Or why

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Speaker 2: do they say they think it should be in federal court.

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Speaker 3: Yeah, it's what I call pretzel logic. Okay, So the

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Speaker 3: way it works is the oil companies the defendants claim

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Speaker 3: that these cases because it's global in nature. Again, they're

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Speaker 3: making the argument the case is really about emissions, right,

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Speaker 3: and so they're saying that is classically a question for

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Speaker 3: federal jurisdiction. You can't have fifty states plus the District

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Speaker 3: of Columbia running around filing lawsuits against us. These should

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Speaker 3: be litigated in federal court because they're interstate and global

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Speaker 3: in nature, the impacts, the damage that you're really talking

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Speaker 3: about here. And then they say, and because there is

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Speaker 3: no federal law, they should all be dismissed. So that's

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Speaker 3: the pedsologic part of it. First of all, it's governed

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Speaker 3: by federal law, so they belong in federal court. But

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Speaker 3: since there's no federal law, they should be dismissed. And

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Speaker 3: that's where the judges in the DC's circuit. And two

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Speaker 3: of them were Trump appointee judges. We're scratching their heads

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Speaker 3: and saying, wait a minute, how can this be right?

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Speaker 3: How can you be saying, first there is federal law,

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Speaker 3: and then federal law disappears. I don't get it. So

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Speaker 3: I'm predicting that the DC Circuit is going to send

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Speaker 3: this case back to the District of Columbia court.

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Speaker 2: So explain why the industry is fighting tooth and nail

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Speaker 2: to force these cases into federal court.

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Speaker 1: Why they want them in federal court.

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Speaker 3: They want to fast track to the Supreme Court. They

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Speaker 3: want to get these cases back in front of the

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Speaker 3: Supreme Court and tossed out completely. That's what they're shooting for.

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Speaker 3: They don't ever want to go to trial. They don't

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Speaker 3: want to have any depositions, they don't want to have

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Speaker 3: any discovery. They want to try to spike these cases.

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Speaker 3: They tried to get the Supreme Court to take an

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Speaker 3: appeal from this other class of cases I mentioned, these

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Speaker 3: more tort based, con nuisance based kinds of cases, But

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Speaker 3: the Supreme Court just recently said no, thanks, we're not

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Speaker 3: going to look at them right now. Maybe later, but

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Speaker 3: right now we're staying out of it, and.

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Speaker 2: Has the industry basically struck out in these cases. I

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Speaker 2: think the DC District Court judge. There were at least

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Speaker 2: thirteen other district court judges and five appeals courts that.

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Speaker 3: Disssst them all. Yeah, the defendant oil companies has lost

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Speaker 3: every single attempt to move these cases into federal court.

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Speaker 1: Are any of the cases moving forward?

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Speaker 2: I read that the first one of these was brought

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Speaker 2: by coastal California communities in twenty seventeen.

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Speaker 4: Yeah.

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Speaker 3: The case in front right now, interestingly, is Honolulu, and

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Speaker 3: in Honolulu, the state court judge has already denied. The

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Speaker 3: case was sent back from federal court to state court

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Speaker 3: in Hawaii, and the Hawaii state court judge has already

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Speaker 3: denied the oil company's motion to dismiss based on the

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Speaker 3: argument that these claims are pre empted by federal law.

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Speaker 3: There's two different federal doctrines going on here, and it

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Speaker 3: gets very confusing. I'm sure one is whether the Clean

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Speaker 3: Air Act has displaced federal common law, which would otherwise

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Speaker 3: govern sort of interstate pollution problems, right, But the other

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Speaker 3: doctrine that the companies are arguing is that the Clean

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Speaker 3: Air Act also preempts state law that's one that the

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Speaker 3: Supreme Court is ultimately going to have to decide I

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Speaker 3: predict and in.

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Speaker 2: Several of these cases, appeals courts have ruled twice to

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Speaker 2: affirm the state courts are the right venue.

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Speaker 1: At what point does discovery start?

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Speaker 2: I mean, how long can they keep litigating the jurisdictional issue?

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Speaker 3: Run their string on that, and the Hawaii judges are

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Speaker 3: poised to start discovery. There's a petition pending in the

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Speaker 3: Hawaii Supreme Court, which is their sort of last gas

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Speaker 3: effort to prevent discovery. But again, my colleagues at the

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Speaker 3: University of Hawaii Law School know their court very well,

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Speaker 3: are pretty confident that the Hawaii Supreme Court is not

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Speaker 3: going to stop the cases and that discovery is probably

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Speaker 3: going to get underway in Hawaii this year.

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Speaker 2: Do we think the industry is afraid of discovery, very

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Speaker 2: afraid of discovery, incredibly afraid of discovery.

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Speaker 3: Yeah, somewhere along that spectrum they're very afraid because you know,

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Speaker 3: now you're talking about subpoenaing former CEOs of Exxon and

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Speaker 3: BP and Shell all the rest, putting them under oath

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Speaker 3: and asking them very pointed questions about what did you

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Speaker 3: know when did you know it. What did you do

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Speaker 3: with the information? Why does your advertising say one thing

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Speaker 3: when your internal documents say something else. Why are you

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Speaker 3: filing securities reports with the Securities in Exchange Commission that

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Speaker 3: are not fully disclosing the risks and the dangers that

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Speaker 3: you knew about. In fact, one of the more recent

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Speaker 3: studies of what the companies knew concluded company scientists knew

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Speaker 3: more than government scientists about the dangers of climate change,

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Speaker 3: earlier than some of the international organizations like the Intergovernmental

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Speaker 3: Panel on Climate Change new So all of this is

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Speaker 3: going to come out, it's going to become public, and

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Speaker 3: it's going to go into evidence in front of a jury.

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Speaker 3: And that's what they're terrified about.

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Speaker 2: Pat Is there any way that or the numbers too

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Speaker 2: great for the industry to settle some of these cases.

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Speaker 3: I think some of the defendants, you know, there's a

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Speaker 3: range of culpability here. Exxon's the worst. From everything that

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Speaker 3: we've seen, documents that have been released, statements that have

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Speaker 3: been made, et cetera. Exon is really the ringleader of

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Speaker 3: the deception campaign and organizing even the American Petroleum Institute

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Speaker 3: and others to carry out this propaganda of deceit. We

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Speaker 3: don't know very much about climate change. Still a lot

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Speaker 3: of unanswered questions, still a lot of research needed, and

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Speaker 3: so forth. But some of the other companies are sort

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Speaker 3: of less egregious in their conduct. They might try to

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Speaker 3: peel off and settle that. That happened with the tobacco cases.

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Speaker 3: Some of the tobacco companies decided, you know, stop the

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Speaker 3: bleeding and let's get out of these cases. And that

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Speaker 3: could happen in these cases.

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Speaker 2: Thanks so much for being on the show. Pat. That's

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Speaker 2: Professor Patrick Parento of the Vermont Law and Graduate School.

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Speaker 2: Another setback for federal prosecutors in their efforts to pursue

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Speaker 2: charges of public corruption against state and local officials, the

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Speaker 2: Supreme Court threw out two fraud convictions during former New

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Speaker 2: York Governor Andrew Cuomo's administration, one involving Joseph, a former

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Speaker 2: campaign manager and longtime confidante to Cuomo. During the oral arguments,

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Speaker 2: Justice is from across the Court's ideological spectrum had expressed

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Speaker 2: concern that the government's position would put influential lobbyists and

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Speaker 2: those who hire them at risk of prosecution. Here are

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Speaker 2: Chief Justice John Roberts and Justice Elena Kagan. So it

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Speaker 2: sounds like that's an effort to break down the concept

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Speaker 2: of political power.

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Speaker 5: You're proposing a test which, as the Chief Justice suggested,

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Speaker 5: doesn't need to have any of that. You don't have

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Speaker 5: to be a former official, you don't need to be

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Speaker 5: a future official. I don't think you can give me

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Speaker 5: that test without making it look like the guys just

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Speaker 5: a really, really good lobbyist.

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Speaker 2: These are part of a long line of Supreme Court

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Speaker 2: cases that criticize federal prosecutors for overreaching in public corruption cases,

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Speaker 2: dating from tossing the conviction of former Virginia Governor Bob

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Speaker 2: McDon donal in twenty sixteen to tossing the convictions of two

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Speaker 2: political allies a former New Jersey Governor Chris Christie in

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Speaker 2: twenty twenty in the Bridgegate scandal. Joining me is Nicole Ingish,

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Speaker 2: a former state court judge and federal prosecutor. She's currently

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Speaker 2: a partner at Dorsey and Whitney. Tell us about the

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Speaker 2: case against Percoco.

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Speaker 4: So, Joseph Percoco was a former aid to then Governor Cuomo,

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Speaker 4: and he was charged and convicted of conspiracy to commit

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Speaker 4: honest services fraud. And that was from the time when

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Speaker 4: he was no longer working for Governor Cuomo as an aide,

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Speaker 4: but at the time he was serving in a campaign capacity,

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Speaker 4: and at that time he received some money thirty five

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Speaker 4: thousand from a development company who wanted to avoid this

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Speaker 4: costly union related requirement, and he used his influence basically

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Speaker 4: to get rid of that requirement.

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Speaker 2: So was his argument at the Supreme Court basically that

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Speaker 2: he was a lobbyist during that time or not an

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Speaker 2: employee of this state.

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Speaker 4: His primary argument was that he was charged under a

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Speaker 4: particular statute that requires the government to show that the

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Speaker 4: person charged has in some way engaged in not serving

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Speaker 4: the public with their honest services. And what he argued

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Speaker 4: is that because he didn't work for the government at

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Speaker 4: the time of this particular charge, he couldn't owe a

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Speaker 4: duty to the public to provide honor services, so this

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Speaker 4: charge needed to be overturned.

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Speaker 1: Tell us what the Supreme Court decided and why.

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Speaker 4: The Supreme Court decided that if a person is going

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Speaker 4: to be charged with honest services fraud, they wouldn't necessarily

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Speaker 4: have to beat someone who works for the government in

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Speaker 4: order for an honest services charge to be sustained, but

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Speaker 4: there needed to be a pretty close tie in. So,

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Speaker 4: in other word, if a person is going to be

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Speaker 4: charged with honest services fraud, they could be somebody who

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Speaker 4: has authority delegated to them as an actual agent of

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Speaker 4: the government, but somebody who is merely a private citizen

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Speaker 4: cannot be charged with that crime.

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Speaker 2: How did they handle the fact that even though he

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Speaker 2: was working on the campaign, he still had access to

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Speaker 2: his offices and continue to use them to conduct business.

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Speaker 1: Did they touch on that?

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Speaker 4: They didn't consider any of those activities to be sufficient

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Speaker 4: because they were concerned that as a private citizen, he

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Speaker 4: could have more or less been acting like a lobbyist.

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Speaker 4: And they were concerned that the statute was being applied

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Speaker 4: in an overly broad way and it could encompass people

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Speaker 4: who have legitimate lobbying activities getting paid to you seek

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Speaker 4: redress from the government. And so the concern was that

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Speaker 4: if he was found guilty of on a services fraud,

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Speaker 4: than the statute could apply to people who are doing

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Speaker 4: legitimate lobbying activities.

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Speaker 2: This decision, I don't think came as a surprise to

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Speaker 2: many people. Explain how the Supreme Court has narrowed the

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Speaker 2: reach of these federal corruption laws in recent years.

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Speaker 4: This definitely was not a surprise, and I think it's

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Speaker 4: telling that by the time the case got to oral argument,

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Speaker 4: the government itself had basically conceded that in each of

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Speaker 4: these cases that the fraud statutes were overly brought and

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Speaker 4: wouldn't have applied, and the government tried to save them

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Speaker 4: by arguing some different theories that they hadn't raised below.

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Speaker 4: So it was definitely not a surprise. The Supreme Court,

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Speaker 4: going back to its McNally decision in nineteen eighty seven,

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Speaker 4: has made it clear that these federal fraud statutes don't

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Speaker 4: authorize federal prosecutors to define what good government means for

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Speaker 4: state and local officials, so the fraud statutes don't criminalize

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Speaker 4: all acts of dishonesty or corruption. And instead, the Supreme

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Speaker 4: Court has made it clear that the federal fraud statutes

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Speaker 4: are limited to protecting property rights, and the only exception

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Speaker 4: is for what's called honest services. That's the charge at

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Speaker 4: issue in Percoco. But since the Supreme Court's decision in

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Speaker 4: twenty ten in Skilling, honest services cases themselves have been

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Speaker 4: limited to those that involve, you know, traditional bribes or kickbacks,

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Speaker 4: and now after per Coco, of course, honest services cases

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Speaker 4: need to involve a government employee or someone you know

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Speaker 4: acting as an actual agent of the government. And what

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Speaker 4: McNally and Skilling and other cases since then have provided

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Speaker 4: is that the justices are very concerned about federalism and overreach.

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Speaker 4: So they're worried, as Justice Kagan said in the twenty

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Speaker 4: twenty decision in Kelly versus the United States, the new

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Speaker 4: Jersey Bridgegate scandal case, that if left unchecked, the federal

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Speaker 4: government could use criminal law to enforce its own view

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Speaker 4: of integrity in broad loss of state and local policy making.

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Speaker 4: And they're also concerned, the justices are that fraud statutes

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Speaker 4: could reach legitimate activities like paid lobbyists who don't owe

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Speaker 4: a duty to the public and who are legitimately getting

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Speaker 4: paid to petition the government.

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Speaker 2: Why do you think those ideas cut across ideological lines

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Speaker 2: on the court.

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Speaker 4: I think it's really interesting that most of these cases

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Speaker 4: have been unanimous or nearly unanimous, and as you say,

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Speaker 4: they do cross ideological lines, which is not something that

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Speaker 4: we see very often. And I think the reason behind

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Speaker 4: that is the liberal justices tend to be very skeptical

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Speaker 4: of criminal laws that don't clearly put people unnotice of

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Speaker 4: the behavior that is criminal. That's often known as the

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Speaker 4: doctrine of lenity, that if criminal statute is somewhat ambiguous

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Speaker 4: or open to different interpretations, it should be interpreted in

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Speaker 4: a way that is most beneficial to the criminal defendant.

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Speaker 4: Conservative justices believe also in the rule of lenity, the

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Speaker 4: same as liberal justices, but they also emphasize how Congress

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Speaker 4: should not let unelected prosecutors and judges decide what should

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Speaker 4: be criminal, and they are more sensitive to First Amendment issues,

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Speaker 4: as we've seen in cases like Citizens United and others,

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Speaker 4: in which the conservative justices are more sympathetic to the

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Speaker 4: idea that money and politics could well be for legitimate purposes.

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Speaker 2: In the concurring opinion, Justice Gorsuch said the Court should

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Speaker 2: have gone further and defined precisely when a duty of

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Speaker 2: providing honest services arose. With all these cases, Why hasn't

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Speaker 2: the Court actually done that?

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Speaker 1: Why leave it ambiguous?

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Speaker 4: Right? Well, the Court feels that it's not the court's

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Speaker 4: job to define what a criminal statute should provide. It's

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Speaker 4: Congress's job. They end up doing it case by case

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Speaker 4: on the facts of the case presented to them, but

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Speaker 4: the general principle is that's for the legislature to do so.

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Speaker 2: Now this goes back to the federal court, and this

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Speaker 2: was based on the jury instruction, So possibly could he

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Speaker 2: be tried again on these It seems.

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Speaker 4: That the court may have left that possibility open, but

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Speaker 4: that remains to be seen on whether there's any possibility

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Speaker 4: of retrying either of these defendants. The various theories that

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Speaker 4: the government argued in the propellate case are ones that

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Speaker 4: were not presented below. So the case has been remanded

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Speaker 4: and it remains to be seen whether it could be retried.

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Speaker 2: They only reversed on some of the convictions, right, he

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Speaker 2: still has other convictions in place.

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Speaker 4: That's correct, and there's quite a lot of things still left.

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Speaker 4: He was convicted of a count of bribery with respect

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Speaker 4: to some other payments, and to my understanding, he served

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Speaker 4: his time in prison and has been released.

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Speaker 2: What's the future for these kinds of prosecutions of public corruption?

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Speaker 4: To a large extent, what the Supreme Court is saying

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Speaker 4: is their preference is to leave this up to the

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Speaker 4: state prosecution system. I don't think that's necessarily a good idea,

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Speaker 4: because the federal system is uniquely better situated to handle

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Speaker 4: public corruption cases somebody who worked in both the federal

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Speaker 4: system and the state system. The federal system has the

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Speaker 4: requisite resources to handle public corruption. These kinds of cases

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Speaker 4: take a lot of resources. They typically involve multiple agencies,

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Speaker 4: a fair amount of time in front of the grand jury,

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Speaker 4: the use of insiders cooperators. The state system, in contrast,

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Speaker 4: is a bit overwhelmed, I would say, in most jurisdictions,

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Speaker 4: and it's dominated by violent crime cases and drug cases,

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Speaker 4: and typically local law enforcement doesn't have, you know, the

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Speaker 4: time or the expertise to handle these kinds of cases.

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Speaker 4: And there's also the issue of how does a state

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Speaker 4: or local authority investigate what might be a counterpart in

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Speaker 4: a state or local agency. So it really does make

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Speaker 4: sense for public corruption cases to be brought federally. But

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Speaker 4: the problem identified in these cases by the Supreme Court

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Speaker 4: is that the key statutes prosecutors typically rely on mail

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Speaker 4: and wire fraud were not designed for these cases. So

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Speaker 4: after this, if you are going to bring these cases

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Speaker 4: in state court, which I don't think is a good idea,

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Speaker 4: chances are the federal prosecutors will need to find a

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Speaker 4: way to have their case fit, you know, within the

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Speaker 4: property fraud statutes or the Honest Services Statute. The Supreme

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Speaker 4: Court has given some guidance on how future corruption cases

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Speaker 4: might survive after these cases. In per Coco, prosecutors will

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Speaker 4: need to apply common law agency principles when they're bringing

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Speaker 4: on a services fraud theory, and in a case involving

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Speaker 4: a private citizen. After Seminelli, prosecutors will need to stick

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Speaker 4: more closely to traditional property theories when bringing mail and

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Speaker 4: wire fraud cases, so they really will need to show

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Speaker 4: that there is a scheme to defraud another out of

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Speaker 4: money or property. Or Another option is for prosecutors to

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Speaker 4: find one of the existing statutes, not the fraud statutes,

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Speaker 4: but the others that might fit the conduct more closely,

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Speaker 4: things like the Hobzac, the Travel Act, Federal Program Bribery Statue,

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Speaker 4: and others. Any final thoughts, Even though these cases look

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Speaker 4: like the Court is just antagonistic towards public corruption prosecutions,

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Speaker 4: that's not really what these cases are about. These cases

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Speaker 4: are about the Court's concern about federalism, about the idea

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Speaker 4: that federal courts are courts of limited jurisdiction, and also

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Speaker 4: about their concerns regarding due process and the rule of

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Speaker 4: lenity that if a statue has any ambiguity, it should

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Speaker 4: be construed in a way most favorable to the defendant.

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Speaker 2: Thanks so much for being on the show. That's Nicole Ingish,

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Speaker 2: a former Minnesota State court judge and federal prosecutor. She's

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Speaker 2: currently a partner at Dorsey and Whitney. And that's it

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Speaker 2: for this edition of The Bloomberg Law Show. Remember you

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Speaker 2: can always get the latest legal news on our Bloomberg

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Speaker 2: Law Podcast. You can find them on Apple Podcasts, Spotify,

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Speaker 2: And remember to tune into The Bloomberg Law Show every

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Speaker 2: and you're listening to Bloomberg