Judicial Climate for "Global Warming" Claims Getting Warmer?

Will global warming become the focus of a new wave of substantial, and novel, tort litigation and trigger a resulting upsurge in insurance claims?  Should we expect the global warming claims to resemble the avalanche of asbestos and hazardous waste claims that plagued the insurance industry in recent decades?  The answers remain unclear, but some recent developments are putting these questions into clearer focus.

In 2007, the U.S. Supreme Court ruled, in Massachusetts v. EPA, ^[1] that greenhouse gas emissions constitute "air pollutants" subject to the regulatory authority of the Environmental Protection Agency under the Clean Air Act. ^[2]  Unsurprisingly, wide-ranging speculation and predictions about the likely impact of the court's decision followed.  Many legal practitioners and commentators claimed that the court's ruling would result in a wave of litigation against corporate actors whose past business operations (or products) were sources of greenhouse gas emissions, which, in turn, have been widely recognized by the scientific community as the principal cause of global warming.  It was predicted that such lawsuits would seek to hold these corporate actors liable for their alleged contributions to global warming.  These predictions likewise assumed that such lawsuits would give rise to the next wave of high-stakes insurance coverage litigation as targeted corporate policyholders turn to their general liability insurers over many decades for defense against the claims and indemnification of any resulting judgments or settlements.

Nevertheless, to date, the predicted liability lawsuits have been far less numerous than expected, and those that have been filed have had major trouble "getting off the ground."  In bringing global warming-related liability lawsuits against corporate defendants, plaintiffs have faced significant obstacles that have prevented their cases from getting past a threshold stage.  Plaintiffs typically have confronted difficulties in establishing standing to sue, demonstrating the justiciability of their claims, and considerable judicial skepticism as to their ability to prove that a corporate actor's "contribution" to global warming proximately caused plaintiffs' injuries.  

Recent decisions by the United States Courts of Appeals for the Second and Fifth Circuit, however, have likely given plaintiffs renewed grounds for hope in regard to the viability of their claims, and created new concerns for targeted corporate defendants and their general liability insurers.  These appellate rulings may have removed significant hurdles from the path of plaintiffs seeking to hold corporate emitters of greenhouse gases liable for harms allegedly caused by global warming.  In finding that tort-based global warming actions against corporations present justiciable claims, the Second and Fifth Circuits determined that the plaintiffs satisfy standing requirements and their claims do not present non-justiciable political questions.  In holding that ascertainable and manageable common-law standards are available to the courts to evaluate these types of claims, the Second and Fifth Circuits may have decreased the likelihood that global warming lawsuits will be dismissed at an early point, a development with obvious future insurance coverage implications.

American Electric Power Co. and Comer

In Connecticut v. American Electric Power Co., ^[3] the U.S. Court of Appeals for the Second Circuit reversed the district court's decision in two companion public nuisance lawsuits brought by eight state attorneys general, New York City and three land trusts against electric power companies that operate coal-fired power plants.  Alleging that the companies are "substantial contributors to elevated levels of carbon dioxide and global warming," ^[4] the suit sought an injunctive order capping, and subsequently reducing, the plants' carbon dioxide emissions.  Plaintiffs alleged that, among other things, defendants' actions have led and will lead to increased illnesses and deaths, intensified and prolonged heat waves, a reduction in freshwater sources, aggravation of their residents' respiratory problems and more droughts and floods, resulting in property damage. ^[5] 

Rejecting the district court's determination that the suit presented non-justiciable political questions "impossible to decide without an initial policy determination of a kind clearly for nonjudicial discretion," the Second Circuit noted the plaintiffs had not asked the court to "fashion a comprehensive and far-reaching solution to global climate change, a task that arguably falls within the purview of the political branches." ^[6]  Moreover, the Court of Appeals stated that well-settled principles of common-law tort and public nuisance law will provide appropriate guidance to the district court in evaluating plaintiffs' claims on the merits. ^[7]  In addition to finding that the plaintiffs' claims did not run afoul of the "political question" doctrine, the Second Circuit also found that the plaintiffs had standing to bring their claims.  The court held that, to satisfy standing, the plaintiffs need not prove to a scientific certainty that defendants' emissions caused their alleged injuries, but rather it was sufficient that plaintiffs simply alleged that defendants' carbon dioxide emissions contributed to their injuries. ^[8]

Shortly after the Second Circuit's decision in Connecticut v. American Electric Power Co., the Fifth Circuit Court of Appeals issued a similar ruling in Comer v. Murphy Oil USA, ^[9] a case addressing private plaintiffs' claims that defendants' global warming-related activities increased the severity of a natural disaster, Hurricane Katrina.  In Comer, the Fifth Circuit overturned a Mississippi federal district court's ruling that plaintiffs lacked Article III standing to assert tort-based global warming claims for damages against a variety of corporate defendants.  The plaintiffs are residents and owners of land and personal property along the Mississippi Gulf Coast damaged by Hurricane Katrina.  As a result of this damage, plaintiffs brought public and private nuisance, trespass, negligence, unjust enrichment, fraudulent misrepresentation and civil conspiracy claims against oil, mining, energy and chemical companies.  Plaintiffs' claims rested primarily on the allegation that defendants' energy, fossil fuel and chemical manufacturing operations emitted greenhouse gases that contributed to global warming that, in turn, raised sea levels and water temperatures in the Gulf of Mexico.  Plaintiffs alleged that it was this rise in sea levels and water temperatures that increased the size and ferocity of Hurricane Katrina, which in turn caused the destruction of plaintiffs' private property, as well as public property useful to them. ^[10] 

Although the Court of Appeals determined that plaintiffs' unjust enrichment, fraudulent misrepresentation and civil conspiracy grievances were too generalized to satisfy constitutional and prudential standing requirements,^[11] the court held that the plaintiffs have standing to assert their public and private nuisance, trespass and negligence claims. ^[12]  Moreover, the court determined that none of these claims present non-justiciable political questions.

In ruling that the claims do not constitute political questions, the court noted that they do not "present any specific question that is exclusively committed by law to the discretion of the legislative or executive branch."^[13]  To satisfy the standing requirement, however, the plaintiffs needed to demonstrate that they suffered an "injury in fact"; that the injury was "fairly traceable" to the defendants' actions; and that the alleged injury would "likely . . . be redressed by a favorable decision." ^[14]  In addition to holding that plaintiffs' nuisance, trespass and negligence claims clearly satisfy the first and third requirements, the court held that the second requirement, the "fairly traceable" test, is met because plaintiffs' complaint, which relied upon scientific reports, links plaintiffs' injuries to defendants' contributions to global warming. ^[15]  The plaintiffs therefore pleaded sufficient facts to establish standing to pursue their claims.  Like the Second Circuit in American Electric Power, the Fifth Circuit emphasized in Comer that, at this threshold stage, the plaintiffs did not need to plead allegations sufficient (if proven) to conclusively demonstrate that defendants' conduct proximately caused their injuries.

This distinction is significant as it highlights the higher burden plaintiffs will later face in seeking to prove causation in order to sustain their tort claims.  Throughout the Second and Fifth Circuits' standing analyses, both courts stressed that the "fairly traceable" element of the test for standing purposes is not the same standard ultimately required for tort causation on the merits. ^[16]  In fact, the Comer court seemed to convey some skepticism as to whether the plaintiffs will be able to support their allegations at later stages in the litigation.  Judge Davis, in a special concurring opinion, stated that if it were up to him, he would have affirmed the district court's dismissal of the case on the alternative basis that plaintiffs failed to state a claim upon which relief could be granted under common law. ^[17]

Implications of American Electric Power Co. and Comer  

The American Electric Power and Comer decisions may signal a shift in the way in which the federal courts view tort-based global warming claims.  Prior to these decisions, most courts refused to reach the merits of analogous claims on the basis that they necessarily presented political questions. ^[18]  Perhaps the Second and Fifth Circuits' newfound willingness to consider tort-based global warming claims is derived from a perceived failure on the part of the legislative and executive branches to address the issue.  Indeed, this frustration seems to underlie the Second Circuit's American Electric Power opinion, which was issued after the appeals had been pending for almost four years.  The Second Circuit stated that just because "the Clean Air Act or other air pollution statutes, as they now exist, do not provide Plaintiffs with the remedy they seek does not mean that Plaintiffs' cannot bring an action and must wait for the political branches to craft a 'comprehensive' global solution to global warming." ^[19]

Although American Electric Power and Comer may indicate an increased willingness on the part of the federal courts to entertain global warming litigation, it is too early to project the decisions' significance.  In fact, just days before the Comer decision was released, the Northern District of California dismissed a climate change lawsuit on grounds that it raised a non-justiciable political question and the plaintiffs lacked standing.  In Village of Kivalina v. ExxonMobil Corp., ^[20] the court (Judge Saundra Brown Armstrong) expressly rejected the Second Circuit analysis set forth in American Electric Power.  The Kivalina court's determination that there are not "judicially discoverable and manageable standards" to apply to plaintiffs' claims reveals that some courts maintain serious reservations, in the absence of articulated statutory or regulatory standards against which to measure the defendants' allegedly wrongful conduct, regarding the viability of global warming-related liability lawsuits.  Furthermore, as the recent appellate decisions have made clear, plaintiffs undoubtedly still face the potentially insurmountable task of proving how and to what extent a particular corporation's contribution to global warming proximately caused a particular plaintiff's alleged injuries.

Nevertheless, with Kivalina likely to be appealed to the Ninth Circuit and American Electric Power and Comer already remanded to the district courts to deal on the merits with the causation issues that loom on the horizon, it is clear that corporations and their general liability insurers should be paying close attention to further developments in these cases.

Conclusion

Although two prominent "global warming" lawsuits that were previously dismissed have been resuscitated, at least for the moment, by recent decisions by the Second and Fifth Circuits, whether such lawsuits pose a serious risk of liability exposure for corporate defendants engaged in activities resulting in the emission of greenhouse gases and their liability insurers remains to be seen.

*Not admitted to the District of Columbia bar. Supervised by principals of the firm.

For more information, please contact Theodore A. Howard at 202.719.7120 or thoward@wileyrein.com and Jeremiah Galus at 202.719.7112 or jgalus@wileyrein.com.