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Hoboken brings RICO charges against Big Oil
In a first for climate accountability lawsuits, Hoboken, New Jersey, is charging fossil fuel companies with violating state racketeering laws.
Emily Sanders is the Center for Climate Integrity’s editorial lead. Catch up with her on Twitter here.
The U.S. Supreme Court rejected Big Oil once again on Monday by allowing two more climate accountability lawsuits — from Delaware and Hoboken, New Jersey — to continue moving toward trial in state courts.
Delaware, the lowest-lying state in the nation, and Hoboken, which sits on the Hudson River across from New York City, each filed lawsuits against Exxon, Chevron, Shell, BP, and other oil majors, as well as the American Petroleum Institute (API), in 2020 to hold them accountable under local consumer fraud laws and make them pay for the rising costs to protect residents from flooding, superstorms, and other climate damages.
But now, Hoboken’s case also charges the polluters with violating New Jersey’s Racketeering Influenced Corrupt Organizations Act, better known as RICO.
Hoboken recently amended its complaint to charge major fossil fuel companies with conspiring to defraud the public about the harms they knew their products would cause.
Last year, 16 municipalities in Puerto Rico brought the first climate racketeering lawsuit against Big Oil under the federal RICO law. Now, Hoboken’s lawsuit is the first to charge oil giants with violating a state’s racketeering laws by coordinating to spread climate disinformation.
Here’s what you need to know about the city’s latest legal argument:
Hoboken says fossil fuel companies united behind trade associations and front groups to perpetuate a “fraudulent scheme to deceive the public about the link between fossil fuels and climate change.”
Under New Jersey’s RICO law, it is illegal “to maintain, directly or indirectly, any interest or control of an enterprise which is engaged in activities of which affect trade or commerce."
Hoboken’s complaint argues that that’s exactly what the executives of fossil fuel companies did, and are still doing today, through their participation in and control over the decades-long climate deception campaign coordinated through the American Petroleum Institute, the largest oil and gas trade association.
Senior executives at the oil companies charged in Hoboken’s lawsuit were API board members, sat on its executives committees, and funded the association with tens of millions of dollars every year, all while helping them to “craft and disseminate misleading messaging regarding climate change,” the complaint reads. Rather than compete to sell their products, the companies banded together under a collective goal: to continue marketing fossil fuels for as long as possible and delay climate action “without being held accountable for the damage and destruction they have caused, and are continuing to cause, the City of Hoboken and countless places like it.”
API’s knowledge of climate change dates back to the 1960s, when the association formed task forces and committees to study the consequences of burning fossil fuels. But instead of disclosing what they learned to the public, API formed the so-called “Global Climate Science Communications Team” (GCSCT) in 1998 — a group whose members included Exxon, Chevron, and other fossil fuel defendants in Hoboken’s case, but not a single actual scientist. Its mission, according to an internal “Action Plan” that fossil fuel executives contributed to, was to ensure that “[a] majority of the American public, including industry leadership, recognizes that significant uncertainties exist in climate science, and therefore raises questions among those (e.g. Congress) who chart the future U.S. course on global climate change.”
The fossil fuel defendants also conspired with API in 1989 to create the “Global Climate Coalition,” another deceptively-named front group that worked to publish advertisements, op-eds in major media outlets, and industry-backed publications denying climate science and claiming that climate action would be harmful and unnecessary. Executives from Exxon, Chevron, ConocoPhillips, and API all served on the GCC’s Board of Directors.
Hoboken’s complaint notes that while the GCC disbanded in 2002, API continues to spend millions funding front groups that downplay the role of fossil fuels in causing climate change. The trade association — whose board has been chaired solely by fossil fuel company executives for the last seven years — and the companies themselves have now evolved their deceptive efforts to convince the public that Big Oil is working on climate solutions.
“The acts of racketeering are an ongoing part of Defendants’ regular way of doing business,” the complaint reads.
Hoboken’s case shines a light on Big Oil’s conspiracy to defraud the public.
While journalistic, congressional, and academic investigations have helped inform the public about companies’ individual efforts to spread climate disinformation, Hoboken’s case helps to illuminate how companies worked together through API and the GCC to rig the market in favor of fossil fuels.
Center for Climate Integrity (CCI) Vice President Alyssa Johl pointed out that “we know that these defendants have engaged in campaigns of deception, denial, and disinformation, but this is the first time a state lawsuit has articulated the ways in which they did that through coordinated action.” [Note: ExxonKnews is a project of CCI.]
“This was all part of [the companies’] blueprint and strategy for selling deception to the American public and consumers,” Johl said.
Big Oil used Big Tobacco’s playbook — now they could face a similar reckoning.
As underscored in Hoboken’s complaint, API hired some of the same people that ran Big Tobacco’s campaigns of deception to advise them on the spread of climate disinformation.
“Whether we’re talking about the tobacco industry or the fossil fuel industry, they acted in concert with one another to sell disinformation and denial,” Johl said. “That narrative is one in the same — they knew, they lied, and they need to be held accountable for their fraud and deception.”
The idea has been around for a while. In a 2015 speech, Senator Sheldon Whitehouse pointed out that tobacco companies were found guilty of engaging in a racketeering enterprise for the same coordinated deception as fossil fuel companies have carried out.
“The fossil fuel industry is using a familiar playbook, one perfected by the tobacco industry,” said Whitehouse. “But the government has a playbook too. It’s called RICO.”
While a RICO case against Big Oil hasn’t (yet) been brought by the federal government, even state-level racketeering cases bring significantly more risk against fossil fuel companies — both from a financial perspective, since New Jersey can triple the damages awarded to plaintiffs under RICO judgments, and the reputational damage that would come with public exposure of their coordinated attempts to defraud the public.
“It adds more weight and more risk, and the exposure for the defendants has increased,” said Pat Parenteau, a professor at Vermont Law School’s Environmental Law Center. Take Shell, for example, he said. “Shell is really trying to portray itself as being a leader in moving away from dirty energy. A judgment of liability that they were engaged in a racketeering enterprise is bound to do extreme reputational damage to their brand.”
A growing legal theory for climate accountability?
Thirty three states and two U.S. territories have their own RICO statutes, so it’s possible that Hoboken’s case could set a template for others to follow.
“I see this as a really cutting edge theory that’s probably going to be replicated in future lawsuits,” said Johl. “We know that a number of states have really strong state RICO statutes and it’s a powerful tool in their toolkit to go after fraudulent activity that was orchestrated over half a century.”
Parenteau predicts that if Puerto Rico or Hoboken’s cases move past motions to dismiss, we’ll likely see amended complaints including racketeering and fraud violations in other cases. In the meantime, the wave of lawsuits continues to move forward.
“I’ve gotta believe that in the advice that private lawyers are giving these companies, they are communicating that the risks here are real, and that it’s probably only a matter of time before there’s a major verdict against one or more of these companies,” Parenteau said. “There’s [more than 20] of these cases now in motion, and they’re all back in state court, and they’re gonna stay there. Sooner or later one of them is going to break through.”
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