Description: Class action lawsuit on behalf of Exxon Mobil Corporation (Exxon) employees alleging that Exxon defendants' failure to disclose climate change information violated fiduciary duties under Employee Retirement Income Security Act.
Fentress v. Exxon Mobil Corp.
Filing Date Type File Action Taken Summary 02/04/2019 Order Download Second amended complaint dismissed. Federal Court Again Dismissed ERISA Action Alleging Breach of Fiduciary Duties by Exxon Officers. The federal district court for the Southern District of Texas again dismissed a class action lawsuit brought under the Employee Retirement Income Security Act (ERISA) by Exxon Mobil Corporation (Exxon) employees who participated in an Exxon Mobil Savings Plan and who were invested in Exxon stock between November 1, 2015 and November 1, 2016. The plaintiffs alleged that defendants—senior corporate officers who were fiduciaries of the Savings Plan—knew or should have known that the value of Exxon’s stock had become artificially inflated due to fraud and misrepresentation, making it an imprudent investment. The plaintiffs asserted that Exxon’s public statements were materially false and misleading because they failed to disclose that Exxon reserves had become impaired due to, among other factors, the proxy cost of carbon. In their second amended complaint, the plaintiffs alleged that the defendants should have sought out those responsible for Exxon’s securities disclosures to persuade them to refrain from making affirmative misrepresentations. The district court found that the second amended complaint still failed to meet the very high pleading standards for a claim under ERISA of failure to prudently manage the Savings Plan’s assets. The court found that it could not say that “attempting to prevent Exxon’s alleged misrepresentations would have been ‘so clearly beneficial that a prudent fiduciary could not conclude that it would be more likely to harm the fund than to help it.’” The court distinguished a recent Second Circuit opinion that found that a plan’s fiduciaries could not have concluded that a corrective disclosure would do more harm than good. In Exxon’s case, the district court said Fifth Circuit precedent precluded the plaintiffs’ argument that the alleged fraud would become more damaging over time. The court also said that eventual disclosure was not inevitable despite investigations into Exxon by state attorneys general and the Securities and Exchange Commission. 03/30/2018 Memorandum Download Motion to dismiss granted. Texas Federal Court Dismissed ERISA Class Action Lawsuit Against Exxon That Alleged Breaches of Fiduciary Duties Related to Climate Disclosures. The federal district court for the Southern District of Texas dismissed a class action lawsuit alleging that Exxon Mobil Corporation (Exxon) and certain senior Exxon officials breached fiduciary duties under the Employee Retirement Income Security Act (ERISA) by making materially false and misleading statements that failed to disclose known climate change risks. The court said the plaintiffs failed to state a “duty of prudence” claim because of shortcomings in the plaintiffs’ allegations that the defendants had insider information and should have known that the market price was based on materially false or misleading information. For instance, while Exxon’s “decades-long misinformation campaign about the causes and effects of climate change should not be understated,” the amended complaint provided no basis for believing that risks posed by climate change were not incorporated into Exxon’s stock price. The court also said the plaintiffs had not alleged facts to show why the price of carbon used by Exxon was a misrepresentation or did not account for the regulatory landscape. In addition, the court found that even if there were sufficient allegations that the defendants knew the company’s hydrocarbon reserves were overvalued before they wrote them down, the plaintiffs had not plausibly alleged alternative actions the defendants could have taken to benefit the retirement funds. 06/05/2017 Opposition Download Memorandum filed by plaintiffs in opposition to motion to dismiss. 04/04/2017 Motion to Dismiss Download Motion to dismiss filed. Exxon Filed Motion to Dismiss ERISA Class Action. Exxon Mobil Corporation and individual defendants (Exxon) filed a motion to dismiss a class action brought under the Employee Retirement Income Security Act (ERISA) on behalf of participants in an Exxon retirement savings plan. The complaint asserted that the defendants violated their fiduciary duties by investing in Exxon stock when they knew the stock price was artificially inflated because Exxon had failed to make disclosures concerning climate change risks. In the motion to dismiss, Exxon asserted that the complaint did not satisfy the “exacting” pleading standard and did not plausibly allege either the existence of material information that Exxon misrepresented or improperly failed to disclose or that the individual defendants knew nonpublic information about Exxon’s assets. Exxon also said that the complaint did not sufficiently allege a claim that the company failed to monitor the individual defendants. 02/03/2017 Complaint Download Amended complaint filed. 11/23/2016 Complaint Download Class action complaint filed. Former Exxon Employee Filed Class Action Alleging Company and Officers Breached Fiduciary Duties to Retirement Plan Investors. A former employee of Exxon Mobil Corporation filed a class action lawsuit on behalf of himself and other current and former Exxon employees who participated in an Exxon retirement savings plan and invested in Exxon stock between November 1, 2015 and October 28, 2016. The complaint asserted claims under the Employee Retirement Income Security Act (ERISA) that Exxon and senior Exxon officials breached their fiduciary duties to participants in the Plan because they knew or should have known that Exxon’s stock price was artificially inflated, making it an imprudent investment. The complaint alleged that the stock price was artificially inflated because Exxon failed to disclose that internally generated reports concerning climate change recognized the environmental risks caused by global warming and climate change; that due to risk associated with climate change Exxon would not be able to extract existing hydrocarbon reserves it claimed to have; and that Exxon had used an inaccurate price of carbon to calculate the value of certain oil and gas prospects.