Description: Securities fraud class action against Exxon Mobil Corporation (Exxon) alleging that Exxon failed to disclose climate risks.
Ramirez v. Exxon Mobil Corp.
Filing Date Type File Action Taken Summary 09/11/2018 Motion Download Motion for reconsideration filed by defendants. Exxon Sought Reconsideration of Texas Federal Court’s Decision to Let Securities Fraud Case Proceed. Exxon Mobil Corporation filed a motion for reconsideration of a Texas federal district’s order that partially denied Exxon’s motion to dismiss a lawsuit brought by investors who alleged that Exxon and Exxon officials made material misstatements concerning the company’s use of proxy costs for carbon in business and investment decisions. Exxon argued that the court’s conclusion that the investors had adequately pleaded scienter was inconsistent with the Private Securities Litigation Reform Act of 1995 and Fifth Circuit precedents. Alternatively, Exxon requested that the court certify its order for interlocutory appeal. 08/14/2018 Memorandum Opinion and Order Download Motion to dismiss denied except with respect to Section 10(b) and Rule 10b-5 securities claim against one defendant. Texas Federal Court Allowed Securities Fraud Suit to Proceed Against Exxon. The federal district court for the Northern District of Texas found that investors in Exxon Mobil Corporation (Exxon) had sufficiently pleaded claims that Exxon and certain Exxon officials made material misstatements concerning the company’s use of proxy costs for carbon in business and investment decisions. Exxon argued that the investors’ allegations that it stated a different proxy cost in public statements than it used in internal calculations were based on the investors’ confusing of two separate proxy costs—one for carbon and one for greenhouse gases—as the same proxy cost. The court concluded, however, that “[w]hether the two differing proxy cost values represent two different costs or the same cost with different values applied internally than publicly purported to be applied is a factual dispute and cannot be determined at this motion to dismiss stage.” The court also noted that the complaint alleged that Exxon had indicated to investors that it used only one proxy cost across all business units. The court also found that the plaintiffs had alleged sufficient facts to plead other material misstatements related to the condition of certain specific businesses. The court further ruled that the plaintiffs had adequately pleaded loss causation and had met the heightened scienter standard for all defendants except for Exxon’s vice president of investor relations. The allegations supporting the court’s finding that the scienter standard was met included allegations that Exxon’s management committee regularly received detailed information on carbon-related risks and proxy costs, allegations that Exxon was particularly motivated to maintain its AAA credit rating in advance of a $12 billion public debt offering, and allegations that three of the defendants signed documents filed with the Securities and Exchange Commission that allegedly contained materially misleading information. 12/21/2017 Reply Download Reply filed by defendants in support of motion to dismiss. 11/21/2017 Response Download Response filed by lead plaintiff in opposition to defendants' motion to dismiss. Plaintiff Opposed Exxon’s Motion to Dismiss Securities Class Action. The lead plaintiff in a securities class action against Exxon Mobil Corporation (Exxon) filed its response in opposition to Exxon’s motion to dismiss. The lead plaintiff contended that Exxon had admitted to internal use for planning purposes of “a separate, undisclosed set of proxy costs” of carbon that was significantly lower than the proxy costs described in defendants’ representations to investors. The lead plaintiff argued that Exxon’s justification of the internal use of the separate set of costs raised factual questions that could not be resolved on a motion to dismiss. The lead plaintiff also asserted that Exxon’s explanations were “plainly inconsistent” with its representations. The lead plaintiff contended that the complaint alleged a strong inference of scienter “by alleging numerous particularized facts establishing that each of the defendants ‘knowingly or recklessly made statements to the market while aware of facts that, if not disclosed, would render those statements misleading,’” and that the complaint sufficiently alleged loss causation by alleging partial disclosures that revealed fraudulent conduct and the value of Exxon’s reserves and that caused significant declines in Exxon’s stock price. 11/21/2017 Response Download Response filed by lead plaintiff in opposition to defendants' motion to strike. 09/26/2017 Motion Download Motion filed by defendants to strike Wright declaration, Oleske affirmation, and allegations that rely on them. 09/26/2017 Motion to Dismiss Download Motion to dismiss filed. Exxon Asked Federal Court to Dismiss Securities Class Action. Exxon Mobil Corporation (Exxon) and four of its current and former officers moved to dismiss a federal securities class action in the federal district court for the Northern District of Texas in which the complaint alleged that the defendants made materially false and misleading statements regarding the value and amount of Exxon’s oil and gas reserves and regarding Exxon’s purported efforts to incorporate carbon or greenhouse gas proxy costs into the investment and valuation process for its oil and gas reserves. Exxon asserted that it had fully disclosed the risks of climate change to its business and that it had not misrepresented the methodologies it used to analyze those risks. Exxon said the complaint’s allegations “rest on confusing two distinct concepts”: first, “a proxy cost of carbon,” which Exxon said it used to represent the impact of climate change policies on future global demand and, second, a “greenhouse gas … costs,” which Exxon said it used to “to estimate its own expenses for its emissions of carbon dioxide or other greenhouse gases.” Exxon contended that the complaint’s allegations “establish only the unremarkable fact that ExxonMobil used two different numbers for two different purposes, all for the purpose of prudently taking account of climate-change risks.” Exxon also argued that the complaint did not adequately plead fraudulent intent or loss causation. 09/26/2017 Reply Download Reply filed by defendants in support of motion to direct lead plaintiff to publish new notice under the PSLRA to new proposed class. 07/26/2017 Complaint Download Consolidated complaint filed. Consolidated Complaint Filed in Securities Class Action Against Exxon. On July 26, 2017, the lead plaintiff in a federal securities class action against Exxon Mobil Corporation (Exxon) and four Exxon officers filed a 186-page consolidated complaint. The consolidated complaint alleged that Exxon was a “company with a well-documented history of intentionally misleading the general and investing public with regard to the science concerning global climate change and its connection to fossil fuel usage, as well as the impact the changing climate is likely to have on Exxon’s reserve values and long-term business prospects.” The proposed class includes persons who acquired Exxon’s publicly traded common stock between March 31, 2014 and January 30, 2017. The consolidated complaint alleged that the defendants made materially false and misleading statements regarding the value and amount of Exxon’s oil and gas reserves and regarding Exxon’s purported efforts to incorporate carbon or greenhouse gas proxy costs into the investment and valuation process for its oil and gas reserves. 06/06/2017 Stipulation Download Joint stipulation and order entered regarding schedule for consolidated complaint and defendants' response thereto. 11/07/2016 Complaint Download Class action complaint filed. Exxon Investor Filed Securities Class Action for Failure to Disclose Climate Risks. A man who invested in Exxon stock during 2016 filed a securities fraud class action against Exxon and three Exxon officers in the federal court for the Northern District of Texas. The action was filed on behalf of purchasers of Exxon common stock between February 19, 2016 and October 27, 2016. The complaint alleged that Exxon’s public statements during that period were materially false and misleading because they 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. The complaint alleged that as a result of positive statements Exxon made during the class period, the common stock price was artificially inflated, and that Exxon’s release of its third quarter financial results on October 28, 2016, in which it disclosed it might have to write down 20% of its oil and gas assets, resulted in the stock price falling by more than $2 per share.