LAW:

Landmark 2nd Circuit ruling may open gates for climate cases

Climate change lawsuits gained new urgency for environmentalists and industry groups alike last week when a federal appeals court issued a ruling that both sides see as a potential game changer.

In that case, Connecticut v. AEP, the 2nd U.S. Circuit Court of Appeals' panel sided with a coalition of eight states, New York City and environmental groups that had filed a public nuisance lawsuit against the nation's largest coal-burning utilities (Greenwire, Sept. 21).

"A lot of observers thought that this kind of litigation was dead or nearly dead in the wake of some of the district court rulings that proceeded this case," said Bruce Myers, a senior attorney with the Environmental Law Institute. "But you've got a very respected circuit court coming forward with a panel of two [judges] appointed by conservative presidents saying, 'No, in effect, this kind of litigation can proceed.'"

Environmentalists hailed the decision, which created a new judicial remedy, holding greenhouse gas emitters responsible for causing a "public nuisance" in the form of global warming.

"This is the first global warming tort case and, since 2005, when it was dismissed, we were losing. Now we're winning," said Matthew Pawa, a Massachusetts-based attorney who helped file the lawsuit on behalf of the Open Space Institute and Audubon Society of New Hampshire. "Plus, the 2nd Circuit is a very well-respected court. Our 2005 dismissal was repeatedly flaunted by industry as evidence that global warming cannot be litigated as a tort. Now it is clear that global warming can be litigated as a tort. That's a game changer even though the court was just applying well-established law."

The ruling also increased pressure from all sides for Congress and the Obama administration to act.

"Environmental groups have been saying we're happy with this ruling because it legalizes what we've been saying all along, but the best way to approach this is on an overarching basis through legislation," said Steve Jones, chairman of Marten Law Group's litigation department. "No court is going to issue an economywide cap-and-trade rule. That's going to come through Congress."

For their part, industry groups view congressional action as a "least bad" solution, UCLA law professor Jonathan Zasloff said.

"This holding is potentially significant, because it can put polluters in a real bind," Zasloff said. "Their normal strategy is to tie up new regulations in the courts for several years -- maybe until they can get a more friendly administration. But now, the Second Circuit has told them that the only way to get rid of the public nuisance lawsuit is to let those regulations go into effect. The judges have told the power companies to choose their poison."

The decision may have already spurred the other branches of government to action.

"The judiciary is now saying that if Congress and the White House don't do something, we will. This has really jump-started action in both the executive and legislative branches," Jones said. "Congress hasn't finished its work, but EPA is a lot further down the path. The day after the appeals court decision, EPA proceeded with its mandatory greenhouse gas reporting rule. This is very significant."

Regardless of congressional or executive decisions on climate change, environmental attorneys suggest the court's decision will almost certainly bring additional public-nuisance lawsuits.

"This is the first time this kind of cause of action has been recognized," Jones said. "This really opens the door for a lot of potential claims to be brought by other kinds of plaintiffs. You're a coastal community, you spend money to adapt and you've got to raise your waterfront and put in extra infrastructure to deal with rising sea levels. You'd have a claim under this ruling."

The possibility of multiplying nuisance lawsuits is of chief concern to opponents of the court's ruling.

"Unfortunately, the [appeals court's] decision to allow public-nuisance claims to proceed against businesses for their contributions to global warming may be just the break the trial lawyers need to press ahead with their liability-expanding crusade," said Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform.

"If this decision is allowed to reverse the judicial trend, it will help further line the pockets of trial lawyers, but it will come at the expense of virtually every U.S. consumer and employer."

Appeal expected

Court watchers expect the electric utilities in the case to appeal the 2nd Circuit ruling. Attorneys for the power companies declined to specify their legal strategy, but they have until Nov. 5 to seek a rehearing by the full appeals court.

They could also petition for Supreme Court review.

"The more conservative bloc on the court has been very interested in standing issues -- which plaintiffs can bring suit -- for some time, and it's quite possible that the justices will have something to say about the way the 2nd Circuit dealt with this," Myers said.

It is far from certain, however, that the justices will agree to take up a decision from a two-judge panel on a lone circuit court, Jones said.

"This was the first decision of its kind in the federal appellate courts, so there's no conflict currently warranting review," Jones said. "If you had another circuit that went the other way, you would likely see the justices weigh in to resolve the split."

At least two similar cases are making their way through the legal system, and their outcomes could determine whether the high court decides to weigh in on the issue.

One case to watch is pending review before the 5th U.S. Circuit Court of Appeals in New Orleans, according to Gilbert Keteltas, co-chairman of Howrey LLP's environmental, product and tort practice.

"Are we going to see a split at the appellate level?" Keteltas said. "The timing of this new case will be interesting."

In Comer v. Murphy Oil Co., 14 individuals filed a class-action lawsuit against insurance, oil, coal and chemical companies, seeking relief for property damages resulting from Hurricane Katrina.

The plaintiffs allege that the defendants' emissions contributed to climate change and thus magnified adverse weather events, including Hurricane Katrina. The district court dismissed the case on constitutional standing and political question grounds, and it now goes before the 5th Circuit.

Another potential case that has generated widespread interest is currently before the California Northern District Court, according to Emily Huggins Jones of Thompson Hine LLP.

"This case turns on the same question as Connecticut, and it will be interesting to see how the 9th Circuit responds," she said.

In Village of Kivalina v. Exxon Mobil, an Alaskan coastal town filed a lawsuit in February 2008 against 20 oil, coal and electric utility companies for nuisance and conspiracy, alleging that the companies' greenhouse gas emissions have caused thinning Arctic sea ice and storm surges, and seeking $400 million in damages to relocate the entire village.

"As the district court is sitting and looking at that case, how can it not examine a 139-page decision out of the 2nd Circuit on the same issue? You just have to," Myers said. "The other circuits are not bound by what the 2nd Circuit did -- but in terms of persuasive authority, this is pretty powerful. As a matter of good jurisprudence, they'll have to explain if they decide to ignore or disagree with it."

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