Opinion analysis

Court revives federal appeal for oil and gas companies in climate-change case

The Supreme Court on Monday gave a major boost to a group of oil and gas companies that are seeking to stay out of state court and defend a lawsuit against them in federal court instead. By a vote of 7-1 (with Justice Samuel Alito not participating), the justices agreed with the companies – which include BP, Chevron and Exxon Mobil – that a federal appeals court had the power to review an entire order sending the case back to state court, rather than only one of the grounds on which the companies relied to move the case to federal court.

The case, BP PLC v. Mayor and City of Council of Baltimore, originated three years ago as a lawsuit by the city of Baltimore seeking to hold the companies responsible for their role in climate change. The city contends that the companies knew that the use of fossil fuels would lead to global warming but continued to produce and sell fossil fuel products anyway.

The Supreme Court did not weigh in on the merits of the city’s case. Instead, the fight before the court was over procedure. The city filed its case in a Maryland state court. But defendants, particularly out-of-state corporations, sometimes try to move lawsuits to federal court, especially if they believe that the judge or jury will be more favorable to them there or if they want to take advantage of federal rules. That is precisely what Chevron did in this case: It transferred the suit to a federal court in Maryland – a procedure known as “removal.” The city then asked the federal district court to send the case back to state court, and the district court agreed – a procedure known as “remand.” The companies appealed that ruling to the U.S. Court of Appeals for the 4th Circuit.

As a general rule, most orders sending a case back to state court cannot be appealed, but federal law carves out two narrow exceptions when the defendant relied on either a law known as the federal officer removal statute, which allows lawsuits against federal officials to be transferred to federal court, or a separate law allowing for the removal of civil rights cases. The companies had relied on the federal officer statute as one of eight grounds to transfer the case to federal court, arguing that the city was attempting to hold them responsible for work that they had done at the direction of federal officials.

The 4th Circuit ruled that it could review only whether removal was appropriate under the federal officer statute – which, it concluded, it was not. The 4th Circuit declined to hear the companies’ attempt to appeal the district court’s rejection of the other seven purported grounds for removal. The Supreme Court on Monday held that the 4th Circuit was mistaken. In a decision by Justice Neil Gorsuch, the court made clear that a federal appeals court can review the district court’s entire remand order when one of the grounds for removal is appealable.

The court rejected the city’s contention that allowing appeals of remand orders will delay litigation of the merits of a case. Congress has already created the possibility of delay by allowing appeals in cases removed pursuant to the federal officer statute and the civil rights statute, Gorsuch noted. But in any event, Gorsuch continued, “‘even the most formidable’ policy arguments cannot ‘overcome’ a clear statutory directive.” And if this is not the result that Congress wants, Gorsuch added, it is free to change the law.

The court did not give the companies everything they had hoped for. The court declined to consider the other grounds for removal that the companies had raised, instead sending the case back for the 4th Circuit to consider them for the first time.

Justice Sonia Sotomayor dissented. She complained that as a result of the court’s decision, the exception will “swallow the rule.” Defendants, she contended, will be able to “sidestep” the general bar on appellate review of remand orders by “shoehorning” an argument under the federal officer or civil rights statutes “into their case for removal.”

Alito, who has disclosed investments in two of the energy companies involved in the lawsuit, was recused from the case.

This article was originally published at Howe on the Court.