The verdict, which capped a nearly three-week civil trial between Exxon and the New York attorney general’s office, is a victory for the company, which had spent several years fighting the case. The company is also battling similar accusations in other state and federal courts.
In his 55-page ruling, New York State Supreme Court Justice Barry Ostrager said the attorney general’s office had failed to prove the company violated either the Martin Act, a broad antifraud statute commonly used to pursue financial crime, or other similar laws.
“The Office of the Attorney General failed to prove, by a preponderance of the evidence, that ExxonMobil made any material misstatements or omissions about its practices and procedures that misled any reasonable investor,” Justice Ostrager wrote.
Still, he noted the case was a securities-fraud one, and his ruling only revolved around that issue. “Nothing in this opinion is intended to absolve ExxonMobil from responsibility for contributing to climate change through the emission of greenhouse gases in the production of its fossil fuel products,” the judge wrote.
During the trial, the office of Attorney General Letitia James, a Democrat, accused the company of using two different accounting methods—one public, and one internal—to project its business costs in countries that were expected to implement policies to combat climate change. How the company planned for these costs mattered to investors, the office said, since it would impact the future health of the company.
The attorney general had estimated the damage to shareholders to be as much as $1.6 billion.
Lawyers for Exxon said the company had done nothing wrong. A reasonable investor wouldn’t expect to know such internal calculations, the company said. It had also accused the attorney general’s office of being motivated by politics in bringing the case.
A spokesman for Exxon said the ruling affirmed the company position that it had provided investors with accurate information. “The court agreed that the Attorney General failed to make a case, even with the extremely low threshold of the Martin Act in its favor,” the spokesman said.
A spokesman for the attorney general didn’t immediately comment on the ruling.
During the trial’s closing arguments, the attorney general’s office dropped two of the four fraud counts from its case. Lawyers for Exxon argued the office shouldn’t be allowed to drop those counts, saying the company deserved a ruling.
Justice Ostrager said because he found the attorney general hadn’t proved the Martin Act-related counts, his ruling also established the company wasn’t liable on the other fraud counts, which carry a higher burden of proof.
In addition to the New York case, Exxon faces a lawsuit from the Massachusetts attorney general’s office, which has accused the company of deceiving investors about climate-change costs, similar to the allegations in New York. The Massachusetts suit also accuses Exxon of violating a state consumer-protection law by conducting a deceptive marketing campaign.
Both the New York and Massachusetts cases, which were filed in state courts, allege the company broke state laws.
The company also faces shareholder lawsuits in federal courts in Texas and New Jersey that allege violations of federal securities law and accuse the company of deceiving investors.
In all those cases, Exxon has denied wrongdoing.