California Climate Lawsuit Bill Is Constitutionally Flawed

Capitol Weekly published version posted here

By Kyla Christofferson Powell

At the end of January, in response to the devastating Los Angeles wildfires, California State Sen. Scott Wiener, D-San Francisco, introduced a bill in the California Legislature that proposes to remedy the harms caused by fires, floods, earthquakes, hurricanes, tsunamis and other climate disasters with lawsuits against oil and gas producers.

S.B. 222 would create a new way to sue, based on allegations that oil and gas producers provided misinformation about climate change at any time in the past, without any requirement to show that the misinformation caused the harm. But the bill’s flaws — including its vagueness, its retroactivity and its singling out of one industry for liability — make it unsuitable for consideration by the Legislature.

The premise of S.B. 222 is that lawsuits by private citizens and subrogation actions by private insurers will recoup losses from climate disasters. As a bonus, the bill requires the California Fair Plan, the state’s insurer of last resort, to bring subrogation actions that will supposedly provide a major infusion of financial resources that will save the plan from insolvency.

Even if the bill were enacted, it would be many months, if not years, before claimants would receive any proceeds. And the bill would not guarantee full recovery of losses. Lawsuits can be poor vehicles for compensating injured parties, because attorney fees and litigation costs take a big bite of any proceeds.

For example, a 2022 study by the U.S. Chamber of Commerce Institute for Legal Reform found that compensation to claimants in tort lawsuits only represents 53% of total expenditures in the tort system.[1]

But even if S.B. 222 could eliminate litigation delay and ensure that all the proceeds from the lawsuits it authorizes go to those who suffered losses, it would still be a bad bill, because it violates well-established constitutional principles.

S.B. 222 is too vague to be enforced.

The bill would make oil and gas producers liable for statements about climate change, no matter when they were made, if they are determined by a fact-finder to be misleading or deceptive.

But as the U.S. Supreme Court asserted in FCC v. Fox TV Stations Inc. in 2012, quoting its decision in U.S. v. Williams from 2008, the imposition of a penalty does not comply with due process “if the statute or regulation under which it is obtained ‘fails to provide a person of ordinary intelligence fair notice of what is prohibited, or is so standardless that it authorizes or encourages seriously discriminatory enforcement.’”

Since S.B. 222 would impose liability based on the content of speech, the vague language the bill uses to describe the prohibited conduct would have a chilling effect on free speech, thus raising First Amendment concerns. But no matter what test of vagueness is applied, it is too vague to be enforced.

S.B. 222 does not inform those who may be subject to its provisions what statements would be considered misleading or deceptive. It does not provide a time frame for assessing accuracy. What might be considered misleading today would not necessarily have been considered misleading 30, 40 or 50 years ago.

The bill also threatens to punish vigorous and legitimate political advocacy, even though such advocacy is at the core of the First Amendment. As the Supreme Court stated in Mills v. Alabama in 1966, “[w]hatever differences may exist about interpretations of the First Amendment, there is practically universal agreement that a major purpose of that Amendment was to protect the free discussion of governmental affairs.” 

That guarantee of free speech, as the court said in New York Times Co. v. Sullivan in 1964, reflects “a profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open.”

Former Justice Oliver Wendell Holmes articulated the concept in 1919, in his dissent in Abrams v. U.S.:

But when men have realized that time has upset many fighting faiths, they may come to believe even more than they believe the very foundations of their own conduct that the ultimate good desired is better reached by free trade in ideas — that the best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out. That at any rate is the theory of our Constitution. It is an experiment, as all life is an experiment. Every year if not every day we have to wager our salvation upon some prophecy based upon imperfect knowledge. While that experiment is part of our system I think that we should be eternally vigilant against attempts to check the expression of opinions that we loathe and believe to be fraught with death, unless they so imminently threaten immediate interference with the lawful and pressing purposes of the law that an immediate check is required to save the country.

S.B. 222 would unconstitutionally impose billions of dollars of retroactive liability.

The bill would operate retroactively, by imposing billions of dollars of liability on oil and gas companies for statements made years ago when no one could have predicted that such a law would come into existence. Although laws may operate retroactively in some circumstances, there is a presumption against such an effect.

In its 1994 decision in Landgraf v. Usi Film Products, the Supreme Court noted that this presumption “is deeply rooted in our jurisprudence, and embodies a legal doctrine centuries older than our Republic. Elementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly; settled expectations should not be lightly disrupted.” 

The presumption against retroactive provisions is so strong that, as the court said in Eastern Enterprises v. Apfel in 1998, its decisions “have left open the possibility that legislation might be unconstitutional if it imposes severe retroactive liability on a limited class of parties that could not have anticipated the liability, and the extent of that liability is substantially disproportionate to the parties’ experience.” 

S.B. 222 presents just such a case. It imposes severe retroactive liability (billions of dollars in damages) on a limited class of persons (oil and gas producers) that could not have anticipated the liability. And the liability that S.B. 222 imposes is disproportionate, because it does not take into account the many other actors that contribute to climate change.

These include the millions of people who drive vehicles with internal combustion engines; the farmers whose cattle produce billions of pounds of methane each year; producers of coal, which is a fossil fuel just like oil and gas;[2] and the electric power sector, which accounts for 25% of greenhouse gas emissions.[3]

Although a defendant could ordinarily avoid being on the hook for the full amount of a plaintiff’s damages through principles of apportionment of fault (for noneconomic damages) or by pursuing equitable indemnification against joint tortfeasors (for all damages), that would not be possible for defendants in an S.B. 222 lawsuit.

Since the bill makes each defendant jointly, severally and strictly liable, they could individually or collectively be required to pay 100% of the damages — even if other actors who are not subject to S.B. 222 are partially or even mostly responsible. Only those companies arbitrarily targeted in S.B. 222 would be left holding the bag for all the losses.

S.B. 222 violates the equal protection clause by singling out oil and gas producers for all damage caused by climate disasters.

The Fourteenth Amendment bars a state from denying any person within its jurisdiction “the equal protection of the laws.” That means that a state must have at least a rational basis for treating two similarly situated persons differently.

In Hillsborough v. Cromwell, the Supreme Court stated in 1946 that when applied to state taxation rules, the equal protection clause “protects the individual from state action which selects him out for discriminatory treatment by subjecting him to taxes not imposed on others of the same class.”

And in Minnesota v. Clover Leaf Creamery Co., the court asserted in 1981 that to survive an equal protection challenge, the state must identify a statutory purpose that is “rationally related” to its enactment. 

The stated purpose of S.B. 222 is to provide individuals, insurers and the California Fair Plan with compensation for losses caused by climate disasters. The bill’s proponents have not provided any reason for targeting oil and gas producers to provide that compensation, while ignoring other actors who are similarly situated under the proponents’ rationale for imposing liability.

Coal producers are the most glaring omission. Although the common understanding of fossil fuel includes coal,[4] S.B. 222 defines the term to include just about everything except coal.[5] Because the bill provides no explanation, let alone a rational one, for that exemption, it should not survive equal protection scrutiny.

Conclusion

Although S.B. 222 promises compensation for losses suffered because of climate disasters, the promise is empty.

Even if the bill could ensure that those who suffer losses will receive all the compensation generated by the lawsuits it spawns, the targeting of oil and gas companies to the exclusion of all other actors who have contributed to climate change, combined with its imposition of liability without proof of causation, almost certainly guarantees that it cannot be enforced.

The Legislature should reject S.B. 222, and instead look for real solutions to help wildfire survivors.

Kyla Christoffersen Powell is the president and CEO of the Civil Justice Association of California.