Last year then-acting New York Attorney General Barbara Underwood filed a suit alleging the company misled investors by using accounting subterfuge to underestimate the impact of regulatory costs on future profits. The New York Times predicted the case would be a “numbingly complex” trek through the inexact science of calculating energy regulatory costs. However, the suit is not about corporate bookkeeping. It is the latest tactic in a concerted multi-year effort to use climate change as a club to bludgeon the company.
But the litigation campaign against ExxonMobil has repeatedly faltered and likely will again with this latest suit. The legal action invokes the 1921 Martin Act, which took aim at certain kinds of stock-sale operations of the era. The law gives prosecutors wide latitude in charging fraud and even spares them the trouble of proving bad intent in civil cases. The Martin Act has been a favorite for attorneys general eager to make names for themselves.
Underwood’s predecessor, Eric Schneiderman, who was forced out over domestic violence allegations, invoked the Martin Act when announcing an investigation of ExxonMobil for supposed climate-change misdeeds back in 2015. Schneiderman’s allegation that the company spent decades concealing what it knew about climate change collapsed under the weight of documents that Exxon produced which showed otherwise, forcing the AG’s office to pivot to alternative legal theories.