Exxon lawsuit over activist investor’s climate proposal dismissed
A federal judge in Texas on Monday dismissed a lawsuit Exxon Mobil filed against an activist investor, Arjuna Capital, over a shareholder proposal calling for cuts to the oil giant’s greenhouse gas emissions.
Judge Mark T. Pittman of the U.S. District Court for the Northern District of Texas ruled that Exxon’s claim was irrelevant because Arjuna had withdrawn his proposal and vowed not to submit similar proposals.
“The trend of shareholder activism in this country is not going anywhere,” Judge Pittman wrote, but he added that “the court cannot give Exxon notice of its rights absent a concrete case or controversy that triggers jurisdiction.”
Exxon sued Arjuna and another investor, Follow This, in January to prevent their non-binding resolution from being put to a shareholder vote. A month earlier, Arjuna had filed a proposed resolution calling on Exxon to accelerate its plans to reduce its carbon emissions “and to outline new plans, goals and timelines,” according to Exxon’s complaint. Follow This then joined the support, the complaint said.
In the complaint, Exxon stated that the proposal “is not intended to improve ExxonMobil’s economic performance or create shareholder value.”
“Defendants’ overarching goal is to force Exxon Mobil to change the nature of its ordinary activities or go out of business entirely,” the company said.
Judge Pittman dismissed Netherlands-based Follow This from the lawsuit in May, but allowed the case against Arjuna to proceed.
Arjuna withdrew the motion and moved to dismiss the lawsuit, which the judge denied “because withdrawal of the motion does not preclude similar conduct in the future.” Arjuna then promised not to make similar motions, saying his promise “precludes even the remotest possibility of another motion” regarding Exxon’s carbon emissions.
Judge Pittman’s ruling followed a hearing held Monday to determine whether Arjuna’s promise rendered Exxon’s complaint moot.
“Our lawsuit has highlighted the widespread abuse of the shareholder proxy filing process,” Exxon Chairman and CEO Darren Woods said in a statement about the decision. “Putting forward repeated proposals that receive a small minority of support serves no one’s interests except those of the proponent.”
In her own statement, Natasha Lamb, Arjuna’s chief investment officer, praised the court’s ruling as “the right result.”
“Climate change presents real headwinds for the oil and gas industry, and deflection will not change that simple fact,” she said. “Investors understand these risks and expect their companies to engage with them on considered approaches to risk mitigation, not litigation.”
Alain Delaqueriere contributed to research.
