In Climate Change Risk Management Lawsuits, Kai Alderson, Fasken Martineau, and Stephen Higgs, of Perkins Coie, write that public companies face exposure to legal liability for investor losses blamed on failure to anticipate or disclose climate change risks.
Plaintiffs have brought lawsuits alleging that a company’s GHG emissions contributed to extreme weather events like Hurricane Katrina, which directly or indirectly resulted in property damage or bodily injury. Claimants rely on the common-law nuisance theory that the GHG emissions are a “public nuisance” causing property damage or injury. Companies whose operations emit large amounts of GHG, e.g., fossil-fuel-based energy companies, investor-owned utilities, power generators and large industrial facilities, may be particularly exposed to multiple large claims and may have to bear defense costs, including defense of potential class actions, even against claims that ultimately fail.
Some lower courts have dismissed such cases because plaintiffs lacked “standing” to sue or because their claims raised “political” questions unsuited to judicial resolution. However, the Second Circuit Court of Appeals reversed a lower court’s dismissal of one such suit in Connecticut v. American Electric Power, finding it appropriate for district court consideration. It is possible more of these cases will be brought, particularly as long as no comprehensive federal climate change legislation exists.
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