Fifth Circuit Dismisses Comer v. Murphy Oil — A Victory for Industry In Climate Change Tort Litigation?

   By Douglas A. Henderson, Partner, Troutman Sanders LLP

On May 28, 2010, in a startling decision in perhaps the most important and certainly the most topsy-turvy climate change tort case against the utility, chemical, and oil and gas industry, the United States Court of Appeals for the Fifth Circuit handed industry a victory by dismissing the appeal in Comer v. Murphy Oil. The decision follows a complex procedural path: a favorable district court decision for industry dismissing the case, a decision of a three-judge panel of the Fifth Circuit handing the plaintiffs a victory by reversing that dismissal, and an order of the full court en banc vacating that reversal and ordering further briefing and oral argument before the full court.

In April, however, the Court lost its quorum to decide the case after a last-minute recusal by an eighth judge on the 16-judge court created uncertainty on whether the Court could consider the appeal further.  Last Friday, the Court resolved that uncertainty by ruling the vacatur of the three-judge panel decision remains in place, but the loss of the quorum left the Court with no choice but to dismiss the appeal.

The continued vacatur of three-judge panel’s decision is the remarkable win for industry.  It means the district court’s decision—which held that property owners did not have standing to sue for climate change and that climate change was a “political question” for Congress—stands as good law.  For now, in the Fifth Circuit at least, property owners are not permitted to seek state-law tort damages for industrial emissions of carbon dioxide.

Background: The Tort Claims in Comer v. Murphy Oil

In Comer, plaintiffs filed a putative class action against a wide range of energy, fossil fuel, and chemical companies, claiming they (a) generated greenhouse gases (b) which caused global warming, (c) which increased global surface air and water temperatures, (d) which in turn caused a rise in sea levels and strengthened Hurricane Katrina, and (e) which all then combined to damage their homes and property.   On August 30, 2007, in a two-page order, Judge Louis Guirola, Jr. dismissed plaintiffs’ claims based on standing.  But in his ruling from the bench, Judge Guirola also held the plaintiffs’ claims were barred by the “political question” doctrine, the idea that Congress and state legislatures are better equipped to make decisions involving climate change, especially given the national and international implications and policy decisions involved.

On October 16, 2009, a three-judge panel of the Fifth Circuit Court of Appeals reversed Judge Guirola, holding that the plaintiffs did in fact have standing to sue industry for their Hurricane Katrina damages allegedly caused by climate change.  The panel also held that issues of climate change were not barred by the "political question" doctrine.

On February 26, 2010, the Court granted rehearing en banc to address the political question and standing issues.  The Court’s decision to grant rehearing en banc was based on a 6-3 vote of the remaining nine judges on the Fifth Circuit who were not then recused for various reasons.

In late April, with most of the briefing already submitted and a hearing scheduled for May 24, 2010, the Court issued an order stating that because another judge was recused, only eight judges were left to hear the merits of the appeal, which meant the court no longer had a majority of the 16-judge Fifth Circuit.  Confronting the dwindling number of judges, the court requested additional briefing on what it should do.

Recusal Math: The Reason for the Comer Dismissal

After considering a wide range of arguments, a majority of the remaining non-recused members of the Fifth Circuit held that it had no quorum and it could not hear the case en banc, as it had initially decided that it would do on February 26, 2010.  After considering arguments by parties and amici over the past few weeks, five of the eight remaining non-recused members rejected all of the theories on how to fix the problem—(1) having the Chief Justice appoint a judge from another Circuit; (2) declaring a quorum of the non—recused judges; (3) adopting a “rule of necessity”; (4) “dis-enbancing” the case or reinstating the three-judge panel’s decision; and (5) holding the case in abeyance until the composition of the court changed.  None of these fixes worked, the Fifth Circuit held, because “a court without a quorum cannot conduct judicial business.”

Ironically, the three judges dissenting from the Court’s dismissal of the appeal were the same three judges constituting the three-judge panel which initially overturned the district court’s opinion.  In separate dissents, Judge Davis, joined by Judge Stewart, and Judge Dennis believed the court should decide the merits of the case.  For these judges, it made no sense to allow a vote to take a case en banc to dictate the results on the merits.  For Judge Davis, it made no sense that a majority of the eight unrecused judges could dismiss the appeal, but they could not hear the merits.  For Judge Dennis, the decision was “injudiciously mechanistic and arbitrary.”  If the most recently recused judge had become recused three months earlier, he noted, the outcome would have been precisely the opposite—the court would not have been able to grant the rehearing, which meant the three-judge panel’s reversal of the district court’s opinion would have remained in effect.

Bottom Line: The District Court’s Decision Rejecting Tort Claims Against Industry for CO2 Emissions Stands as Good Law

As for the controlling law, the five remaining unrecused members of the Court specifically held that it could not undo its vacatur of the earlier three-judge panel's decision.  Under its Local Rule 41.3, the grant of rehearing en banc “vacate[d] the panel opinion and judgment of the court and stay[ed] the mandate.”  Applying this rule, the Court held that even though it did not have a quorum to hear the merits of the appeal en banc, the vacatur of the three-judge panel's October 16, 2009 decision was made by a then-proper quorum, even if that quorum later evaporated because of a recusal.  With that decision, the three-judge panel’s reversal of the district court's opinion remained vacated.  This is the good news for industry.

How Does the Fifth Circuit’s Dismissal of Comer Affect the Other Key Climate Change Case, Connecticut v. AEP?

Strange as it may seem, with the Fifth Circuit's dismissal of Comer and the reinstatement of the district court’s rejection of the property owner’s claims against industry, there is now a conflict—to the extent the Fifth Circuit’s dismissal in Comer represents a substantive decision—between the Fifth and the Second Circuits on standing and political question in climate change cases.  The Comer dismissal could strengthen industry’s appeal of the adverse Second Circuit decision in Connecticut v. AEP.

In Connecticut v. AEP, which involved carbon dioxide emissions from coal-fired electric utilities, the Second Circuit held that a group of states could sue to abate climate change under a theory of public nuisance.  In its decision, issued on September 21, 2009, the Second Circuit also found that tort litigation over climate change was not barred by the political question doctrine.  But unlike the Fifth Circuit in Comer, which agreed to rehear the matter en banc, on March 5, 2010 the Second Circuit denied a motion for rehearing en banc.  Certiorari petitions to the Supreme Court in Connecticut v. AEP are due June 3, 2010, and the Supreme Court is likely to determine whether it will grant certiorari by the end of the year.

Long term, many view Comer as the more important case because the plaintiffs are private property owners seeking property damages for climate change, not States, as in Connecticut v. AEP, who may have standing to litigate climate change as a public nuisance by virtue of their “special solitude” as states.  And unlike Connecticut v. AEP, which was largely about forcing air quality controls on electric utilities, the plaintiffs in Comer seek money damages.

Will the United States Supreme Court Grant Certiorari to Decide Whether Climate Change is a “Political Question”?

For Comer, the procedural math determined the substantive outcome.  Of the 16 judges on the Fifth Circuit, eight were recused for various reasons, and five of the remaining eight unrecused judges voted to dismiss the appeal without ever considering the merits of the appeal.  That procedural vote by five judges determined the substantive outcome of the case.  As Judge Dennis suggested in his dissent, the dismissal by the unrecused judges means the plaintiffs, who claim that Hurricane Katrina was caused by industrial emissions, not the industry itself, will now be appellants on the standing and political question issues.

On certiorari in both Comer and in Connecticut v. AEP, the ultimate question for the Supreme Court is whether industry should be liable for climate change.  More fundamentally at issue is whether private property owners can sue industry simply because it emits carbon dioxide, a question important not only for the legal system, but for the U.S. economy itself