California First District Appellate Justice Ioana Petrou
SAN FRANCISCO - A California state appeals court says fuel producer Citgo can't escape, after all, from the lawsuit launched by the cities of San Francisco and Oakland, along with three northern California counties, accusing the oil industry of allegedly duping Californians into using their fuels to power their vehicles and the economy, allegedly exacerbating so-called climate change.
On Jan. 5, a three-justice panel of the California First District Court of Appeal reversed the ruling of a San Francisco County Superior Court judge, who had then blocked the local governments from continuing to press their claims against Citgo.
In the new ruling, the appeals court said the lower court was wrong to determine Citgo's lack of direct marketing to Californians was enough to prevent the local governments from joining Citgo as a defendant in the lawsuit under California law.
The appellate justices said it was enough that Citgo sold gasoline and other petroleum fuels in the state to put them on the hook for potentially massive payouts for allegedly selling oil and gas products whose emissions have allegedly led to a panoply of environmental catastrophes, such as "extreme wildfire," "extreme flooding events," and "a substantial rise in sea level ... along California's coast."
"California has more than a 'little interest' over Citgo’s conduct," the justices wrote. "Although it did not refine gasoline in California, the evidence demonstrates Citgo purchased, distributed, and sold gasoline under its brand within California for approximately 30 years. Moreover, the fairness and reasonableness of a California forum is strengthened by California’s significant interests at stake in this litigation — providing residents with a convenient forum for redressing discrete California-specific harms that have occurred or are anticipated to occur.
"... These impacts are California specific harms that California has a greater interest in addressing than other states. The alleged lack of interest by other states or the federal government in curbing climate-impacts of fossil fuel usage in California does not negate California’s interest or authority to do so," the justices wrote.
The ruling comes as the latest step in a court fight with potentially massive stakes. But the California litigation is just one of a series of such legal actions launched in courts across the country, primarily by Democrat-dominated local and state governments, in partnership with trial lawyers, who are seeking to use the courts to essentially financially punish oil and gas companies by extracting billions of dollars in the name of addressing the alleged harms and dangers of so-called climate change allegedly worsened by the fuels used by American residents and businesses to power vehicles, homes, businesses, and the nation's economy.
The California action was launched nearly a decade ago, currently including as plaintiffs the counties of San Mateo, Marin and Santa Cruz; and the cities of San Francisco, Oakland, Imperial Beach, Richmond and Santa Cruz. The San Mateo County Flood and Sea Level Rise Resiliency District is also a named plaintiff in the action.
In its current iteration, the lawsuit accuses many of America's and the world's largest producers of oil and gas of falsely marketing its fuels to Californians and others in America by allegedly failing to warn the public about the alleged climate change risks which could be generated by using their fuels.
This allegedly, in turn, caused Americans and Californians to consume more of the fuels, which then worsened the alleged climate effects, including natural disasters such as destructive wildfires and flooding events in California.
The local governments say this then imposes a substantial financial burden on the people and the state and local governments to respond to such disasters, which the governments claim would not have occured but for the emissions from the use of petroleum-based fuels.
Defendants in the legal action include Chevron, Exxon, BP, Shell, ConocoPhillios, Marathon Oil, Hess Corporation and others.
The lawsuit also seeks to include Citgo Petroleum.
The oil companies have fought the lawsuits for years, centering their defenses in large part on claims that the lawsuit seeks to sidestep federal law and attempt to use state courts and the threat of massive financial damages to essentially usurp the role of the federal government and regulate the use of oil and gas.
Exxon, in particular, has argued in court in Texas that the lawsuits are the result of conspiracy between Democratic politicians in California and their trial lawyer political allies to use such lawsuits to force the oil and gas companies to either capitulate to their preferred energy policies or go out of business. Exxon and its supporters have argued this amounts to an effort to undemocratically force the entire U.S. to go along with California Democrats' preferred national energy policies, regardless of how the rest of the country may vote.
In 2022, however, the U.S. Ninth Circuit Court of Appeals rejected the oil companies' bid to move the cases to federal court, where more stringent evidentiary standards would have made it more difficult for the local governments to press their climate "disinformation" claims against the energy companies compared to California's notoriously plaintiff-friendly state courts.
The companies have indicated they intend to ultimately seek a final word on the legal claims from the U.S. Supreme Court.
However, the cases have proceeded most recently in San Francisco County Superior Court.
In December 2024, Citgo scored a rare win in the California litigation, as Superior Court Judge Ethan P. Schulman agreed the counties and cities had improperly joined Citgo as a defendant.
In that ruling, Judge Schulman said the plaintiffs needed to do more than just assert Citgo had sold fuel in California to press their "disinformation" and deception claims against Citgo under California law.
In the ruling, Schulman said: "It is insufficient ... for Plaintiffs to show that Citgo sold its products into the California market and that Plaintiffs claims to have been injured by those products. That is particularly true here, where there is no evidence that Citgo engaged in any deceptive advertising or marketing to consumers."
On appeal, however, the First District Appellate Court panel said Schulman was entirely wrong on that score, and the sale of such fuel products is indeed enough to rope Citgo into the governments' lawsuit.
The appellate decision was authored by First District Justice Ioana Petrou. Justices Alison M. Tucher and Victor Rodriguez concurred in the decision.
In addition to their own in-house counsel, the counties and cities are represented by attorneys from the firms of Sher Edling, of San Francisco, and Altshuler Berzon, of San Francisco.
