A federal judge in Texas on Monday dismissed a lawsuit that Exxon Mobil had filed against an activist investor, Arjuna Capital, over a shareholder proposal that called for cuts in the oil giant’s greenhouse gas emissions.
Judge Mark T. Pittman of U.S. District Court for the Northern District of Texas ruled that because Arjuna had withdrawn its proposal and had vowed not to submit similar proposals, Exxon’s claim was moot.
“The trend of shareholder activism in this country isn’t going anywhere,” Judge Pittman wrote, but he added that “the court cannot advise Exxon of its rights without a live case or controversy to trigger jurisdiction.”
Exxon sued Arjuna and another investor, Follow This, in January to stop their nonbinding resolution from going to a vote of shareholders. A month earlier, Arjuna had filed a proposal for the resolution, which called on Exxon to accelerate its plans to reduce its carbon emissions “and to summarize new plans, targets and timetables,” according to Exxon’s complaint. Follow This then joined in support, the complaint said.
In its complaint, Exxon said the proposal “does not seek to improve ExxonMobil’s economic performance or create shareholder value.”
“Defendants’ overarching objective is to force Exxon Mobil to change the nature of its ordinary business or to go out of business entirely,” the company said.
Judge Pittman dismissed Follow This, which is based in the Netherlands, from the lawsuit in May but allowed the case against Arjuna to continue.
Arjuna withdrew the proposal and moved for a dismissal of the lawsuit, which the judge denied “because the proposal’s withdrawal didn’t foreclose the same conduct moving forward.” Arjuna then promised not to put forth similar proposals and said its pledge “forecloses even the remotest chance of another proposal” related to Exxon’s carbon emissions.
Judge Pittman’s ruling followed a hearing held on Monday to determine whether Arjuna’s promise made Exxon’s complaint moot.
“Our lawsuit put a spotlight on the widespread abuse of the shareholder proxy submission process,” Darren Woods, Exxon’s chair and chief executive, said in a statement about the decision. “Making repeated proposals that garner a small minority of support doesn’t serve anyone’s interest except the proponent’s.”
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 to the oil and gas industry, and deflection will not change that simple fact,” she said. “Investors understand these risks and are looking to their companies to engage with them on measured approaches to risk mitigation, not engage in litigation.”
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2024-06-18 18:05:00Z
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