Exxon Mobil Corp. v. Attorney General
Exxon Mobil Corp. v. Attorney General
Opinion
*790 **313 In 2015, news reporters released internal documents from Exxon Mobil Corporation (Exxon) purporting to show that the company knew, long before the general public, that emissions from fossil fuels-Exxon's principal product-contributed to global warming and climate change, and that in order to avoid the consequences of climate change it would be necessary to reduce drastically global fossil fuel consumption. The documents also purported to establish that despite Exxon's knowledge of climate risks, the company failed to disclose that knowledge to the public, and instead sought to undermine the evidence of climate change altogether, in order to preserve its value as a company.
Upon reviewing this information, the Attorney General believed that Exxon's marketing or sale of fossil fuel products in Massachusetts may have violated the State's primary consumer protection law, G. L. c. 93A. Based on her authority under G. L. c. 93A, § 6, the Attorney General issued a civil investigative demand (C.I.D.) to Exxon, seeking documents and information relating to Exxon's knowledge of and activities related to climate change.
Exxon responded by filing a motion in the Superior Court, pursuant to G. L. c. 93A, § 6 (7), seeking to set aside or modify **314 the C.I.D. Exxon argued that (1) Exxon is not subject to personal jurisdiction in Massachusetts; (2) the Attorney General is biased against Exxon and should be disqualified; (3) the C.I.D. violates Exxon's statutory and constitutional rights; and (4) Exxon's Superior Court case should be stayed pending a ruling on Exxon's request for relief in Federal court. 1 The Attorney General cross-moved to compel Exxon to comply with the C.I.D. A Superior Court judge denied Exxon's motion and allowed the Attorney General's cross motion to compel. Exxon appealed, and we transferred the case from the Appeals Court on our own motion. We conclude that there is personal jurisdiction over Exxon with respect to the Attorney General's investigation, and that the judge did not abuse her discretion in denying Exxon's requests to set aside the C.I.D., disqualify the Attorney General, and issue a stay. We affirm the judge's order in its entirety. 2
1.
Personal jurisdiction
. Exxon's primary argument is that, as a nonresident corporation, it is not subject to personal jurisdiction in Massachusetts. For a nonresident to be subject to the authority of a Massachusetts court, the exercise of jurisdiction must satisfy both Massachusetts's long-arm statute, G. L. c. 223A, § 3, and the requirements of the due process clause of the Fourteenth Amendment to the United
*791
States Constitution.
SCVNGR, Inc
. v.
Punchh, Inc
.,
A business is a "resident," and therefore subject to the forum's general jurisdiction, if the business is domiciled or incorporated or has its principal place of business in the forum State.
Goodyear Dunlop Tires Operations, S.A.
v.
Brown
,
**315
Tatro
v.
Manor Care, Inc
.,
Exxon denies any such affiliation in this case, contending that it "engages in no suit-related conduct" in Massachusetts. Here there is no "suit," however, as this matter involves an investigation-a precursor to any formal legal action by the Attorney General. So while our typical inquiry asks whether there is a nexus between the defendant's in-State activities and the plaintiff's legal
claim(s)
, the investigatory context requires that we broaden our analysis to consider the relationship between Exxon's Massachusetts activities and the "central areas of inquiry covered by the [Attorney General's] investigation, regardless of whether that investigation has yet to indicate [any] ... wrongdoing." Securities & Exch. Comm'n
vs
. Lines Overseas Mgt., Ltd., U.S. Dist. Ct., No. Civ.A. 04-302 RWR/AK,
General Laws c. 93A "is a statute of broad impact" that prohibits "unfair methods of competition" and "unfair or deceptive acts or practices in the conduct of any trade or commerce."
**316
Slaney
v.
Westwood Auto, Inc
.,
Our analysis of what constitutes an unfair or deceptive act or practice requires a case-by-case analysis, see
Kattar
v.
Demoulas
,
a.
Long-arm analysis
.
3
Massachusetts's long-arm statute,
*793
G. L. c. 223A, § 3, "sets out a list of specific instances in which a Massachusetts court may acquire personal jurisdiction over a nonresident defendant."
Tatro
,
In Massachusetts, Exxon operates a franchise network of more than 300 retail service stations under the Exxon and Mobil brands that sell gasoline and other fossil fuel products to Massachusetts consumers. The Attorney General contends that this network establishes an independent basis for personal jurisdiction over **318 Exxon in this matter. 4 The franchise system is governed by a Brand Fee Agreement (BFA). Under section 7 of the BFA, the "BFA Holder" pays Exxon a monthly fee for the use of Exxon's trademarks and to participate in Exxon's business services and programs at the BFA Holder's gasoline stations. Under section 5 of the BFA, Exxon prescribes a method for converting unbranded fuel to Exxon- and Mobil-branded gasoline by injecting certain fuel additives; these additives are to be obtained exclusively from suppliers identified by Exxon, and are inserted according to Exxon's specifications. Under section 7(a)(ii) of the BFA, the dollar amount of a BFA Holder's monthly fee is determined in part by the total amount of Exxon- and Mobil-branded fuel sold at the BFA Holder's stations. Specifically, the monthly fee for the final five years of BFA shall equal the amount agreed to between the parties or an amount determined by "Recalculated Total Volume," which is the function of "the total volume of [Exxon- and Mobil-branded fuel] sold in the aggregate by all Direct Served Outlets" during a given period.
The sample BFA submitted to the Superior Court was struck between Exxon and a Massachusetts-based limited liability company; it states that it shall be in effect for a period of fifteen years, with possible extensions, and governs the operation of over 300 Exxon- and Mobil-branded "retail motor fuel outlets" located throughout the
*794
State. This network represents Exxon's "purposeful and successful solicitation of business from residents of the Commonwealth,"
Tatro
,
The more difficult question is whether the C.I.D. "aris[es] from" this network of Exxon- or Mobil-branded fuel stations. G. L. c. 223A, § 3 ( a ). Exxon argues that it does not, because while the Attorney General's investigation is concerned primarily with Exxon's marketing and advertising of its fossil fuel products to Massachusetts consumers, Exxon does not control its franchisees' advertising, and hence those communications cannot be attributed to Exxon for purposes of personal jurisdiction. The judge determined that Exxon's assertion of a lack of control over **319 franchisees' advertising conflicts with the terms of the BFA. We agree. Section 15(a) requires the BFA Holder and "its Franchise Dealers to diligently promote the sale of [Exxon- or Mobil-branded fuel], including through advertisements," and states that "Exxon[ ] shall have the authority to review and approve, in its sole discretion, all forms of advertising and sales promotions ... for the promotion and sale of any product, merchandise or services" that "(i) uses or incorporates any [Exxon trademark] or (ii) relates to any Business operated at a BFA Holder Branded Outlet." This section also obligates the BFA Holder to "expressly require all Franchise Dealers to ... agree to such review and control by Exxon[ ]." 5
In
Depianti
v.
Jan-Pro Franchising Int'l, Inc
.,
This leads to our conclusion that the C.I.D. "aris[es] from" the BFA and Exxon's network of branded fuel stations in **320 Massachusetts. G. L. c. 223A, § 3 ( a ). *795 Through its control over franchisee advertising, Exxon communicates directly with Massachusetts consumers about its fossil fuel products (and hence we reject Exxon's assertion that it "has no direct contact with any consumers in Massachusetts"). This control comports with one of Exxon's "primary business purpose[s]" as expressed in section 13(a) of the BFA: "to optimize effective and efficient ... representation of [Exxon- and Mobil-branded fuel] through planned market and image development." The C.I.D. seeks information about the nature and extent of Exxon's Massachusetts advertisements, including those disseminated through Exxon's franchisees.
More broadly, the C.I.D. seeks information concerning Exxon's internal knowledge about climate change. Many of the requests in the C.I.D. seek documents to substantiate public statements made by Exxon in recent years on the topic of climate change. Exxon protests that its franchisees have nothing to do with climate change and have played no part in disseminating those statements, so the Attorney General's requests cannot "arise from" Exxon's franchise system. Bearing in mind the basis for the C.I.D. and the Attorney General's investigation, G. L. c. 93A, we disagree.
The statute authorizes the Attorney General to initiate an investigation "whenever [s]he believes a person has engaged in or is engaging in" a violation of G. L. c. 93A, in order "to ascertain whether in fact [that] person" is doing so. G. L. c. 93A, § 6 (1). A person may violate G. L. c. 93A through false or misleading advertising. "Our cases ... establish that advertising need not be totally false in order to be deemed deceptive in the context of G. L. c. 93A.... The criticized advertising may consist of a half-truth, or even may be true as a literal matter, but still create an over-all misleading impression through failure to disclose material information."
Aspinall
v.
Philip Morris Cos
.,
b.
Due process
. We must also determine whether the exercise of personal jurisdiction over Exxon comports with the requirements of due process. The "touchstone" of this inquiry remains "whether the defendant purposefully established 'minimum contacts' in the forum state."
Tatro
,
First, Exxon has purposefully availed itself of the privilege of conducting business activities in Massachusetts, with both consumers and other businesses. As mentioned, Exxon is the franchisor of over 300 Exxon- and Mobil-branded service stations located
**322
throughout Massachusetts, and through that arrangement Exxon controls the marketing of its products to Massachusetts consumers. In addition, Exxon admits that it created Massachusetts-specific advertisements for its products in print and radio. Such "advertising in the forum State," especially when coupled with its extensive franchise network, is indicative of Exxon's "intent or purpose to serve the market in the forum State."
Asahi Metal Indus. Co., Ltd
. v.
Superior Court of Cal., Solano County
,
Further, Exxon's franchise system in Massachusetts is governed by a contract,
*797
the BFA. While such a contractual relationship is not necessarily a "contact,"
Burger King Corp
.,
The Attorney General's investigation "arise[s] out of, or relate[s] to" these contacts.
Tatro
,
The exercise of personal jurisdiction over Exxon also does not offend "traditional notions of fair play and substantial justice."
International Shoe Co
. v.
Washington
,
2.
Exxon's challenge to the substance of the C.I.D
. Exxon also challenges the C.I.D. based on its content, arguing that it is "overbroad and unduly burdensome," as well as "arbitrary and capricious." Exxon argues that these points constitute "good cause" warranting our modifying or setting aside the C.I.D. under G. L. c. 93A, § 6 (7) ("the court may, upon motion for good cause shown ... modify or set aside such demand or grant a protective order"). As "[t]he party moving to set aside [the] C.I.D.[, Exxon] bears a heavy burden to show good cause why it should not be compelled to respond."
CUNA Mut. Ins. Soc'y
v.
Attorney Gen
.,
By its terms, G. L. c. 93A, § 6, authorizes the Attorney General to initiate an investigation "whenever [s]he believes a person has engaged in or is engaging in any method, act or practice declared to be unlawful by this chapter." This grants the Attorney General "broad investigatory powers."
Bodimetric Profiles
,
In pertinent part, § 6 (1) (
b
) authorizes the Attorney General to "examine ... any documentary material ... relevant to such alleged unlawful method, act or practice" that is the subject of the Attorney General's investigation. This "sets forth a relevance test to define the documents the Attorney General may examine."
Yankee Milk
,
First, we agree with the judge that the C.I.D. describes with reasonable particularity the material requested, G. L. c. 93A, § 6 (4) (
c
), (5), given its focus on Exxon's knowledge of the impacts of carbon dioxide and other fossil fuel emissions on the Earth's climate. With respect to the relevance of the materials sought, Exxon argues that the Attorney General's request for historic documents dating as far back as 1976 are not relevant to an investigation under c. 93A, which carries a four-year statute of limitations. G. L. c. 260, § 5A. We find no support for Exxon's position, either in law (Exxon fails to cite any case) or logic. A document created more than four years ago is, of course, still probative of Exxon's present knowledge on the issue of climate change, and whether Exxon disclosed that knowledge to the public. Because these materials are not "plainly irrelevant,"
Yankee Milk
,
We are also not persuaded that the C.I.D.'s requests "exceed reasonable limits."
Id
. at 361,
The remainder of Exxon's challenge to the substance of the C.I.D. concerns its assertion that the Attorney General issued the C.I.D. solely as a pretext, "rendering the [C.I.D.] an arbitrary and capricious exercise of executive power." Exxon cites to cases from other contexts to suggest that our analysis of the propriety of the C.I.D. must include an evaluation of the reasonableness of the Attorney General's reasons for issuing it. "There is no requirement that the Attorney General have probable cause to believe that a violation of ... c. 93A has occurred. [She] need only have a belief that a person has engaged in or is engaging in conduct declared by be unlawful by ... c. 93A. In these circumstances, the Attorney General must not act arbitrarily or in excess of [her] statutory authority, but [s]he need not be confident in the probable result of [her] investigation."
CUNA Mut. Ins. Soc'y
,
3.
Disqualification of the Attorney General
. Exxon also seeks the disqualification of the entire office of the Attorney General from this investigation. Exxon bases its request on comments made by the Attorney General in March, 2016, at the press conference where she announced the commencement of her investigation into Exxon. The judge denied Exxon's request, and we review the denial for an abuse of discretion.
Commonwealth
v.
Reynolds
,
At the press conference, titled "AGs United for Clean Power," the Attorney General spoke about the basis for her investigation. The relevant portion of her comments were as follows:
"Part of the problem has been one of public perception, and it appears, certainly, that certain companies, certain industries, may not have told the whole story, leading many to doubt whether climate change is real and to misunderstand and misapprehend the catastrophic nature of its impacts. Fossil fuel companies that deceived investors and consumers **328 about the dangers of climate change should be, must be, held accountable. That's why I, too, have joined in investigating the practices of Exxon .... We can all see today the troubling disconnect between what Exxon knew, what industry folks knew, and what the company and industry chose *801 to share with investors and with the American public."
Exxon argues that these comments violated Mass. R. Prof. C. 3.6, as appearing in
4.
Exxon's request for a stay
. The day before filing its request to modify or set aside the C.I.D., Exxon filed a complaint for declaratory and injunctive relief in the United States District Court for the Northern District of Texas challenging the C.I.D. on constitutional grounds not raised in this action.
13
Exxon requested that the Superior Court judge stay this matter pending the resolution of the Federal suit. The judge denied Exxon's request, and we review that denial for an abuse of discretion.
Soe
v.
Sex Offender Registry Bd
.,
In denying Exxon's request, the judge reasoned that the Superior **329 Court is better equipped than a Federal court in Texas to decide a matter pertaining to Massachusetts's primary consumer protection law, G. L. c. 93A. 14 Exxon argues that this constitutes an abuse of discretion, and contends, somewhat remarkably, that there "is good reason to question the premise" that Massachusetts courts are more capable than out-of-State courts to oversee cases arising under c. 93A. The Legislature designated the Superior Court as the forum for bringing a challenge to a C.I.D. issued under G. L. c. 93A, § 6. See G. L. c. 93A, § 6 (7) ("[t]he motion may be filed in the superior court of the county in which the person served resides or has his usual place of business, or in Suffolk county"). Likewise, the Legislature provided that civil actions under G. L. c. 93A, § 9 or 11, may be brought in the Superior Court, the Housing Court, or the District Court, see G. L. c. 93A, §§ 9 (1), (3A), 11, with the Superior Court retaining the broadest grant of jurisdiction over c. 93A claims. 15 It *802 should go without saying that Massachusetts courts, which routinely hear c. 93A claims, are better equipped than other courts in other jurisdictions to oversee such cases.
Exxon's contention that the lower court erred in failing to apply the "first-filed" rule is equally unavailing. The filing of a complaint in Federal court one day before a State court filing hardly triggers a mechanical application of the first-filed rule. See, e.g.,
EMC Corp
. v.
Parallel Iron, LLC
,
Finally, where there is only a partial overlap in the subject matter of two actions, a judge has considerable discretion when
**330
deciding whether to grant a stay. See
In re Telebrands Corp
.,
5. Conclusion . We affirm the order denying Exxon's motion to modify or set aside the C.I.D., Exxon's request to disqualify the Attorney General, and Exxon's motion to stay these proceedings. We further affirm the order granting the Attorney General's cross motion to compel Exxon's compliance with the C.I.D.
Judgment affirmed .
One day before filing its instant Superior Court motion, Exxon filed a complaint for declaratory and injunctive relief in the United States District Court for the Northern District of Texas, challenging the C.I.D. on constitutional grounds not raised in this action. Exxon Mobil Corp.
vs
. Healey, U.S. Dist. Ct., No. 4:16-CV-469,
We acknowledge the amicus briefs submitted by five former Massachusetts Attorneys General and the Chamber of Commerce of the United States of America.
The parties' arguments on the jurisdictional issues focus exclusively on the due process question, forgoing any analysis under Massachusetts's long-arm statute, G. L. c. 223A, § 3. We recently clarified, however, that Massachusetts courts cannot "streamline" the personal jurisdiction inquiry by focusing solely on due process considerations, under the theory that the limits imposed by the long-arm statute and due process are coextensive. See
SCVNGR, Inc
. v.
Punchh, Inc
.,
The Attorney General also cites additional Massachusetts contacts besides Exxon's franchise network as grounds for our exercise of personal jurisdiction over Exxon. We address those contacts in our discussion of due process, given our conclusion that the "literal requirements of the [long-arm] statute are satisfied" through Exxon's franchise system.
Tatro
v.
Manor Care, Inc.
,
Exxon says that it proffered evidence below that "BFA holders control their own marketing," citing to certain provisions of the BFA and to an affidavit from Exxon's United States Branded Wholesale Manager, Geoffrey Doescher. The cited-to provisions of the BFA (sections 2 [e][6] and 3[a], [h] ) address the establishment of the franchise relationship and the use of Exxon's trademarks, and do not clarify control over advertising. Similarly, while the Doescher affidavit states in conclusory fashion that Exxon does not control the "marketing of" or "advertisements by BFA-holders," this is belied by section 15(a) of the BFA.
We are not persuaded by Exxon's argument that its control over franchisee advertising is solely to protect its trademarks under Federal law. See
Depianti
v.
Jan-Pro Franchising Int'l, Inc
.,
See 940 Code Mass. Regs. § 3.02(2) (2014) ("No statement or illustration shall be used in any advertisement ... which may ... misrepresent the product in such a manner that later, on disclosure of the true facts, there is a likelihood that the buyer may be switched from the advertised product to another"); 940 Code Mass. Regs. § 3.05(1)-(2) (1993) ("No claim or representation shall be made by any means concerning a product which directly, or by implication, or by failure to adequately disclose additional relevant information, has the capacity or tendency or effect of deceiving buyers or prospective buyers in any material respect").
Following the Superior Court judge's decision and the parties' submission of their appellate briefs, the United States Supreme Court decided
Bristol-Myers Squibb Co
. v.
Superior Court of Cal., San Francisco County
, --- U.S. ----,
Because we conclude that due process is satisfied by virtue of the nexus between the Attorney General's investigation and Exxon's franchise system, we need not reach the parties' arguments with respect to the Attorney General's alternative theory that Exxon may have deceived investors with respect to climate change. Although the cover letter of the C.I.D. states that the investigation concerns potential violations of G. L. c. 93A with respect to both consumers and investors, very few of the C.I.D.'s requests even mention investors or securities, and even then, those requests likewise concern Exxon's internal knowledge and discussions concerning climate change (in these requests, for the purpose of preparing securities filings or investor communications). Given the focus on Exxon's knowledge, these requests also relate sufficiently to the Attorney General's consumer deception theory.
This factor mirrors the particularity requirement of the previous section, G. L. c. 93A, § 6 (4) (
c
), which mandates that the notice of a C.I.D. "describe the class or classes of documentary material to be produced thereunder with reasonable specificity, so as fairly to indicate the material demanded." See
Yankee Milk
,
Similarly, the relevance requirement of this second factor mirrors the relevance requirement of § 6 (1) ( b ), and we interpret the two to impose an identical standard.
The judge wrote: "At the hearing, both parties indicated that Exxon has already complied with its obligations regarding a similar demand for documents from the New York Attorney General. In fact, as of December 5, 2016, Exxon had produced 1.4 million pages of documents responsive to the New York Attorney General's request."
The Federal action was transferred to the United States District Court for the Southern District of New York, and on March 29, 2018, the District Court dismissed Exxon's complaint with prejudice due to Exxon's failure to state a claim and the preclusive effect of the Superior Court decision in this matter. See Exxon Mobil Corp.
vs
. Healey & another, U.S. Dist. Ct., No. 1:17-cv-02301,
The judge also determined that "the interests of substantial justice dictate that the matter be heard in Massachusetts," citing G. L. c. 223A, § 5. Exxon has not argued that it would be unfairly prejudiced by having to litigate in Massachusetts, and thus has not moved to dismiss under the doctrine of forum non conveniens.
Whereas the Housing Court's jurisdiction over c. 93A claims is restricted to those involving housing matters, see G. L. c. 93A, § 9 (1) ; G. L. c. 185C, § 3, and the District Court has jurisdiction over actions "for money damages only," G. L. c. 93A, §§ 9 (3A), 11, the Superior Court is not so limited, and may hear any case under c. 93A "for damages and such equitable relief, including an injunction, as the court deems to be necessary and proper." G. L. c. 93A, § 9 (1).
Exxon's Federal complaint for declaratory and injunctive relief is based on violations of Exxon's rights under the First, Fourth, and Fourteenth Amendments to the United States Constitution, as well as an alleged violation of the dormant commerce clause and an abuse of process claim.
Reference
- Full Case Name
- Exxon Mobil Corporation v. Attorney General.
- Cited By
- 44 cases
- Status
- Published