ESG Litigation & Enforcement Tracking
General ESG Litigation
March 15, 2024 | Liberty Energy Inc. v. Securities and Exchange Commission, No. 24-60109 (5th Cir.).
The Fifth Circuit Court of Appeals granted an administrative stay of the Enhancement and Standardization of Climate-Related Disclosures for Investors Rule on March 15, 2024 in response to the petitioners’ emergency motion for administrative stay and stay pending judicial review filed on March 8, 2024. The petitioners argued the stay was warranted because they are likely to prevail on the merits, the rule is arbitrary and capricious, the rule violates the First Amendment by mandating disclosures and effectively mandating discussing climate change, and the petitioners have suffered irreparable harm in the form of unrecoverable compliance costs and constitutional injuries.
On March 22, 2024, the court ordered transfer of the petition to the Eighth Circuit for consolidation and dissolved the administrative stay.
March 6, 2024 | West Virginia v. Securities and Exchange Commission, No. 24-60109 (11th Cir.).
Ten states petitioned for review of the Enhancement and Standardization of Climate-Related Disclosures for Investors Rule, alleging that the rule exceeds the statutory authority of the SEC and is otherwise arbitrary, capricious, an abuse of discretion, and not in accordance with law. The petitioners requested that the court declare the final rule unlawful and vacate the SEC’s final action.
February 28, 2024 | People of the State of New York v. JBS USA Food Company, No. tc240228-23 (Sup. Ct. N.Y.).
The New York State AG filed a complaint in New York state court alleging that JBS USA Food Company, the largest producer of beef in the world, made unsubstantiated and misleading environmental marketing claims about its commitment to reducing greenhouse gas emissions in violation of New York State’s consumer protection laws. The suit notes that beef production contributes significantly to climate change and alleges that JBS’s “Net Zero by 2040” claims are misleading because the company’s greenhouse gas emissions calculations fail to account for significant Scope 3 emissions related to the company’s supply chain land use. The suit asks the court to enjoin JBS from violating the state’s consumer protection laws, order JBS to disgorge profits traceable to the unsubstantiated claims, grant civil penalties, and perform independent audits of all JBS’s consumer-facing publications.
February 26, 2024 | Chattooga Conservancy v. United States Department of Agriculture, No. 1:24-cv-00518 (D.D.C.).
The Chattooga Conservancy filed a complaint against the U.S. Department of Agriculture and the U.S. Forest Service under the National Environmental Policy Act, alleging that the agencies failed to assess the direct, indirect, and cumulative effects of logging projects authorized to fulfill annual national timber targets. The complaint asks the court to block the agencies from offering further timber sales in fiscal year 2024 and from implementing the remaining commercial timber harvest efforts for authorized projects.
February 21, 2024 | Spence v. American Airlines Inc., No. 4:23-cv-00552 (N.D. Tex.).
The Northern District of Texas denied a motion to dismiss filed by American Airlines that sought to dismiss the class action complaint alleging American Airlines breached its fiduciary duty under the Employee Retirement Income Security Act (ERISA) by investing its employees’ retirement savings with funds pursuing ESG goals and strategies, rather than focusing exclusively on maximizing financial benefits.
January 25, 2024 | Porter v. GrafTech International Ltd., No. 1:24-cv-00154 (N.D. Ohio).
A purchaser of common stock filed a putative securities class action under the Securities Exchange Act against graphite electrode product manufacturer GrafTech, alleging that the company’s materially false and misleading statements and omissions caused him and class members to suffer significant losses and economic damages. The complaint alleges that GrafTech made claims in IPO offering materials promoting the “more environmentally friendly” steelmaking employed by its customers as key to its claimed sustainability initiatives when its facility operations had allegedly contaminated neighboring communities.
Consumer Sues Dutch Airline for Allegedly Misleading Sustainability Claims
November 13, 2023 | Simijanovic v. Koninklijke Luchtvaart Maatschappij N.V., No. 2:23-cv-12882 (E.D. MI.)
A customer filed a proposed class action against Koninklijke Luchtvaart Maatschappij N.V., operating as KLM Royal Dutch Airlines, in the United States District Court for the Eastern District of Michigan for allegedly misleading claims related to claims of environmental benefits related to its use of biofuels and carbon offset program. The complaint alleges that KLM’s claims are deceptive because they are unqualified and imply that the benefits are significant when they are negligible. The consumer alleges that plaintiff paid more for flying on KLM than he otherwise would have had he known its representations and omissions about its environmental efforts were false and misleading.
Retired Public Employee Challenges Constitutionality of Oklahoma Energy Discrimination Elimination Act
November 20, 2023 | Don Keenan v. The State of Oklahoma and Todd Russ, in his capacity as the Treasurer of the State of Oklahoma, No. CV-2023-2762 (D.C. Ok.)
A retired employee of the Oklahoma Employment Securities Commission filed a Verified Petition in the District Court of Oklahoma County on November 20, 2023, alleging that the Energy Discrimination Elimination Act of 2022, Okla. Stat. tit. 74 § 12001 (the “Act”) is unconstitutional. The employee alleges that the Act requires companies, including financial institutions, who do business in the state to affirm that they do not and will not boycott energy companies or the state will cease doing business with the financial institution and divest the state’s holdings from the financial institutions.
Consumer Sues United Airlines for Allegedly Misleading Sustainability Claims
November 19, 2023 | Alexander Zajac v. United Airlines, Inc., No. 8:23-cv-03145 (S.D. Md.)
A consumer filed a proposed class action against United Airlines in the U.S. District Court in the District of Maryland, Southern Division alleging, among other things, that United Airlines’ description of alternative aviation fuels from biomaterials as “sustainable” is misleading. The consumer alleges fraud and violations of the Maryland Consumer Protection Act.
Anti-GMO Group Sues Cava Group, Inc. Over Food Safety and Sustainability Claims
October 13, 2023 | GMO Free USA d/b/a Toxin Free USA v. Cava Group, Inc., 2023-CAB-006356 (D.C. Super. Ct.)
Anti-GMO citizen group Toxin Free USA filed suit against D.C.-based Mediterranean restaurant Cava Group, Inc., claiming false and deceptive marketing practices. The suit alleges that Cava markets its food as “healthy” and its business as “sustainable” when in fact certain food products contain synthetic biocide/pesticide residues and certain food packages contain man-made per- and polyfluoroalkyl substances (PFAS). Cava filed a motion to dismiss the suit in November 2023.
Plaintiffs Appeal Texas Court Decision Upholding ESG Investing Regulations
October 26, 2023 | State of Utah v. Walsh, No. 2:23-cv-00016-Z (N.D. Tex.)
26 State Attorneys General and private plaintiffs have appealed a decision from the Northern District of Texas upholding the Department of Labor’s ERISA regulations regarding ESG considerations in investing. The underlying rules, which took effect February 1, 2023, allowed financial fiduciaries to consider “the economic effects of climate change and other environmental, social, or governance factors” rather than only “pecuniary factors” when making investment decisions. The Northern District of Texas held that the rules are a reasonable exercise of the Department’s authority, that they changed little in substance regarding a fiduciary’s duties, and that the Department adequately explained its reasoning in issuing the regulations. The State Attorneys General appealed the decision to the Fifth Circuit Court of Appeals on October 26, 2023.
Pilot Files Amended Complaint over Retirement Plan’s ESG Policy Decisions
August 25, 2023 | Spence v. American Airlines Inc., No. 4:23-cv-00552 (N.D. Tex.).
A pilot filed an amended proposed class action complaint against American Airlines alleging that the defendant breached its fiduciary duties in violation of ERISA by managing its 401(k) plan for pilots with investment options that consider ESG policy goals. The plaintiff alleges that the majority of his plan portfolio is managed by a publicly traded investment management firm that has joined Climate Action 100+ and has advocated for ESG and sustainable investing. The plaintiff brings claims for breach of the duties of loyalty and prudence and to monitor fiduciaries, and seeks a declaratory judgment that American Airlines has violated ERISA, a permanent injunction, and attorneys’ fees and costs.
Consumers Voluntarily Dismiss Two Proposed Class Actions for Allegedly False Marketing of Consumer Goods’ Sustainability
August 14, 2023 | Dougherty v. Kohl’s Inc., No. 2:23-cv-00456 (E.D. Wisc.).
June 22, 2023 | Charles v. Church & Dwight Co. Inc., No. 1:23-cv-02528 (E.D.N.Y.).
Plaintiff consumers voluntarily dismissed two separate proposed class actions advancing claims of unjust and deceptive practices, unjust enrichment, fraud, and breach of express warranty, among others, for alleged misrepresentations and “greenwashing” in marketing of certain consumer products. (1) On August 14, 2023, a consumer voluntarily dismissed a proposed class action filed against Kohl’s Inc. for alleged misrepresentations of bedsheets being made from environmentally friendly bamboo fibers; (2) on June 22, 2023, a consumer voluntarily dismissed with prejudice a proposed class action filed against manufacturing company Church & Dwight Co. Inc. alleging “greenwashing” and misrepresentation in marketing laundry detergent as environmentally friendly.
Consumer Files Consumer Fraud Proposed Class Action for Supermarket’s Labeling of Eggs
May 3, 2023 | Long v. The Kroger Co., No. 1:23-cv-01179 (C.D. Ill.).
A customer filed a proposed class action complaint against The Kroger Co. in the Central District of Illinois claiming that labeling of eggs as “farm fresh” and “Grade A” allegedly misled consumers to believe the eggs were from hens not confined in cages. The plaintiff brought claims under the Illinois Consumer Fraud and Deceptive Business Practices Act and state consumer fraud acts, as well as claims for breach of express warranty, implied warranty, negligent misrepresentation, fraud, and unjust enrichment. The plaintiff also contended that in allegedly misleading customers that its eggs are cage-free, Kroger reneged on its ESG and sustainability commitments to animal welfare.
Four States Petition for Review of New SEC Rule
February 22, 2023 | Texas v. Securities and Exchange Commission, No. 23-60079 (5th Cir.).
February 24, 2023 | Press Release, Paxton Sues Biden Administration to Terminate Illegal SEC Rule That Will Hurt Financial Companies and Their Investors, Texas Office of the Attorney General.
Texas, Louisiana, Utah, and West Virginia filed a petition in the Fifth Circuit Court of Appeals petitioning the court to review and set aside the Securities and Exchange Commission’s Final Rule, Enhanced Reporting of Proxy Votes by Registered Management Investment Companies; Reporting of Executive Compensation Votes by Institutional Investment Managers. The Texas attorney general published a press release highlighting the petition and asserting that the SEC rule amends the proxy vote reporting form, Form N-PX, to expand the number of voting categories in order to further the political agenda of the Biden Administration. The press release also claimed that the new rule would increase compliance costs and pressure funds to take actions that run contrary to the best interests of their investors.
Class Action Alleges Banks Assisted FTX Despite Knowledge of Fund Misappropriation
February 22, 2023 | O’Keefe v. Sequoia Capital Operations LLC, et al., No. 1:23-cv-20700 (S.D. Fla.).
The plaintiffs filed a class action in the Southern District of Florida alleging that the defendants, which include banks, venture capital firms, accounting firms, and a California-based law firm, conspired with FTX to perpetrate fraud by, among other things, performing sham audits of FTX’s primary entities, certifying that efficient controls were in place, and providing non-routine, high-risk banking services to FTX and promoting FTX despite knowing that it was misappropriating funds.
Lawsuit Challenges ERISA Rule Permitting ESG Investing
February 21, 2023 | Braun v. Walsh, No. 2:23-cv-00234 (E.D. Wis.).
Two 401-K plan participants filed a complaint in the Eastern District of Wisconsin challenging the U.S. Department of Labor’s final rule, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, and seeking a preliminary and permanent injunction. The complaint alleges that the new rule violates ERISA and exceeds the authority granted to the Secretary of Labor by permitting and encouraging plan administrators to consider ESG factors when making investments on behalf of plan beneficiaries.
Twenty-Six States Challenge Department of Labor ERISA Rule Allowing Consideration of ESG Factors in Investing
February 28, 2023 | State of Utah, et al. v. Walsh and United States Department of Labor, No. 2:23-cv-16-00016 (N.D. Tex.).
Twenty-six states along with five private plaintiffs, including a publicly traded energy company and a nonprofit trade association, filed a complaint in the Northern District of Texas challenging Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, the final rule promulgated by the Department of Labor published on December 1, 2022. The complaint alleges that the rule undermines protections for retirement savings by allowing consideration of ESG factors, oversteps the Department of Labor’s authority under ERISA, and is arbitrary and capricious.
Investors Sue For-Profit Humanitarian Organization Alleging Misrepresentations of Sustainability and Financial Health of Organization
January 17, 2023 | Bhatia, et al. v. Thome, et al., No. 23STCV00999 (Cal. Sup. Ct., Central District of L.A.)
Equity investors in a company called TBSL filed a complaint in the Superior Court of California alleging that the defendants convinced investors to invest in TBSL by fraudulently holding itself out as a for-profit humanitarian organization and assuring investors that TBSL was a sustainable business dedicated to serving humanitarian efforts to end child hunger.
Proposed Class Actions Filed Against Deutsche Bank and JP Morgan Chase & Co. over Alleged Connections to Jeffrey Epstein
November 24, 2022 |Doe v. Deutsche Bank, et al., No. 1:22-cv-10018 (S.D.N.Y. 2022) and Doe v. JP Morgan Chase & Co., No. 1:22-cv-10019 (S.D.N.Y. 2022).
Two proposed class actions were filed in the Southern District of New York against Deutsche Bank and JP Morgan Chase & Co. alleging that the defendants financially benefited from participating in Jeffrey Epstein’s sex trafficking operations. Specifically, the plaintiffs allege violations of federal sex trafficking statutes and the Racketeer Influenced and Corrupt Organizations Act (RICO).