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Corporate Legal Accountability Quarterly Bulletin - Issue 31, June 2019


Welcome to our Corporate Legal Accountability Quarterly Bulletin -- highlighting a specific topic each quarter, as well as key developments in corporate legal accountability.  The Corporate Legal Accountability hub on our website provides objective, concise information about lawsuits against companies in which human rights abuses are alleged .
 
This bulletin and previous issues are available in English, ChineseFrench, GermanRussian and Spanish.
Quarterly highlight

Legal developments New translations

New blog posts
Other news
Events
Quarterly highlight

Are shareholders the new champions of climate justice? 

For several decades, individuals and communities affected by climate change – as well as the lawyers, advocates and civil society organizations who represent them – have been using litigation as a strategic tool to hold corporations accountable for climate change-related human rights harms. Traditionally, these lawsuits were brought against governments. However, and as we demonstrated in our 2018 Annual Briefing, Turning up the heat: Corporate legal accountability for climate change, companies are increasingly becoming the direct targets of litigation.
 
What is more, the “usual suspects” are no longer the only drivers of action. Institutional and private shareholders are increasingly bringing legal claims against the companies or private institutions in which they own shares (so-called shareholder litigation). Shareholders are therefore emerging as an important group of advocates in the fight against corporate impunity for climate-related harm (see our most recent Legal Briefing on Climate Litigation for further details).
 
The world’s first shareholder-led lawsuit over alleged failure to adequately disclose climate risk was filed against Exxon Mobil Corporation (Exxon) in 2016. This class action was initiated by a group of US investors who sought damages from Exxon after its stock price fell by 13% that year. Plaintiffs argued that the company had made false and misleading statements relating to the impact of climate change on its business, thus substantially overstating the value of its oil reserves, and artificially inflating the company’s value. While the case was later dismissed, it paved the way for what seems to be a lively trend of federal class action litigation in the US.
 
At least two new such cases have been initiated in California Federal Courts since late 2018, where shareholders are claiming monetary compensation for the alleged damages they sustained as a result of false and misleading statements relating to the impacts of climate change. Barnes v. Edison International, for instance, is a fraud lawsuit alleging that the company provided misleading information about its mitigation measures related to climate change and the heightened risk of wildfires in California. In York County v. Rambo, a coalition of pension funds and investors is suing Pacific Gas and Electric Company and its parent company (PG&E). The lawsuit alleges that the value of the bonds has declined as a result of the defendants’ failure to disclose the true state of their business and operations and the risks posed by their lax wildfire safety practices.
 
Litigation is also used to seek the enforcement of other fiduciary duties and procedural rights. In July 2018, Mark McVeigh brought a world-first lawsuit against the trustee of his retirement fund, the Retail Employees Superannuation Trust (REST). The plaintiff argues that REST breached the fiduciary duties owed to him by failing to adequately consider climate change risks. He is consequently demanding that REST provide him with the requested information and seeking injunctions from the court to prevent future misconduct by the defendant.
 
Along similar lines, in October 2018, Client Earth a non-profit environmental organization and shareholder in the Polish energy company Enea SA, sued the company in the Regional Court of Poznań in Poland. The lawsuit claims that, due to climate-related financial risks, Enea’s approval to construct a coal-fired power plant harms the economic interests of the company and its shareholders and should not proceed. Ambitiously, this type of lawsuit aims to change the very climate change-related strategy of fossil fuel companies, by forcing them to abandon controversial investments.
 
Another compelling case of shareholder litigation is Fentress v. Exxon Mobil Corp. This recently dismissed class action lawsuit was brought against the company by employees who participated in an Exxon Mobil Savings Plan and who had invested in Exxon stocks. The lawsuit alleged that the company’s failure to disclose climate change information violated fiduciary duties under the Employee Retirement Income Security Act (ERISA). The plaintiffs argued that Exxon’s stock had become artificially inflated in value due to fraud and misrepresentation, thus making Exxon stock an imprudent investment under ERISA and damaging the Plan and those Plan participants who bought or held Exxon stock.
 
As these lawsuits demonstrate, shareholders have emerged as increasingly important actors in global efforts to achieve responsible corporate climate policies and practices. Unlike strategic lawsuits which attempt to attribute climate change impacts to specific companies, shareholder litigation is essentially about the assessment of climate change related financial risk. As plaintiffs, shareholders typically invoke one of two arguments: that their lack of knowledge about climate risks has undermined their ability to exercise their rights as shareholders, and/or that the company’s misleading use of knowledge has harmed their interests as shareholders. The range of remedies claimed is large, spanning from monetary compensation and restitution, to the enforcement of obligations on climate disclosure and declaratory relief for breaches of rights of information, to more ambitious attempts to change the business strategy of fossil fuel companies. 
 
While many of the lawsuits are ongoing, the innovative legal strategies on which they are based have yet to withstand the test of time. Their chances of success will depend on many factors, including how courts will assess the link between specific actions of the boards – such as investment choices – and climate change, and in turn the link between these actions and the financial interests of shareholders.
 
This centrality of financial risk and financial harm means that shareholder litigation is only marginally suited for purposes such as proving that a particular fossil fuel company has contributed to climate change through its specific emissions, or for providing reparation for climate change-related harm to the public at large rather than to shareholders. Nonetheless, shareholders can and have used litigation to force companies to adopt more climate-friendly policies, or at the very least disclose how climate related risks might affect the company’s bottom line. As such, shareholder litigation is a compelling strategy for climate accountability – one that pressures companies to pay heed to omnipresent demands to adequately address their climate impacts, including by their own shareholders.
 
Guest blogs on Shareholder activism in the context of climate change

Legal developments

New case profiles

Gloucester Resources lawsuit (re mine’s impact on climate change, Australia): On 18 December 2012, Australian mining company Gloucester Resources (GRL) lodged a development application for consent to open a coal mine near Gloucester, Australia. In 2017, the New South Wales Planning Assessment Commission rejected the proposal on the basis that the proposed open-cut mine will harm the quality of life of local residents. GRL filed an appeal, and on 8 February 2019, the New South Wales Land and Environment Court upheld the government’s denial of the application. In his judgment, Justice Preston stated that "the construction and operation of the mine, and the transportation and combustion of the coal from the mine, will result in the emission of greenhouse gases, which will contribute to climate change". 
 
PTTEP Australasia lawsuit (re Montara oil spill in Indonesia): On 3 August 2016, an Indonesian seaweed farmer filed a class action lawsuit on behalf of approximately 15,000 farmers in the Federal Court of Australia, against PTTEP Australasia (PTTEPAA). The claim refers to a 2009 blowout at an oil well at the Montara Wellhead Platform in Australia, operated by PTTEPAA, which released thousands of litres of oil and gas into the Timor Sea for over 70 days. The plaintiffs claim damages for the immediate destruction of seaweed caused by the spill, as well as the subsequent decline in production caused by oil pollution, leading to loss of their livelihoods. The case is on-going.
 
Raub Australian Gold Minig lawsuit (re defamation by villagers, Malaysia): In In September 2013, Raub Australian Gold Mining (RAGM) filed a defamation lawsuit in Malaysia against Hue Shieh Lee, a resident of Bukit Koman and Vice-President of a local activist group. The company alleges that some of Hue Shieh Lee’s statements were defamatory because they suggested that the company had allowed cyanide spills from its facility and was therefore directly responsible for causing health problems to the community. In February 2019, the Federal Court of Appeal unanimously dismissed the appeal filed by RAGM and ordered the company to pay RM 60,000 (USD 14,365) in legal costs.
 

Updates to existing case profiles

Lawsuit against Eternit (re asbestos exposure in Italy): On 23 May 2019, a Turin court sentenced Eternit’s former CEO, Stephan Schmidheiny to four years in prison for manslaughter over the deaths of two employees of the factory in Cavagnolo, Italy.
 
Gun industry lawsuit (re Sandy Hook shooting in USA): In March 2019, the Connecticut Supreme Court revived the lawsuit, saying that the families of victims of the shooting can sue for wrongful marketing under the Connecticut Unfair Trade Practices Act. In April 2019, gun manufacturer Remington asked the US Supreme court to hear the case.
 
Lawsuits by Natural Fruit Company (re defamation suits against Andy Hall, Thailand): On 22 May 2019, Bangkok’s Prakanong Court rejected Andy Hall’s appeal and upheld the lower court judgment ordering him to pay 10 million baht (USD 313,000) in damages to Natural Fruit.
 
Lawsuits against Shell (re complicity in killings in Nigeria): On 1 May 2019, a Dutch court rules it has jurisdiction to hear the case and ordering Shell to hand over confidential internal documents to the claimants.
 
Texaco/Chevron lawsuits (re oil pollution in Ecuador): On 4 April 2019, the Canadian Supreme Court rejected the request to review the decision of the Ontario Superior Court. The lower court had ruled that Chevron Canada cannot be held liable instead of its parent company, and its assets cannot be seized to enforce the USD 9.5 billion Ecuadorian judgment.
 
Thammakaset lawsuits (re criminal defamation case over labour exploitation in Thailand): On 12 March 2019, after an appeal by Thammakaset, the Central Labour Court (also known as the Supreme Labour Court) issued a statement confirming the payment of the 1.7 million Thai Baht to the 14 migrant workers. As of now, Thammakaset has filed a total of 17 criminal and civil cases against 23 human rights defenders including 14 former workers, journalists, academics, and civil society activists. The hearings of the criminal defamation cases against former employees and journalists are scheduled at the end of May and June 2019.

Vedanta Resources lawsuit (re water contamination, Zambia): On 10 April 2019, the UK Supreme Court ruled that the case brought by almost 2,000 Zambian villagers against Vedanta Resources can be heard in English courts.
New translations

In French 

Procès intenté par Raub Australian Gold (diffamation contre Hue Shieh Lee (en Malaisie))  

[Raub Australian Gold Mining lawsuit (re defamation by villagers, Malaysia)

New blog posts

Business, Human Rights& the Limits of Law, Yousuf Aftab, Enodo Rights, 20 Jun 2019

What are the legal tools for holding corporations to account globally?, Maria Khan, Raja Mohammad Akram & Co, 27 May 2019

Supreme Court decision on Vedanta vs Zambian farmers will help those seeking justice against corporate abuse, say lawyers, Oliver Holland, Leigh Day, 30 Apr 2019

Zambian farmers can take Vedanta to court over water pollution. What are the legal implications?, Gabrielle Holly, Omnia Strategy LLP, 10 Apr 2019
 
Other news

From Business & Human Rights Resource Centre

New portal and blog series on Mandatory Human Rights Due Diligence: The portal collects latest news, guidance for governments and examples of company implementation of human rights due diligence. These new resources build on the momentum for stronger regulations requiring companies to undertake human rights due diligence. They aim to serve as a space for debate and a hub for the latest news, guidance, and examples of initiatives.
 
New interviews of lawyers fighting for corporate accountability:

  • Sophorn Sek of Rights & Business Law Office, Phnom Penh, Cambodia.
  • Ben Hoffman, former Amazon Staff Attorney with EarthRights International and now Acting Director at Columbia Law School’s Human Rights Clinic.
  • Previous lawyers interviews available here
Criminal liability special issue: Page updated with new cases.

Corporate Legal Accountability Annual Briefing 2019: The Future of Work: Litigating Labour Relationships in the Gig Economy, Mar 2019.

Who is an “employee” in the gig economy - and can the courts help protect labour rights?
Maysa Zorob, Corporate Legal Accountability Programme Manager, 5 Mar 2019

Reports, articles & guidance by leading experts & organizations

Launch of the Legal Cultures of the Subsoil Database, Institute of Latin American Studies, University of London, 11 Jun 2019
 
49 global CSOs call for justice for Nigerian villages devastated by Shell oil spill, 29 May 2019

Cameroon: NGOs file lawsuit against Bolloré to force company to comply with its social commitments, Reuters & Sherpa, 27 May 2019

Latin America: Report details impacts of international arbitrations filed by mining companies, Mining Watch, Institute for Policy Studies y CIEL, 7 Apr 2019

New report with key elements for companies to navigate changing business & human rights legal landscape, Global Business Initiative & Clifford Chance, 22 Mar 2019
 
Report on challenges & opportunities for law firms implementing the UN Guiding Principles, Catie Shavin, Independent Advisor & Anna Triponel, Triponel Consulting, 20 Mar 2019

New Book: ”Business and Human Rights as Law: Towards Justiciability of Rights, Involvement, and Remedy”, Yousuf Aftab & Audrey Mocle, Enodo Rights, 18 Mar 2019
 
New book: "The Role of the Lawyer in Implementing the Ruggie Principles: 8 Good Practices For Corporate Lawyers", Ana Maria Ovejero & Fundación Fernando Pombo, Mar 2019
 
Access to legal remedies for victims of corporate human rights abuses in third countries, European Parliament, Feb 2019 

Events

The AIDP XX International Congress of Penal Law “Criminal Justice and Corporate Business”, International Association of Penal Law, (13-16 Nov 2019, Rome. Application Deadline:  30 Jun 2019)

Multinational accountability following Lungowe v Vedanta: perspectives from the front line, Leigh Day (18 Jun 2019, London)

Towards Criminal Liability of Corporations for Human Rights Violations: The Lundin Case in Sweden, Asser Institute (23 May 2019, The Hague)
 
Event on Vedanta v Lungowe, Business and Human Rights Practitioners’ Network  (21 May 2019, London)
 
Championing Accountability: Human Rights in the Era of Big Business, Fabian International Policy Group (14 May 2019, London)

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