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Electronically Filed
Supreme Court
SCAP-XX-XXXXXXX
31-OCT-2023
08:57 AM
Dkt. 74 OP
IN THE SUPREME COURT OF THE STATE OF HAWAI‘I
---o0o---
CITY AND COUNTY OF HONOLULU and HONOLULU BOARD OF WATER SUPPLY,
Plaintiffs-Appellees,
vs.
SUNOCO LP; ALOHA PETROLEUM, LTD.; ALOHA PETROLEUM LLC;
EXXON MOBIL CORPORATION; EXXONMOBIL OIL CORPORATION;
ROYAL DUTCH SHELL PLC; SHELL OIL COMPANY; SHELL OIL PRODUCTS
COMPANY LLC; CHEVRON CORPORATION; CHEVRON U.S.A. INC.;
BHP HAWAII INC.; BP PLC; BP AMERICA INC.; MARATHON PETROLEUM
CORPORATION; CONOCOPHILLIPS; CONOCOPHILLIPS COMPANY;
PHILLIPS 66; and PHILLIPS 66 COMPANY,
Defendants-Appellants,
and
BHP GROUP LIMITED and BHP GROUP PLC,
Defendants-Appellees.
SCAP-XX-XXXXXXX
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CAAP-XX-XXXXXXX; CASE NO. 1CCV-XX-XXXXXXX)
October 31, 2023
RECKTENWALD, C.J., McKENNA, AND EDDINS, JJ.,
CIRCUIT JUDGE JOHNSON AND CIRCUIT JUDGE TONAKI,
ASSIGNED BY REASON OF VACANCIES,
AND EDDINS, J., CONCURRING
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OPINION OF THE COURT BY RECKTENWALD, C.J.
I. INTRODUCTION
The City and County of Honolulu and the Honolulu Board
of Water Supply (collectively, Plaintiffs) brought suit against
a number of oil and gas producers 1 (collectively, Defendants)
alleging five counts: public nuisance, private nuisance, strict
liability failure to warn, negligent failure to warn, and
trespass. Defendants appeal the circuit court’s denial of their
motions to dismiss for both lack of jurisdiction and failure to
state a claim. We conclude that the circuit court properly
denied both motions, and accordingly, this lawsuit can proceed.
Plaintiffs argue this is a traditional tort case
alleging that Defendants engaged in a deceptive promotion
campaign and misled the public about the dangers of using their
oil and gas products. Plaintiffs claim their theory of
liability is simple: Defendants knew of the dangers of using
their fossil fuel products, “knowingly concealed and
misrepresented the climate impacts of their fossil fuel
products,” and engaged in “sophisticated disinformation
campaigns to cast doubt on the science, causes, and effects of
1 Defendants are: Sunoco LP, Aloha Petroleum, Ltd., Aloha Petroleum
LLC, Exxon Mobil Corporation, ExxonMobil Oil Corporation, Shell plc (f/k/a
Royal Dutch Shell plc), Shell U.S.A. Inc. (f/k/a Shell Oil Company), Shell
Oil Products Company LLC, Chevron Corporation, Chevron U.S.A. Inc., Woodside
Energy Hawaii Inc. (f/k/a BHP Hawaii Inc.), BP plc, BP America Inc., Marathon
Petroleum Corporation, ConocoPhillips, ConocoPhillips Company, Phillips 66,
and Phillips 66 Company. The circuit court dismissed BHP Group Limited and
BHP Group plc – that dismissal was not appealed and is not before this court.
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global warming,” causing increased fossil fuel consumption and
greenhouse gas emissions, which then caused property and
infrastructure damage in Honolulu. Simply put, Plaintiffs say
the issue is whether Defendants misled the public about fossil
fuels’ dangers and environmental impact.
Defendants disagree. They say this is another in a
long line of lawsuits seeking to regulate interstate and
international greenhouse gas emissions, all of which have been
rejected. Greenhouse gas emissions and global warming are
caused by “billions of daily choices, over more than a century,
by governments, companies, and individuals,” and Plaintiffs
“seek to recover from a handful of Defendants for the cumulative
effect of worldwide emissions leading to global climate change
and Plaintiffs’ alleged injuries.” They argue: (1) the circuit
court lacked specific jurisdiction over the Defendants; (2)
Plaintiffs’ claims are preempted by federal common law, which in
turn, was displaced by the Clean Air Act (CAA); and (3)
alternatively, Plaintiffs’ claims are preempted by the CAA.
We agree with Plaintiffs. This suit does not seek to
regulate emissions and does not seek damages for interstate
emissions. Rather, Plaintiffs’ complaint “clearly seeks to
challenge the promotion and sale of fossil-fuel products without
warning and abetted by a sophisticated disinformation campaign.”
Mayor & City Council of Baltimore v. BP P.L.C., 31 F.4th 178,
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233 (4th Cir. 2022), cert. denied, 143 S. Ct. 1795 (2023)
(characterizing a complaint brought against many of the same
Defendants in this case alleging broadly the same counts, theory
of liability, and injuries). This case concerns torts committed
in Hawaiʻi that caused alleged injuries in Hawaiʻi.
Thus, Defendants’ arguments on appeal fail. First,
Defendants are subject to specific jurisdiction in Hawaiʻi
because: (1) Plaintiffs’ allegations that Defendants misled
consumers about fossil fuels products’ dangers “arise out of”
and “relate to” Defendants’ contacts with Hawaiʻi, i.e.,
Defendants’ sale and marketing of those fossil fuel products in
Hawaiʻi, Ford Motor Co. v. Montana Eighth Judicial District
Court, 141 S. Ct. 1017, 1025 (2021); (2) it is reasonable for
Hawaiʻi courts to exercise specific jurisdiction over Defendants,
and doing so does not conflict with interstate federalism
principles because Hawaiʻi has a “significant interest[] . . .
[in] ‘providing [its] residents with a convenient forum for
redressing injuries inflicted by out-of-state actors,’” see id.
at 1030 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462,
473 (1985)); and (3) the Supreme Court has never imposed a
“clear notice” requirement, see id. at 1025.
Second, the CAA displaced federal common law governing
interstate pollution damages suits; after displacement, federal
common law does not preempt state law. See Am. Elec. Power Co.
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v. Connecticut, 564 U.S. 410, 423-24 (2011) (“AEP”); Bd. of
Cnty. Comm’rs of Boulder Cnty. v. Suncor Energy (U.S.A.) Inc.,
25 F.4th 1238, 1260 (10th Cir. 2022), cert. denied, 143 S. Ct.
1795 (2023) (“[T]he federal common law of nuisance that formerly
governed transboundary pollution suits no longer exists due to
Congress’s displacement of that law through the CAA.”). We must
only consider whether the CAA preempts state law. AEP, 564 U.S.
at 429 (“[T]he availability vel non of a state lawsuit depends
inter alia on the preemptive effect of the [CAA].”).
Third, the CAA does not preempt Plaintiffs’ claims.
The CAA does not occupy the entire field of emissions
regulation. See Merrick v. Diageo Ams. Supply, Inc., 805 F.3d
685, 695 (6th Cir. 2015) (determining that there is “no evidence
that Congress intended that all emissions regulation occur
through the [CAA’s] framework”). There is no “actual conflict”
between Plaintiffs’ state tort law claims and the CAA’s
overriding federal purpose or objective. See In re Methyl
Tertiary Butyl Ether (MTBE) Prod. Liab. Litig. (MTBE), 725 F.3d
65, 101 (2d Cir. 2013) (concluding that CAA did not preempt
state tort law claims relating to a gasoline additive where it
was possible to comply with both state and federal law).
Therefore, we affirm the circuit court’s orders
denying Defendants’ motion to dismiss for lack of jurisdiction
and motion to dismiss for failure to state a claim.
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II. BACKGROUND
A. Circuit Court Proceedings
1. Original complaint, removal, and remand
In March 2020, Plaintiffs filed their original
complaint in the Circuit Court for the First Circuit alleging
that for decades, Defendants knew their fossil fuel products
caused greenhouse gas emissions and global warming, but they
failed to warn consumers of the threat, and actively worked to
discredit scientific evidence that supported the existence of
global warming. In April 2020, Defendants removed the case to
federal court. Defendants argued that removal jurisdiction was
appropriate because federal common law governed, and the CAA and
other federal statutes preempted Plaintiffs’ claims. 2
On Plaintiffs’ motion, the federal district court
remanded the case to state circuit court. The federal court
explained that the Ninth Circuit, in City of Oakland v. BP PLC,
969 F.3d 895, 906-08 (9th Cir. 2020), recently rejected
2 Defendants asserted eight grounds for federal jurisdiction: (1)
the Outer Continental Shelf Lands Act (OCSLA) because “[a] significant
portion of oil and gas exploration and production” occurs on the shelf; (2)
the federal officer removal statute, see 28 U.S.C. § 1442(a)(1), because oil
and gas production “took place under the direction of a federal officer to
support critical national security, military, and other core federal
government operations;” (3) federal enclave jurisdiction because some oil
production occurred on federal enclaves like the Outer Continental Shelf; (4)
federal common law, which defendants argue governs Plaintiffs’ claims; (5)
federal question jurisdiction because Plaintiffs’ claims “necessarily raise[]
federal questions under the [CAA], EPA and other federal regulations and
international treaties on climate change to which the United States is a
party;” (6) federal preemption by the CAA and other related statutes; (7)
bankruptcy jurisdiction; and (8) admiralty jurisdiction.
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Defendants’ federal-common-law, federal-preemption, and federal-
question-jurisdiction arguments. City & Cnty. of Honolulu v.
Sunoco LP, No. 20-CV-00163-DKW-RT, 2021 WL 531237, at *2 n.8 (D.
Haw. Feb. 12, 2021). The court explained that the “principal
problem with Defendants’ arguments is that they misconstrue
Plaintiffs’ claims.” Id. at *1. “More specifically, contrary
to Defendants’ contentions, Plaintiffs have chosen to pursue
claims that target Defendants’ alleged concealment of the
dangers of fossil fuels, rather than the acts of extracting,
processing, and delivering those fuels.” Id. Further,
Plaintiffs’ nuisance claims arise “not through [Defendants’]
‘fossil fuel production activities,’ . . . but through their
alleged failure to warn about the hazards of using their fossil
fuel products and disseminating misleading information about the
same.” Id. at *3.
On appeal, the Ninth Circuit affirmed the district
court’s order remanding the case to state circuit court. City &
Cnty. of Honolulu v. Sunoco LP, 39 F.4th 1101, 1113 (9th Cir.
2022). Defendants filed an application for writ of certiorari
to the U.S. Supreme Court, which was denied. Sunoco LP v. City
& Cnty. of Honolulu, 143 S. Ct. 1795 (2023) (denying application
for certiorari).
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2. First Amended Complaint
In its First Amended Complaint (Complaint), Plaintiffs
added the Board of Water Supply (BWS) as a plaintiff and amended
certain allegations to incorporate damages specific to BWS.
Plaintiffs also added an allegation that the wrongful conduct
giving rise to the second cause of action (private nuisance) was
committed with actual malice, permitting punitive damages.
First, Plaintiffs allege that human activity is
causing the atmosphere and oceans to warm, sea levels to rise,
snow cover to diminish, oceans to acidify, and hydrologic
systems to change. Greenhouse gas emissions, which are largely
a byproduct of combustion of fossil fuels, are the chief cause
of this warming. The accumulation of greenhouse gases in the
atmosphere has adverse impacts on the earth, including: warming
of the average surface temperature, resulting in increasingly
frequent heatwaves; sea level rise; flooding of land and
infrastructure; changes to the global climate, including longer
periods of drought; ocean acidification; increased frequency of
extreme weather; changes to ecosystems; and impacts on human
health associated with extreme weather, decreased air quality,
and vector-borne illnesses.
Next, Plaintiffs allege that Defendants knew about the
dangers associated with their products because they, or their
predecessors in interest, were members of the American Petroleum
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Institute (API). Beginning in the 1950s, scientists warned the
API that fossil fuels were causing atmospheric carbon dioxide
levels to increase. In 1965, President Lyndon B. Johnson’s
Scientific Advisory Committee warned of global warming and the
catastrophic impacts that could result. The API President
related these findings to industry leaders at the association’s
annual meeting that year. Plaintiffs allege that by 1965,
industry leaders were aware of the global warming phenomenon
caused by their products. Defendants continued to gather
information on the climate change impacts of their products
throughout the 1960s, 1970s, and 1980s.
During the 1980s, many of the defendants in the
present case formed their own research units focused on climate
modeling. API provided a forum where Defendants shared research
efforts and corroborated each other’s findings. Plaintiffs
allege that by 1988, Defendants “had amassed a compelling body
of knowledge about the role of anthropogenic greenhouse gases,
and specifically those emitted from the normal use of
Defendants’ fossil fuel products, in causing global warming and
its cascading impacts[.]”
Plaintiffs allege that around 1990, public discussion
shifted from gathering information on climate change to
international efforts to curb emissions. At this point,
Defendants – rather than collaborating with the international
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community to help curb emissions - “embarked on a decades-long
campaign designed to maximize continued dependence on their
products and undermine national and international efforts to
rein in greenhouse gas emissions.” Defendants began a public
relations campaign to cast doubt on the science connecting
global climate change to their products. Defendants promoted
their products through misleading advertisements and funding
“climate change denialist organizations.”
According to Plaintiffs, Defendants’ efforts to cast
doubt on climate science continued throughout the 1990s and
2000s. Defendants “bankroll[ed]” scientists with “fringe
opinions” in order to create a false sense of disagreement in
the scientific community. Defendants’ own scientists, experts,
and managers had previously acknowledged climate change’s
effects. At the same time, Defendants worked to change public
opinion over climate change’s existence and avoid regulation.
Defendants funded dozens of think tanks, front groups, and dark
money foundations pushing climate change denial, with ExxonMobil
alone spending almost $31 million.
Plaintiffs allege that, while Defendants publicly cast
doubt on climate change, they simultaneously invested in
operational changes to prepare for its adverse consequences.
For example, Defendants allegedly raised offshore oil platforms
to protect against rising sea levels, reinforced them against
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storms, and developed new technologies for extracting oil in
places previously blocked by polar sea ice.
Defendants now claim they are investing in renewable
energy, but Plaintiffs claim these statements are a pretense.
Defendants’ advertisements and promotional materials do not
disclose the risks of their products, and they continue to ramp
up fossil fuel production, including new fossil fuel
development.
Plaintiffs allege that they have sustained damages
caused by Defendants’ failure to warn and deceptive promotion of
dangerous products. Defendants’ conduct “is a substantial
factor in causing global warming,” which has had adverse effects
on Plaintiffs. These effects include sea level rise (causing
flooding, erosion, and beach loss); more extreme weather events;
ocean warming (causing destruction of coral reefs); loss of
endemic species; and diminished availability of fresh water.
Because of Defendants’ conduct, Plaintiffs suffered damage to
their facilities and property, incurred increased planning and
preparation costs to adapt communities to global warming’s
effects, collected less tax revenue due to impacts on tourism,
and suffered the cost of public health impacts such as an
increase in heat-related illnesses. Plaintiffs have already
suffered damage to beach parks, roads, and drain way
infrastructure from flooding and sea level rise.
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Plaintiffs bring five counts under state law: public
nuisance, private nuisance, strict-liability failure to warn,
negligent failure to warn, and trespass. All counts rely on the
same theory of liability: Defendants knew about the dangers of
using their fossil fuel products, failed to warn consumers about
those known dangers, and engaged in a sophisticated
disinformation campaign to increase fossil fuel consumption, all
of which exacerbated the impacts of climate change in Honolulu.
3. Defendants’ joint motions to dismiss
Defendants filed two motions to dismiss, the first for
lack of jurisdiction and the second for failure to state a
claim. In their first motion to dismiss, Defendants argued the
circuit court did not have specific jurisdiction because
“(1) the Complaint avers, as it must, that Plaintiffs’
alleged injuries arise out of and relate to worldwide
conduct by countless actors, not Defendants’ alleged
contacts with Hawai‘i; (2) Defendants did not have ‘clear
notice’ that as a result of their activities in Hawai‘i they
could be sued here for activity occurring around the world;
and (3) exercising jurisdiction would be constitutionally
unreasonable.”
In their second motion to dismiss, Defendants argued:
(1) Plaintiffs’ claims are interstate pollution claims, which
must be brought under federal common law, not state common law,
and that the CAA preempts interstate pollution federal common
law claims; or alternatively, (2) Plaintiffs’ state common law
claims are preempted by the CAA. Plaintiffs opposed.
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At the motion hearing, Plaintiffs summarized their
theory of liability, which is central to the jurisdictional and
preemption issues on appeal. Plaintiffs explained that
defendants “concealed and misrepresented the climate impacts of
their products, using sophisticated disinformation campaigns to
discredit the science of global warming.” Defendants also
allegedly misled “consumers and the rest of the world about the
dangers of using their products as intended in a profligate
manner.” Thus, “these deceptive commercial activities . . .
inflated the overall consumption of fossil fuels, which
increased greenhouse gas emissions, which exacerbated climate
change, which created the hazardous environmental conditions”
that have allegedly injured Plaintiffs.
4. The circuit denied Defendants’ motions to dismiss
The circuit court subsequently denied both motions. 3
The circuit court denied Defendants’ motion to dismiss
for lack of jurisdiction, concluding that it had specific
jurisdiction because Plaintiffs’ claims arose out of and related
to Defendants’ sales and marketing contacts in Hawaiʻi. See,
e.g., Ford Motor, 141 S. Ct. at 1025. The circuit court also
determined it would be reasonable to exercise specific
3 The Honorable Jeffrey P. Crabtree presided.
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jurisdiction over Defendants. See Hawaii Forest & Trial Ltd. v.
Davey, 556 F. Supp. 2d 1162, 1168-72 (D. Haw. 2008).
The circuit court also denied Defendants’ joint motion
to dismiss for failure to state a claim. The court explained
that the standard for the review of a motion to dismiss “is
generally limited to the allegations in the complaint, which
must be deemed true for purposes of the motion,” Kahala Royal
Corp. v. Goodsill Anderson Quinn & Stifel, 113 Hawai‘i 251, 266,
151 P.3d 732, 747 (2007), but courts are “not required to accept
conclusory allegations,” Civ. Beat L. Ctr. for the Pub. Int.,
Inc. v. City & Cnty. of Honolulu, 144 Hawai‘i 466, 474, 445 P.3d
47, 55 (2019). And “the issue is not solely whether the
allegations as currently pled are adequate.” Rather, “[a]
complaint should not be dismissed for failure to state a claim
unless it appears beyond doubt that the plaintiff can prove no
set of facts in support of his or her claim that would entitle
him or her to relief under any set of facts or any alternative
theory.” (Citations omitted).
The circuit court first concluded that City of New
York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021), cited by
Defendants, “has limited application to this case, because the
claims in the instant case are both different from and were not
squarely addressed in [that] opinion.” The circuit court then
determined that federal common law did not govern Plaintiffs’
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state law claims. The circuit court also determined that
Plaintiffs’ claims were not preempted by the CAA.
The circuit court also rejected Defendants’ argument
that a large damages award in this case could act as a de facto
emissions regulation because an unfavorable judgment would “not
prevent Defendants from producing and selling as much fossil
fuels as they are able, as long as Defendants make the
disclosures allegedly required, and do not engage in
misinformation.” The circuit court concluded:
A broad doctrine that damages awards in tort cases
impermissibly regulate conduct and are thereby preempted
would intrude on the historic powers of state courts. Such
a broad “damages = regulation = preemption” doctrine could
preempt many cases common in state court, including much
class action litigation, products liability litigation,
claims against pharmaceutical companies, and consumer
protection litigation.
Last, the circuit court concluded that it was
appropriate for state common law to govern Plaintiffs’ claims:
Defendants argue (and the City of New York opinion
expresses) that climate change cases are based on “artful
pleading.” Respectfully, we often see “artful pleading” in
the trial courts, where new conduct and new harms often
arise:
The argument that recognizing the tort will
result in a vast amount of litigation has accompanied
virtually every innovation in the law. Assuming that
it is true, that fact is unpersuasive unless the
litigation largely will be spurious and harassing.
Undoubtedly, when a court recognizes a new cause of
action, there will be many cases based on it. Many
will be soundly based and the plaintiffs in those
cases will have their rights vindicated. In other
cases, plaintiffs will abuse the law for some
unworthy end, but the possibility of abuse cannot
obscure the need to provide an appropriate remedy.
Fergerstrom v. Hawaiian Ocean View Estates, 50 Haw. 374,
377 (1968) (opinion by Levinson, J.)[.] Here, the causes
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of action may seem new, but in fact are common. They just
seem new due to the unprecedented allegations involving
causes and effects of fossil fuels and climate change.
Common law historically tries to adapt to such new
circumstances.
The circuit court then granted Defendants leave to
file an interlocutory appeal.
B. Appellate Proceedings
Defendants timely filed their joint notice of
interlocutory appeal from the circuit court’s Order Denying
Defendants’ Joint Motion to Dismiss for Failure to State a Claim
and its Order Denying Defendants’ Joint Motion to Dismiss for
Lack of Personal Jurisdiction. This court subsequently granted
Plaintiffs’ application for transfer from the Intermediate Court
of Appeals.
On appeal, Defendants frame this case as one where
Plaintiffs “seek[] to hold Defendants liable under Hawai‘i tort
law for harms allegedly attributable to global climate change.”
This case should be dismissed because “these emissions flow from
billions of daily choices, over more than a century, by
governments, companies, and individuals about what types of
fuels to use, and how to use them.” Plaintiffs “seek to recover
from a handful of Defendants for the cumulative effect of
worldwide emissions leading to global climate change and
Plaintiffs’ alleged injuries.”
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Plaintiffs dispute Defendants’ characterization of the
Complaint. Plaintiffs argue that the Complaint does “not ask
for damages for all effects of climate change; rather, [it]
seek[s] damages only for the effects of climate change allegedly
caused by Defendants’ breach of Hawai‘i law regarding failure to
disclose, failures to warn, and deceptive promotion.”
Plaintiffs contend their Complaint is “straightforward”:
“Defendants knowingly concealed and misrepresented the climate
impacts of their fossil fuel products” and that “deception
inflated global consumption of fossil fuels, which increased
greenhouse gas emissions, exacerbated climate change, and
created hazardous conditions in Hawai‘i.” Despite Defendants’
contention that this suit seeks to regulate fossil fuel
production, “so long as Defendants start warning of their
products’ climate impacts and stop spreading climate
disinformation, they can sell as much fossil fuel as they wish
without fear of incurring further liability.”
Defendants raise three points of error: (1) the
circuit court lacked specific jurisdiction over the Defendants;
(2) Plaintiffs’ claims are preempted by federal common law,
which in turn, was displaced by the CAA; and (3) alternatively,
Plaintiffs’ claims are preempted by the CAA.
First, Defendants argue that specific jurisdiction
does not attach because: (1) Plaintiffs cannot show that their
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claims “arise out of or relate to,” Ford Motor, 141 S. Ct. at
1025, Defendants’ contacts with Hawai‘i because Plaintiffs’
alleged injuries did not “occur in-state as a result of the use
of the product in-state;” (2) Defendants’ in-state conduct “did
not reasonably place them on clear notice” they would be subject
to specific jurisdiction in Hawai‘i as required by the federal
Due Process Clause; and (3) the exercise of “personal
jurisdiction here would conflict with federalism principles”
limiting state jurisdiction in areas of national interest.
Plaintiffs dispute Defendants’ arguments, contending:
(1) the U.S. Supreme Court explained in Ford Motor that it had
“never framed the specific jurisdiction inquiry as always
requiring proof of causation — i.e., proof that the plaintiff’s
claim came about because of the defendant’s in-state conduct,”
id. at 1026; (2) Defendants had fair warning they could be haled
into Hawaiʻi courts, and Ford Motor did not create a “clear
notice” requirement, id. at 1027; and (3) Plaintiffs’ suit does
not interfere with national energy policy because Defendants can
continue to produce as much oil as they want as long as they
stop their tortious marketing conduct.
Second, Defendants argue that Plaintiffs’ state law
claims are governed by federal common law “because they seek
redress for harms allegedly caused by interstate and
international emissions.” Relying on City of New York,
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Defendants say that federal common law preempts Plaintiffs’
state common law tort claims, and in turn, the CAA preempts the
federal common law. See City of New York, 993 F.3d at 93-96.
Defendants contend that “[o]nce this court correctly concludes
that Plaintiffs’ claims are necessarily governed by federal law,
it follows that Plaintiffs also have no remedy under federal
law.”
Plaintiffs counter that the CAA displaced federal
common law governing interstate pollution, and that law “no
longer exists.” Boulder, 25 F.4th at 1260; see also AEP, 564
U.S. at 423. Plaintiffs claim that “once federal common law
disappears, the question of state law preemption is answered
solely by reference to federal statutes, not the ghost of some
judge-made federal law.” See AEP, 564 U.S. at 429 (“[T]he
availability . . . of a state lawsuit depends . . . on the
preemptive effect of the [CAA].”). According to Plaintiffs, the
proper preemption analysis requires examining only whether the
CAA preempts their state law claims. The court need not
consider first whether displaced federal common law preempts
Plaintiffs’ state claims, and second whether displaced federal
common law is preempted by the CAA.
Third and finally, Defendants alternatively argue that
the CAA preempts Plaintiffs’ claims. Defendants say Plaintiffs
seek damages for injuries allegedly caused by out-of-state
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sources’ emissions. Relying on N. Carolina ex rel. Cooper v.
Tenn. Valley Auth., 615 F.3d 291, 303, 306 (4th Cir. 2010),
Defendants contend that the “CAA preempts state-law claims
concerning out-of-state emissions.” Plaintiffs counter that the
“CAA does not concern itself in any way with the acts that
trigger liability under [its] Complaint, namely: the use of
deception to promote the consumption of fossil fuel products.”
They say the CAA regulates “pollution-generating emissions from
both stationary sources, such as factories and powerplants, and
moving sources, such as cars, trucks, and aircraft,” Util. Air
Regul. Grp. v. EPA, 573 U.S. 302, 308 (2014), not the
traditional state tort claims for failure to warn and deceptive
promotion.
III. STANDARD OF REVIEW
A. Motion to Dismiss
A trial court’s ruling on a motion to dismiss is
reviewed de novo. The court must accept plaintiff's
allegations as true and view them in the light most
favorable to the plaintiff; dismissal is proper only if it
appears beyond doubt that the plaintiff can prove no set of
facts in support of his or her claim that would entitle him
or her to relief.
Delapinia v. Nationstar Mortg. LLC, 150 Hawai‘i 91, 97–98, 497
P.3d 106, 112–13 (2021) (quoting Goran Pleho, LLC v. Lacy, 144
Hawai‘i 224, 236, 439 P.3d 176, 188 (2019)).
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B. Jurisdiction
“A trial court’s determination to exercise personal
jurisdiction is a question of law reviewable de novo when the
underlying facts are undisputed.” Shaw v. N. Am. Title Co., 76
Hawai‘i 323, 326, 876 P.2d 1291, 1294 (1994) (citing Bourassa v.
Desrochers, 938 F.2d 1056, 1057 (9th Cir. 1991)). Plaintiffs
“need make only a prima facie showing that: (1) [defendant’s]
activities in Hawai‘i fall into a category specified by Hawai‘i's
long-arm statute, [Hawai‘i Revised Statutes (HRS)] § 634–35; and
(2) the application of HRS § 634–35 comports with due process.”
Id. at 327, 876 P.3d at 1295 (citing Cowan v. First Ins. Co. of
Hawai‘i, 61 Haw. 644, 649, 608 P.2d 394, 399 (1980)). When the
circuit court relies on pleadings and affidavits, without
conducting an “‘full-blown evidentiary hearing,’” the
plaintiff’s “‘allegations are presumed true and all factual
disputes are decided in [plaintiff’s] favor.’” Id. (citations
omitted).
C. Preemption
Questions of federal preemption “are questions of law
reviewable de novo under the right/wrong standard.” Rodrigues
v. United Pub. Workers, AFSCME Loc. 646, AFL-CIO, 135 Hawai‘i
316, 320, 349 P.3d 1171, 1175 (2015).
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IV. DISCUSSION
We affirm the circuit court’s orders denying
Defendant’s motions to dismiss. Similar to Baltimore,
Plaintiffs’ Complaint “clearly seeks to challenge the promotion
and sale of fossil-fuel products without warning and abetted by
a sophisticated disinformation campaign.” 31 F.4th at 233.
While Plaintiffs’ Complaint does reference global emissions
repeatedly, “these references only serve to tell a broader story
about how the unrestrained production and use of Defendants’
fossil-fuel products contribute to greenhouse gas pollution.”
Id. Plaintiffs do “not merely allege that Defendants
contributed to climate change and its attendant harms by
producing and selling fossil-fuel products; it is the
concealment and misrepresentation of the products’ known dangers
- and the simultaneous promotion of their unrestrained use -
that allegedly drove consumption, and thus greenhouse gas
pollution, and thus climate change.” Id. at 233-34.
As the circuit court explained:
The court recognizes that nuisance, trespass, and
failure to warn vary somewhat in terms of their specific
elements. All of these claims, however, share the same
basic structure of requiring that a defendant engage in
tortious conduct that causes injury to a plaintiff.
Moreover, as the court understands it, Plaintiffs are
relying on the same basic theory of liability to prove each
of their claims, namely: that Defendants’ failures to
disclose and deceptive promotion increased fossil fuel
consumption, which – in turn – exacerbated the local
impacts of climate change in Hawaiʻi.
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Because this is a traditional tort case alleging
Defendants misled consumers and should have warned them about
the dangers of using their products, Defendants’ arguments fail.
Defendants’ contacts with Hawaiʻi (selling oil and gas here)
arise from and relate to Plaintiffs’ claims (deceptive promotion
and failure to warn about the dangers of using the oil and gas
sold here). Defendants are alleged to have engaged in tortious
acts in Hawaiʻi and have extensive contacts in Hawaiʻi, and it is
therefore reasonable for Defendants to be haled into court here.
Further, neither displaced federal common law nor the CAA
preempts Plaintiffs’ state-law tort claims.
A. Defendants Are Subject to Specific Jurisdiction in Hawaiʻi
Specific jurisdiction attaches where (1) Defendants’
activity falls under the State’s long-arm statute, and (2) the
exercise of jurisdiction comports with due process. See Shaw,
76 Hawai‘i at 327, 876 P.2d at 1295. As we recently explained,
“the two-step inquiry may in fact be redundant” because Hawaiʻi’s
long-arm statute “was adopted to expand the jurisdiction of the
State’s courts to the extent permitted by the due process clause
of the Fourteenth Amendment.” Yamashita v. LG Chem, Ltd., 152
Hawai‘i 19, 21-22, 518 P.3d 1169, 1171-72 (2022), opinion after
certified question answered, 62 F.4th 496 (9th Cir. 2023)
(quoting Cowan, 61 Haw. at 649, 608 P.2d at 399). But while
“this collapsed inquiry yields the same practical result as the
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two-step test” and is “not improper,” “there is value in
remembering that personal jurisdiction rests on both negative
federal limits and positive state assertions of jurisdiction.”
Id. at 22, 518 P.3d at 1172. Accordingly, we engage in the two-
step test outlined in Yamashita.
First, Defendants’ activity in Hawai‘i falls under the
long-arm statute. Plaintiffs’ Complaint alleges that Defendants
conducted fossil fuel business in Hawaiʻi, committed torts in
Hawaiʻi, and caused injury in Hawaiʻi. See HRS § 634-35(a)
(1)-(2)(2016) 4 (persons subject to Hawaiʻi’s personal
jurisdiction when transact business or commit tort within
state). Further, Defendants did not dispute below and do not
dispute on appeal that their in-state activity falls under the
long-arm statute.
Second, exercising specific jurisdiction over
Defendants comports with due process. Specific jurisdiction
4 HRS § 634-35, Hawai‘i’s long-arm statute, provides:
Acts submitting to jurisdiction. (a) Any person, whether or not
a citizen or resident of this State, who in person or through an
agent does any of the acts hereinafter enumerated, thereby
submits such person, and, if an individual, the person's personal
representative, to the jurisdiction of the courts of this State
as to any cause of action arising from the doing of any of the
acts:
(1) The transaction of any business within this State;
(2) The commission of a tortious act within this State;
(3) The ownership, use, or possession of any real estate
situated in this State;
(4) Contracting to insure any person, property, or risk
located within this State at the time of contracting.
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comports with due process where: (1) defendants “purposefully
avail[ed] [themselves] of the privilege of conducting activities
in the forum, thereby invoking the benefits and protections of
its laws”; (2) plaintiffs’ claim “arises out of or relates to
the defendant[s’] forum-related activities”; and (3) exercising
specific jurisdiction “comport[s] with fair play and substantial
justice, i.e. it must be reasonable.” Int. of Doe, 83 Hawai‘i
367, 374, 926 P.2d 1290, 1297 (1996). This three-part test is
“commonly referred to as the minimum contacts test.” Greys Ave.
Partners, LLC v. Theyers, 431 F. Supp. 3d 1121, 1128 (D. Haw.
2020). “The minimum contacts test ‘ensures that a defendant
will not be haled into a jurisdiction solely as a result of
random, fortuitous, or attenuated contacts[.]’” Freestream
Aircraft (Bermuda) Ltd. v. Aero L. Grp., 905 F.3d 597, 603 (9th
Cir. 2018) (quoting Burger King, 471 U.S. at 475).
Defendants do not contest the first prong of the
minimum contacts test - that they “purposefully avail[ed]”
themselves of the forum. See id. Therefore, at issue is
whether Plaintiffs’ claims “arise out of or relate to”
Defendants’ Hawaiʻi contacts and whether the exercise of specific
jurisdiction is reasonable. Ford Motor, 141 S. Ct. at 1025.
Defendants further argue that, under Ford Motor, they did not
have “clear notice” they could be subject to specific
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jurisdiction in Hawaiʻi. Id. at 1030 (quoting World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
As set forth below, Defendants are subject to specific
jurisdiction in Hawaiʻi because: (1) Plaintiffs’ allegations that
Defendants misled consumers about the dangers of using their
products “arise out of” and “relate to” Defendants’ contacts
with Hawaiʻi, here Defendants’ sale and promotion of oil and gas
in Hawaiʻi, id. at 1025 (quoting Bristol-Myers Squibb Co. v.
Superior Ct. of Cal., 137 S. Ct. 1773, 1786 (2017)); (2) it is
reasonable for Hawaiʻi courts to exercise specific jurisdiction
over Defendants and doing so does not conflict with interstate
federalism principles because Hawaiʻi has a “significant
interest[] [in] ‘providing [its] residents with a convenient
forum for redressing injuries inflicted by out-of-state
actors,’” see id. at 1030 (quoting Burger King, 471 U.S. at
473); and (3) the U.S. Supreme Court has never imposed a “clear
notice” requirement, despite having the opportunity to do so,
see id. at 1025.
Courts typically analyze jurisdictional contacts on a
claim-by-claim basis. See, e.g., Seiferth v. Helicopteros
Atuneros, Inc., 472 F.3d 266, 274–75 (5th Cir. 2006). But
courts “need not assess contacts on a claim-by-claim basis if
all claims arise from the same forum contacts.” See, e.g.,
Moncrief Oil Int’l Inc. v. OAO Gazprom, 414 S.W.3d 142, 150-51
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(Tex. 2013). Plaintiffs bring five claims: public nuisance,
private nuisance, strict liability failure to warn, negligent
failure to warn, and trespass. Plaintiffs’ claims all arise
from the same alleged forum contacts for all Defendants – here,
Defendants’ products were transported, traded, distributed,
promoted, marketed, refined, manufactured, sold, and/or consumed
in Hawaiʻi. Plaintiffs’ claims also all arise from the same
alleged acts – here, Defendants’ deceptive promotion of and
failure to warn about the dangers of using oil and gas.
Accordingly, we examine all claims against all Defendants
together. See id.
1. Plaintiffs’ claims “arise out of or relate to”
Defendants’ in-state conduct
Quoting Ford Motor, Defendants argue that when
personal jurisdiction is based on “‘advertising, selling, and
servicing,’” the alleged injuries must be “caused by the use and
malfunction of the defendant’s products within the forum State”
for specific jurisdiction to attach. 141 S. Ct. at 1022. In
short, Defendants say “the injury must occur in-state as a
result of the use of the product in-state” for specific
jurisdiction to attach. In this case, Defendants contend that
Hawaiʻi is a small state, with only 0.02% of the world’s
population, that accounts for only 0.06% of the world’s carbon
dioxide emissions per year. Quoting Native Vill. of Kivalina v.
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ExxonMobil Corp., Defendants argue that “‘the undifferentiated
nature of greenhouse gas emissions from all global sources and
their world-wide accumulation over long periods of time’ mean
that ‘there is no realistic possibility of tracing any
particular alleged effect of global warming to any particular
emissions by any specific person, entity, [or] group at any
particular point in time.’” 5 663 F. Supp. 2d 863, 876 (N.D. Cal.
2009) (“Kivalina I”), aff’d, 696 F.3d 849 (9th Cir. 2012).
Given the “undifferentiated nature of greenhouse gas emissions,”
Defendants argue the circuit court erred in asserting specific
jurisdiction.
5 In Kivalina I, the Village of Kivalina brought a federal common
law nuisance claim for damages against 24 oil, energy, and utility companies.
663 F. Supp. 2d at 868. Defendants’ Kivalina I quotations are taken from the
court’s Article III standing analysis, not from an analysis of whether the
court had specific jurisdiction under the minimum contacts test. See id. at
881. The court concluded that because Kivalina sought damages for greenhouse
gas emissions, which come from “global sources and their worldwide
accumulation”, the “multitude of alternative culprits” meant Kivalina could
not establish its injury was fairly traceable to Defendants. Id. at 880-81
(quotation marks omitted). Accordingly, the court dismissed the case for
lack of standing. Id. at 882. Kivalina I involved different claims than
those before us in this case, and was disposed of on standing, not minimum
contacts grounds – it is inapposite with respect to Defendants’
jurisdictional arguments. See id. at 868, 882.
But Native Vill. of Kivalina v. ExxonMobil Corp., 696 F.3d 849
(9th Cir. 2012) (“Kivalina II”) is relevant to Defendants’ federal common law
arguments. There, the Ninth Circuit affirmed the trial court’s dismissal for
lack of jurisdiction in Kivalina I, but not because Kivalina lacked standing.
Id. at 856–58. Instead, the Ninth Circuit determined that “AEP extinguished
Kivalina’s federal common law public nuisance damage action, along with the
federal common law public nuisance abatement actions.” 696 F.3d at 858.
Accordingly, Kivalina could not bring its federal common law nuisance claim,
and dismissal was proper. Id.
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We agree with Plaintiffs that “Defendants’ arguments
for reversal flow[] from a single, fatally flawed premise: they
say, in various formulations, that they can only be subject to
personal jurisdiction if the climate change injuries Plaintiffs
allege were caused by Defendants’ fossil fuels being burned in
Hawaiʻi.” 6 Indeed, the U.S. Supreme Court rejected an argument
similar to Defendants’ causation argument in Ford Motor, holding
that the “causation-only approach finds no support in this
Court’s requirement of a ‘connection’ between a plaintiff’s suit
and a defendant’s activities.” 141 S. Ct. at 1026.
In Ford Motor, the U.S. Supreme Court consolidated two
cases with the same underlying facts: in both, there was a car
accident in the forum state involving an allegedly
malfunctioning Ford vehicle designed, manufactured, and sold
outside of the forum state. Id. at 1023. Ford moved to dismiss
both cases, arguing that “the state court . . . had jurisdiction
only if the company’s conduct in the State had given rise to the
plaintiff’s claims.” Id. Ford argued that a “causal link” was
required: it was only subject to specific jurisdiction in the
forum state “if the company had designed, manufactured, or –
6 Defendants’ causation arguments are better saved for the merits
stage of this litigation where Plaintiffs must prove causation with respect
to all of its tort claims. Of course, we express no opinion as to the
validity of those arguments.
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most likely – sold in the State the particular vehicle involved
in the accident.” Id.
The Supreme Court held that for specific jurisdiction
to attach, a defendant “must take ‘some act by which [it]
purposefully avails itself of the privilege of conducting
activities within the forum State.’” Id. at 1024 (quoting
Hanson v. Denckla, 357 U.S. 235, 253 (1958)). “The contacts
must be the defendant’s own choice and not ‘random, isolated, or
fortuitous.’” Id. at 1025 (quoting Keeton v. Hustler Mag.,
Inc., 465 U.S. 770, 774 (1984)). The contacts “must show that
the defendant deliberately ‘reached out beyond’ its home — by,
for example, ‘exploi[ting] a market’ in the forum State or
entering a contractual relationship centered there.” Id.
(quoting Walden v. Fiore, 571 U.S. 277, 285 (2014)).
Accordingly, for specific jurisdiction to attach, a
plaintiff’s claims “‘must arise out of or relate to defendant’s
contacts’ with the forum.” Id. (quoting Bristol-Myers, 137 S.
Ct. at 1786). “The first half of that standard asks about
causation; but the back half, after the ‘or,’ contemplates that
some relationships will support jurisdiction without a causal
showing.” Id. at 1026. Ford Motor thus requires only “a
‘connection’ between a plaintiff’s suit and a defendant’s
activities” for specific jurisdiction to attach. Id. at 1026
(quoting Bristol-Myers, 137 S. Ct. at 1776). “Or put just a bit
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differently, there must be an affiliation between the forum and
the underlying controversy, principally, [an] activity or an
occurrence that takes place in the forum State and is therefore
subject to the State’s regulation.” Id. at 1025 (quoting
Bristol-Myers, 137 S. Ct. at 1779) (quotation marks omitted).
Similar to Defendants’ arguments here, the Ford Motor
defendants contended that the link between their forum contacts
and plaintiffs’ claims “must be causal in nature: Jurisdiction
attaches ‘only if the defendant’s forum conduct gave rise to the
plaintiff’s claims.’” Id. at 1026. But the Supreme Court made
clear that it has “never framed the specific jurisdiction
inquiry as always requiring proof of causation — i.e., proof
that the plaintiff’s claim came about because of the defendant’s
in-state conduct.” Id.
The Court relied on World-Wide Volkswagen, 444 U.S. at
295, which “held that an Oklahoma court could not assert
jurisdiction over a New York car dealer just because a car it
sold later caught fire in Oklahoma.” Ford Motor, 141 S. Ct. at
1027. The World-Wide Volkswagen court “contrasted the dealer’s
position to that of two other defendants — Audi, the car’s
manufacturer, and Volkswagen, the car’s nationwide importer
(neither of which contested jurisdiction).” Id. “[I]f Audi and
Volkswagen’s business deliberately extended into Oklahoma (among
other States), then Oklahoma’s courts could hold the companies
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accountable for a car’s catching fire there — even though the
vehicle had been designed and made overseas and sold in New
York.” Id. And while “technically ‘dicta,’” the
Audi/Volkswagen scenario from World-Wide Volkswagen has become
the “paradigm case of specific jurisdiction” and has been
“reaffirmed” in other cases. Id. at 1027-28. This paradigm
case appeared again in Daimler, where the court again “did not
limit jurisdiction to where the car was designed, manufactured,
or first sold.” Id. at 1028.
Turning back to the facts in Ford Motor, the Court
explained that “[b]y every means imaginable - among them,
billboards, TV and radio spots, print ads, and direct mail -
Ford urges [people in the forum states] to buy its vehicles.”
Id. Ford dealers regularly maintained and repaired Ford cars,
and Ford distributed replacement parts throughout both states.
Id. Ford “systematically served a market in [the forum states]
for the very vehicles that the plaintiffs allege malfunctioned
and injured them in those States.” Id. Accordingly, “there is
a strong ‘relationship among the defendant, the forum, and the
litigation’ – the ‘essential foundation’ of specific
jurisdiction.” Id. (quoting Helicopteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)).
The same is true here. Defendants do not contest that
they purposefully availed themselves of the rights and
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privileges of conducting extensive business in Hawaiʻi. Indeed,
the Complaint alleges that each Defendant conducted substantial
business in Hawaiʻi. Each defendant is alleged to have
transported, traded, distributed, promoted, marketed, refined,
manufactured, sold, and/or consumed oil and gas in Hawaiʻi.
Plaintiffs also allege that Defendants failed to warn consumers
in Hawaiʻi about the dangers of using the oil and gas Defendants
sold in the state and that Defendants engaged in a deceptive
marketing campaign to conceal, deny, and discredit efforts to
make those dangers known to the public. Plaintiffs further
allege that Defendants’ tortious failure to warn and deceptive
promotion caused extensive injuries in Hawaiʻi, including:
injury or destruction of City - or [Honolulu Board of Water
Supply] - owned or operated facilities and property deemed
critical for operations, utility services, and risk
management, as well as other assets that are essential to
community health, safety, and well-being; increased
planning and preparation costs for community adaptation and
resiliency to global warming’s effects; decreased tax
revenue due to impacts on the local tourism - and ocean-
based economy; increased costs associated with public
health impacts; and others.
Just as in Ford Motor, “there is a strong
‘relationship among the defendant, the forum, and the
litigation’ – the ‘essential foundation’ of specific
jurisdiction.” See id. (quoting Helicopteros, 466 U.S. at
414). Defendants sold and marketed oil and gas in Hawaiʻi,
availed themselves of Hawaiʻi markets and laws, and the at-issue
litigation alleges tortious acts and damages in Hawaiʻi that
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“arise out of” or “relate to” Defendants Hawaiʻi contacts, i.e.,
oil and gas business conducted in the state. See id. at 1026.
Indeed, the connection between Defendants, Hawaiʻi, and this
litigation is more closely intertwined than that of Ford Motor.
See id. at 1028. Unlike in Ford Motor, here, the alleged
injury-causing products (oil and gas) were marketed and sold in
the forum state. See id. Therefore, Defendants are subject to
specific jurisdiction because there is a clear and unambiguous
“affiliation between the forum and the underlying controversy.”
See id. (quoting Bristol-Myers, 137 S. Ct. at 1779) (quotation
marks omitted).
Defendants rely on Martins v. Bridgestone Am. Tire
Ops., LLC, 266 A.3d 753, 759, 761 (R.I. 2022). Martins is
inapposite. In Martins, a Rhode Island resident drove a truck
from Massachusetts to Connecticut, and struck a tree in
Connecticut when an allegedly defective tire made in and
installed in Tennessee failed. Id. at 756. The Rhode Island
resident was severely injured and was taken to and later died in
Rhode Island. Id. The only connection between Rhode Island
(the forum state) and the litigation was that the decedent was a
Rhode Island resident who passed away in Rhode Island. Id. at
761. The Rhode Island Supreme Court did not endorse the
causation test put forth by Defendants here – the court instead
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determined that the plaintiffs’ claims did not arise out of or
relate to the tire companies’ Rhode Island contacts. Id.
The Supreme Court has “endorse[d] an ‘effects’ test of
jurisdiction in situations involving tortious acts.” Shaw, 76
Hawaiʻi at 330, 876 P.2d at 1298 (quoting Calder v. Jones, 465
U.S. 783, 789 (1984)). “Under this theory, asserting
jurisdiction against nonresident defendants who commit torts
directed at a forum state with the intention of causing in-state
‘effects’ satisfies due process.” Id. The effects test inquiry
“focuses on conduct that takes place outside the forum state and
that has effects inside the forum state.” Freestream Aircraft,
905 F.3d at 604. Generally, “[t]he commission of an intentional
tort in a state is a purposeful act that will satisfy the first
two requirements [of the minimum contacts test].” Id. at 603
(quoting Paccar Int’l, Inc. v. Com. Bank of Kuwait, S.A.K., 757
F.2d 1058, 1064 (9th Cir. 1985)). Therefore, where a
nonresident defendant is alleged to have committed a tort
directed at the forum state, the effects test is an alternate
due process theory capable of establishing that: (1) the
defendant purposefully availed themselves of the forum; and (2)
the plaintiff’s claim arises out of or relates to the
defendant’s forum contacts. Id. at 1062.
Plaintiffs argues that “the effects test . . . is
satisfied here” because “the Complaint alleges that the targets
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of Defendants’ deceptive marketing and failure to warn included
audiences and consumers in Hawaiʻi, and those misrepresentations
and omissions, directed at least in part to Hawaiʻi, contributed
to Plaintiff’s injuries.” Defendants counter that Plaintiffs
failed to identify in their Complaint “a single deceptive
message that Defendants allegedly made in or directed at
Hawaiʻi,” which “defeats personal jurisdiction under the effects
test.”
The circuit court did not engage in an “effects” test
analysis, and the parties’ briefs almost exclusively address the
traditional “minimum contacts” test. Because Defendants are
subject to specific jurisdiction under the minimum contacts
test, see infra Section IV(A)(1), it is not necessary to engage
in an effects test analysis as to the first two prongs of the
due process inquiry. See Louis Vuitton Malletier, S.A. v.
Mosseri, 736 F.3d 1339, 1357 (11th Cir. 2013) (determining that
because the plaintiff had met the “purposeful availment” prong
of the “minimum contacts” test, the court “need not analyze the
‘effects test’ here”).
Relatedly, Defendants argue that, under Shaw,
Plaintiffs’ claims “bear at most an ‘incidental’ . . .
relationship to Defendants’ in-state activities and thus lack
the requisite close connection found in Ford Motor that
permitted exercise of specific jurisdiction.” In Shaw, the
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court held that for the purposes of the long-arm statute’s
“transacting business” subsection, see HRS § 634-35(a)(1), the
alleged Hawaiʻi business conduct (the signing of escrow
documents) was “merely incidental” to business at the crux of
the case (the escrow transaction, which happened in California).
Shaw, 76 Hawaiʻi at 328, 876 P.2d at 1296. Thus, the plaintiff
failed to sufficiently allege, for the purposes of the long-arm
statute, that the defendant “transact[ed] business” in Hawaiʻi.
Id.
The Court in Shaw held that the plaintiff sufficiently
alleged under another subsection of the long-arm statute that
the defendant committed a “tortious act” in Hawaiʻi, see HRS
§ 634-35(a)(2), and that due process was satisfied under the
“effects” test. Shaw, 76 Hawaiʻi at 329-330, 332, 876 P.2d at
1297-98, 1300. Notably, Shaw’s “merely incidental” holding did
not affect the court’s due process analysis – the defendant was
still subject to specific jurisdiction. See Shaw, 76 Hawaiʻi at
328, 876 P.2d at 1296. Here, Defendants’ in-state conduct is
anything but “merely incidental” to Plaintiffs’ claims. See id.
2. Exercising specific jurisdiction is reasonable and
does not “conflict with federalism principles”
The exercise of specific jurisdiction must “comport
with fair play and substantial justice, i.e. it must be
reasonable.” Doe, 83 Hawai‘i at 374, 926 P.2d at 1297. In Doe,
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this court adopted the Ninth Circuit’s seven-factor test for
determining whether the exercise of jurisdiction is reasonable,
which is as follows:
(1) the extent of the defendants’ purposeful
interjection into the forum state's affairs; (2) the burden
on the defendant of defending in the forum; (3) the extent
of any conflict with the sovereignty of the defendants’
state; (4) the forum state’s interest in adjudicating the
dispute; (5) concerns of judicial efficiency; (6) the
significance of the forum to the plaintiff's interest in
relief; and (7) the existence of alternative fora.
Id. (citing Caruth v. Int’l Psychoanalytical Ass’n, 59 F.3d 126,
127 (9th Cir. 1995)).
“None of the factors is solely dispositive; all seven
are weighed in the factual circumstances in which they arise.”
Id. (citation omitted). And, as here, “where a defendant who
purposefully has directed [their] activities at forum residents
seeks to defeat jurisdiction, [they] must present a compelling
case that the presence of some other considerations would render
jurisdiction unreasonable.” Burger King, 471 U.S. at 477
(emphasis added). Therefore, “we begin with a presumption of
reasonableness.” Caruth, 59 F.3d at 128.
Defendants do not engage with the Doe factors, but
appear to argue that factors three and four weigh against
determining that the exercise of jurisdiction over Defendants is
“reasonable.” Doe, 83 Hawai‘i at 374, 926 P.2d at 1297.
Defendants say that “exercising personal jurisdiction here would
be ‘[un]reasonable, in the context of our federal system of
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government.’” Quoting Ford Motor, 141 S. Ct. at 1024)(brackets
in original). According to Defendants, permitting specific
jurisdiction in this context would subject companies to climate
change suits in every court in the country. And if Plaintiffs’
theory were adopted abroad, “American companies could be sued on
climate change-related claims in courts around the world.”
According to Defendants, “[d]ue process does not countenance
that result.” We review each of the Doe factors in turn, and
conclude that they weigh in favor of exercising specific
jurisdiction over Defendants because doing so is “reasonable.”
Id. Defendants have not “present[ed] a compelling case” that
the exercise of specific jurisdiction here would be
unreasonable. See Burger King, 471 U.S. at 477.
The first factor examines “the extent of the
defendants’ purposeful interjection into the forum state’s
affairs.” Doe, 83 Hawai‘i at 374, 926 P.2d at 1297. Defendants
are alleged to have engaged in repeated, purposeful business in
Hawaiʻi. Their products were transported, traded, distributed,
promoted, marketed, refined, manufactured, sold, and/or consumed
in Hawaiʻi.
The second factor examines “the burden on the
defendant of defending in the forum.” Doe, 83 Hawai‘i at 374,
926 P.2d at 1297. Defendants are multi-national oil and gas
corporations with billions in annual revenues. The burden on
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Defendants in defending a suit in a state where Defendants
conduct extensive oil and gas business is slight.
The third factor examines “the extent of any conflict
with the sovereignty of the defendants’ [home] state.” Id.
Defendants’ primary argument is that Plaintiffs’ “claims []
implicate the interests of numerous other States and nations,
many of which do not share the ‘substantive social policies’
Plaintiffs seek to advance - such as curbing energy production
and the use of fossil fuels or allocating the downstream costs
of consumer use to the energy companies to bear directly.” But
this lawsuit does not seek to regulate emissions or curb energy
production – it seeks to hold Defendants accountable for
allegedly (1) failing to warn about the dangers of their fossil
fuel products and (2) deceptively promoting those products.
Holding Defendants accountable for their Hawaiʻi torts implicates
the sovereignty of no state other than Hawaiʻi. And, even if
this case did involve “substantive social policies” not advanced
by other states, “the ‘fundamental substantive social policies’
of another State may be accommodated through application of the
forum’s choice-of-law rules.” Burger King, 471 U.S. at 477.
Relying on Bristol-Myers Squibb Co. v. Superior Ct. of
Cal., 137 S. Ct. at 1780, Defendants further contend that
“asserting personal jurisdiction over these out-of-state
Defendants for global climate change would impermissibly
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interfere with the power of Defendants’ home States (or nations)
over their own corporate citizens and could punish commercial
conduct that occurred beyond the forum State’s borders.”
However, Defendants’ reliance on Bristol-Myers is misplaced.
The U.S. Supreme Court in Bristol-Myers addressed
whether a claim arises out of or relates to a defendant’s
contacts – the second prong of the minimum contacts test. Id.
at 1781. The Court did not hold that specific jurisdiction was
lacking because doing so would be unreasonable. See id.
Instead, the Court determined that specific jurisdiction was
improper because there was no “connection between the forum and
the specific claims at issue.” See id.
The fourth factor examines “the forum state’s interest
in adjudicating the dispute.” Doe, 83 Hawai‘i at 374, 926 P.2d
at 1297. Defendants argue that “Hawaiʻi’s interests in this suit
. . . are no greater than other States,’” and later state that
Hawaiʻi’s interest is “slight.” However, we agree with
Plaintiffs that Hawaiʻi “has a strong interest in remedying local
harms related to corporate misconduct.”
The fifth factor examines the “concerns of judicial
efficiency.” Id. Because this factor is not relevant here, and
Defendants make no arguments to the contrary, we do not address
it.
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The sixth factor examines “the significance of the
forum to the plaintiff’s interest in relief.” Id. Again,
Plaintiffs seeks monetary damages for injuries allegedly
suffered in Hawaiʻi as a result of Defendants’ alleged tortious
conduct in Hawaiʻi.
The seventh factor examines the “existence of
alternate fora.” Id. Defendants have not shown that there is
an alternate forum that is better situated than Hawaiʻi to decide
this dispute.
In sum, the Doe factors weigh heavily in favor of
determining it is reasonable to exercise specific jurisdiction
over Defendants. See id. Further, given that Defendants
purposefully availed themselves of Hawaiʻi markets, Defendants
have failed to overcome the presumption that the exercise of
specific jurisdiction is reasonable. See Burger King, 471 U.S.
at 477, Caruth, 59 F.3d at 128.
3. The Due Process Clause does not require that
Defendants have “clear notice” they could be subject
to specific jurisdiction in Hawaiʻi
The exercise of specific jurisdiction is governed by
the three-part minimum contacts test: jurisdiction is proper
where: (1) the defendant purposefully avails itself of the
forum; (2) the defendant’s contacts “arise out of or relate to”
the plaintiff’s claim; and (3) the exercise of specific
jurisdiction is reasonable. Doe, 83 Hawai‘i at 374, 926 P.2d at
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1297. Where the minimum contacts test is met, the exercise of
specific jurisdiction comports with due process. Id.
Defendants argue that in addition to the minimum
contacts test, the Fourteenth Amendment’s “Due Process Clause
requires a defendant’s activities in the forum to place it on
‘clear notice’ that it is susceptible to a lawsuit in that State
for the claims asserted by a plaintiff,” Ford Motor, 141 S. Ct.
at 1025, 1030. (Emphasis added.) This is wrong. The minimum
contacts test “provides defendants with ‘fair warning’” or, as
the Supreme Court explained, “knowledge that ‘a particular
activity may subject [it] to the jurisdiction of a foreign
sovereign.” Id. at 1025 (emphasis added) (quoting Burger King,
471 U.S. at 472) (brackets in original). “[F]air warning” is
not an additional requirement for the exercise of specific
jurisdiction. Rather, “fair warning” is what due process
“provides.” If the minimum contacts test is met, a defendant
has fair warning; and if it has fair warning, then due process
is satisfied.
The U.S. Supreme Court has not held that “clear
notice” is a separate requirement (on top of the minimum
contacts test) necessary for the exercise of specific
jurisdiction. In Ford Motor, the Court used the phrase “clear
notice” three times, once in a parenthetical and twice when
summarizing the holdings in World-Wide Volkswagen. Id. at 1025,
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1027, 1030. At no point did the Court in Ford Motor hold that
“clear notice” was required for the exercise of specific
jurisdiction. Id. Rather, the Supreme Court used the phrase
“clear notice” in Ford Motor and other cases like World-Wide
Volkswagen to describe situations where a defendant’s contacts
were so pervasive that the defendant had more than “fair
warning” they could be subject to specific jurisdiction in a
forum. Id. at 1025, 1030; see also World-Wide Volkswagen, 444
U.S. at 297.
In sum, if a defendant has purposefully availed
themselves of a forum, the claim arises from or relates to those
contacts with the forum, and the exercise of jurisdiction is
reasonable, the defendant has “fair warning” they could be
subject to specific jurisdiction in that forum. See id. at
1025. The minimum contacts test (and the “fair warning” it
provides) allows a defendant to “‘structure [its] primary
conduct’ to lessen or avoid exposure to a given State’s courts.”
Id. (quoting World-Wide Volkswagen, 444 U.S. at 297 (brackets in
original)). Here, the exercise of specific jurisdiction
comports with due process because: (1) Defendants purposefully
availed themselves of the benefits and protections of Hawaiʻi
laws; (2) Plaintiffs’ claims “arise out of or relate to”
Defendants’ Hawaiʻi contacts; and (3) the exercise of specific
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jurisdiction is reasonable. Defendants had – at a minimum –
“fair warning” they could be subject to suit in Hawaiʻi. See id.
B. Federal Common Law Does Not Preempt Plaintiffs’ Claims
Defendants next argue that “[f]ederal law exclusively
governs claims seeking relief for injuries allegedly caused by
interstate and international emissions.” They say that the
“basic scheme of the [federal] Constitution . . . demands that
federal common law,” AEP, 564 U.S. at 421 (quotation marks
omitted), govern any dispute involving “air and water in their
ambient or interstate aspects,” Illinois v. City of Milwaukee,
406 U.S. 91, 103 (1972) (“Milwaukee I”). Defendants’ argument
ignores well-settled law that “the federal common law of
nuisance that formerly governed transboundary pollution suits no
longer exists due to Congress’s displacement of that law through
the CAA.” Boulder, 25 F.4th at 1260; see also AEP, 564 U.S. at
421.
And despite its displacement, Defendants also argue
that federal common law plays a role in our preemption analysis.
They say that we should first look to whether displaced federal
common law preempts Plaintiffs’ claims, and then to whether the
CAA displaced federal common law. We disagree. “When a federal
statute displaces federal common law, the federal common law
ceases to exist.” Baltimore, 31 F.4th at 205. And as the
Supreme Court explained in AEP, once federal common law is
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displaced, “the availability vel non of a state lawsuit
depends inter alia on the preemptive effect of the federal Act,”
not displaced federal common law. 564 U.S. at 429.
Accordingly, our preemption analysis requires analyzing the
preemptive effect of only the CAA – and, it has none in this
context. See supra Section IV(C).
Defendants’ federal common law preemption arguments
also fail because Plaintiffs’ claims do not seek to regulate
emissions. The federal common law cited by Defendants formerly
governed transboundary pollution abatement and damages suits,
not the tortious marketing and failure to warn claims brought by
Plaintiffs. We agree with the circuit court:
Plaintiffs’ framing of their claims in this case is more
accurate. The tort causes of action are well recognized.
They are tethered to existing well-known elements including
duty, breach of duty, causation, and limits on actual
damages caused by the alleged wrongs. As this court
understands it, Plaintiffs do not ask for damages for all
effects of climate change; rather, they seek damages only
for the effects of climate change allegedly caused by
Defendants’ breach of Hawaiʻi law regarding failures to
disclose, failures to warn, and deceptive promotion
(without deciding the issue, presumably by applying
Hawaiʻi’s substantial factor test, see, e.g., Estate of Frey
v. Mastroianni, 146 Hawaiʻi 540, 550 (2020)). Plaintiffs do
not ask this court to limit, cap, or enjoin the production
and sale of fossil fuels. Defendants’ liability in this
case, if any, results from alleged tortious conduct, and
not from lawful conduct in producing and selling fossil
fuels.
Simply put, Plaintiffs’ claims do not seek to regulate
emissions. Instead, Plaintiffs’ Complaint “clearly seeks to
challenge the promotion and sale of fossil-fuel products without
warning and abetted by a sophisticated disinformation campaign.”
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Baltimore, 31 F.4th at 233. Plaintiffs’ references to emissions
in its Complaint “only serve to tell a broader story about how
the unrestrained production and use of Defendants’ fossil-fuel
products contribute to greenhouse gas pollution.” Id.
1. The federal common law governing interstate pollution
abatement and damages suits was displaced by the CAA
Because the CAA displaced federal common law, we
cannot accept Defendants' argument that the federal common law
governs here. First, “AEP extinguished [] federal common law
public nuisance damage action[s], along with the federal common
law public nuisance abatement actions.” Native Vill. of
Kivalina v. ExxonMobil Corp., 696 F.3d 849, 857 (9th Cir. 2012)
(“Kivalina II”). Federal appellate courts have recently
reaffirmed that the federal common law once governing interstate
pollution damages and abatement suits was displaced. 7 In Rhode
Island v. Shell Oil Prod. Co., 35 F.4th 44 (1st Cir. 2022),
cert. denied sub nom. Shell Oil Prod. Co. v. Rhode Island, 143
S. Ct. 1796 (2023), the First Circuit held that “[t]he Clean
Water Act and the [CAA] . . . have statutorily displaced any
federal common law that previously existed,” and as such, the
7 These courts did so in the context of removal jurisdiction. All
held that federal common law did not govern the plaintiffs’ claims, and as
such, federal courts did not have jurisdiction over the at-issue state law
claims. But, regardless of context, all three cases directly addressed
whether federal common law governs state common law claims based on failure
to warn and deceptive promotion theories. And all three courts determined
that federal common law had been displaced.
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court could not “rule that any federal common law controls Rhode
Island’s claims.” Id. at 55 (quotation marks omitted).
In Baltimore, the Fourth Circuit held that federal
common law did not control the city of “Baltimore’s state-law
claims because federal common law in this area cease[d] to exist
due to statutory displacement, Baltimore [did] not invoke[] the
federal statute displacing federal common law, and . . . the CAA
does not completely preempt Baltimore’s claims.” 31 F.4th at
204. And in Boulder, the Tenth Circuit held that “the federal
common law of nuisance that formerly governed transboundary
pollution suits no longer exists due to Congress’s displacement
of that law through the CAA.” 25 F.4th at 1260. Indeed,
Defendants even concede that “[t]he Supreme Court, the Ninth
Circuit, and the Second Circuit have all held that a tort-law
claim for greenhouse gas emissions arising under federal common
law fails as a matter of law under [Federal Rules of Civil
Procedure Rule] 12(b)(6) because Congress displaced such claims
when it established a comprehensive regulatory scheme for
emissions via the CAA.” (Emphasis added.)
Nonetheless, Defendants cite to three cases (Milwaukee
I, Oakland I, and City of New York) that they argue support the
proposition that federal common law governs Plaintiffs’ claims.
These cases have either been overturned (Milwaukee I and Oakland
I) or rely on flawed reasoning (City of New York).
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In Milwaukee I, the state of Illinois brought an
original action against the state of Wisconsin in the Supreme
Court for Wisconsin’s “pollution . . . of Lake Michigan, a body
of interstate water.” 8 Milwaukee I, 406 U.S. at 93. Illinois
alleged Wisconsin discharged “200 million gallons of raw or
inadequately treated sewage and other waste materials” daily
into Lake Michigan. Id. The Supreme Court explained that
“where there is an overriding federal interest in the need for a
uniform rule of decision or where the controversy touches basic
interests of federalism, we have fashioned federal common law.”
Id. at 105 n.6. The Court concluded that “[c]ertainly these
same demands for applying federal law are present in the
pollution of a body of water such as Lake Michigan,” and that
federal law governs disputes involving “air and water in their
ambient or interstate aspects.” Id. at 103, 105 n.6.
Accordingly, the Court held that the “question of
apportionment of interstate waters is a question of ‘federal
common law’ upon which state statutes or decisions are not
conclusive.” Id. at 105. Notably, the Court acknowledged that
the federal common law it created might one day be superseded by
statute, explaining: “new federal laws and new federal
8 The Court ultimately determined that “original jurisdiction [was]
not mandatory,” declined to exercise original jurisdiction, and remitted the
case to the “appropriate district court whose powers are adequate to resolve
the issues.” Milwaukee I, 406 U.S. at 98, 108.
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regulations may in time preempt the field of federal common law
of nuisance.” Id. at 107.
After the Court remitted Milwaukee I to the district
court to determine the outcome of the case under federal common
law, Congress “enacted the Federal Water Pollution Control
Amendments of 1972 [(1972 FWPCA)].” City of Milwaukee v.
Illinois, 451 U.S. 304, 307 (1981) (“Milwaukee II”). On appeal
in Milwaukee II, the Court held that in enacting the 1972 FWPCA,
which governed sewage discharges into interstate bodies of
water, Congress displaced the federal common law created in
Milwaukee I. The Court concluded:
Congress has not left the formulation of appropriate
federal standards to the courts through application of
often vague and indeterminate nuisance concepts and maxims
of equity jurisprudence, but rather has occupied the field
through the establishment of a comprehensive regulatory
program supervised by an expert administrative agency.
[ . . . ]
The establishment of such a self-consciously
comprehensive program by Congress, which certainly did not
exist when [Milwaukee I] was decided, strongly suggests
that there is no room for courts to attempt to improve on
that program with federal common law.
Milwaukee II, 451 U.S. at 317, 319.
Accordingly, the Court determined that “no federal
common-law remedy was available,” thus overruling Milwaukee I.
Id. at 332. That holding was reaffirmed in AEP when the Supreme
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Court determined that the federal common law claims permitted by
Milwaukee I were displaced by the CAA. 9 AEP, 546 U.S. at 424.
Defendants also rely on City of Oakland v. BP PLC, 325
F. Supp. 3d 1017, 1021–22 (N.D. Cal. 2018) (“Oakland I”),
vacated and remanded sub nom. City of Oakland v. BP PLC, 960
F.3d 570 (9th Cir. 2020), opinion amended and superseded on
denial of reh’g, 969 F.3d 895 (9th Cir. 2020). In Oakland I,
the cities of Oakland and San Francisco brought suit against
five large oil and gas companies 10 in state court alleging one
count of nuisance on the same theory that Plaintiffs raises
9 Defendants also cite to Illinois v. City of Milwaukee, 731 F.2d
403, 411 (7th Cir. 1984) (“Milwaukee III”) for the proposition that the
displacement of “one form of federal law (common law) by another (federal
statute) does not somehow breathe life into nonexistent state law.” On
remand from Milwaukee II, Illinois argued that “Illinois common law
controlled this case until Milwaukee I judicially promulgated federal common
law, and that since the 1972 FWPCA dissipated federal common law, Illinois
law must again control.” Id. at 406. The Seventh Circuit disagreed, and
held that, “[g]iven the logic of Milwaukee I and Milwaukee II, we think
federal law must govern in this situation except to the extent that the 1972
FWPCA (the governing federal law created by Congress) authorizes resort to
state law.” Id. at 411. Respectfully, the Seventh Circuit’s approach in
Milwaukee III ignores the presumption that state laws and claims are not
preempted absent “a clear and manifest purpose of Congress” to do so. See
Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947) (“[W]e start with
the assumption that the historic police powers of the States were not to be
superseded by the Federal Act unless that was the clear and manifest purpose
of Congress.”).
Not surprisingly, the Supreme Court implicitly overruled the
Seventh Circuit’s Milwaukee III decision in AEP when the Court held that,
after federal common is displaced, “the availability vel non of a state
lawsuit depends inter alia on the preemptive effect of the federal Act.” 564
U.S. at 429. Thus, contrary to Milwaukee III and Defendants’ argument, state
law that was previously preempted by federal common law does have new life
when the federal common law is displaced. See id.
10 The five defendants in Oakland I (Chevron Corporation, Exxon
Mobil Corporation, BP p.l.c., Royal Dutch Shell plc, and ConocoPhillips) are
also defendants in this case.
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here. Id. at 1021-22. The case was removed to federal court,
and Oakland and San Francisco then amended their complaint to
add a “separate claim for public nuisance under federal common
law.” Id. The district court determined that AEP and Kivalina
II held that the CAA displaced federal common law claims for
emissions abatement and damages. Id. at 1024. Accordingly, the
district court dismissed Oakland and San Francisco’s federal
common law claim and the state law nuisance claim because
“nuisance claims must stand or fall under federal common law.”
Id. at 1028.
On appeal, the Ninth Circuit reversed the federal
district court, determining that Oakland and San Francisco only
added the federal common law claim “to conform” to an earlier
district court ruling. City of Oakland v. BP PLC, 969 F.3d 895,
909 (9th Cir. 2020) (“Oakland II”). The Ninth Circuit also
determined that the state law nuisance claim should not have
been dismissed because “it is not clear that the claim requires
an interpretation or application of federal law at all, because
the Supreme Court has not yet determined [(since AEP displaced
the old federal common law)] that there is a [new] federal
common law of public nuisance relating to interstate pollution.”
Id. at 906. Indeed, in Kivalina II, the Ninth Circuit held just
that – concluding that federal common law suits (not state
common law suits) “aimed at imposing liability on energy
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producers for ‘acting in concert to create, contribute to, and
maintain global warming’ and ‘conspiring to mislead the public
about the science of global warming,’ [were] displaced by the
[CCA].” Id. (quoting Kivalina II, 696 F.3d at 854) (emphasis
added). Therefore, the trial court was incorrect when it
determined that displaced federal common law required the
dismissal of Oakland and San Francisco’s state common law claim
because it was preempted. Id. Since displaced federal common
law did not provide a federal jurisdictional hook, the Ninth
Circuit remanded the case to the federal district court to
determine whether there was an alternate basis for federal
jurisdiction with respect to only the state common law claim.
Id. at 911.
Further, the Second Circuit in City of New York also
held that the “[CAA] displace[d] federal common law claims
concerned with domestic greenhouse gas emissions.” 993 F.3d at
95. Thus, Defendants’ best case – City of New York – goes
against them in part by holding that the very federal common law
they rely on is no longer good law. Indeed, City of New York is
consistent with AEP, Rhode Island, Baltimore, Boulder, Kivalina
II, and Oakland II in holding that the federal common law once
governing interstate pollution suits was displaced by the CAA.
Accordingly, Defendants’ argument that federal common law
preempts Plaintiffs’ claims fails, because Defendants do not
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point to any case recognizing a federal common law action for
interstate pollution suits that has not been displaced by the
CAA.
2. Federal common law does not retain preemptive effect
after it is displaced
Defendants acknowledge that the federal common law
that once governed interstate pollution damages and abatement
suits was displaced by the CAA. Nonetheless, Defendants argue
that despite displacement, federal common law still lives.
Defendants say that federal common law still lives but only with
enough power to preempt state common law claims “involving
interstate air pollution.” According to Defendants, federal
common law is both dead and alive – it is dead in that the CAA
has displaced it, but alive in that it still operates with
enough force to preempt Plaintiffs’ state law claims.
Under Defendants’ preemption theory, this court should
first look to whether the federal common law governing
interstate pollution damages and abatement claims preempts
Plaintiffs’ state common law claims. After determining that
federal common law does in fact preempt Plaintiffs’ state common
law claims, Defendants say this court should then look to
whether the CAA displaced federal common law claims (and
Defendants say it did). Indeed, were this court to adopt
Defendants’ two-step approach, Plaintiffs would have no viable
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cause of action under state or federal law. Federal common law
would preempt state common law, and in turn, the CAA would
displace federal common law. No common law cause of action
would be available. Further, no federal statutory cause of
action would be available because the CAA does not contain one
available to Plaintiffs, see 42 U.S.C. § 7401 et seq., and any
state statutory cause of action would be preempted by federal
common law, which, in turn, would be displaced by the CAA.
We decline to follow Defendants’ two-step approach
because it engages in backwards reasoning. This court would
first need to determine whether the federal common law governing
interstate pollution suits is still good law before determining
whether it can preempt state law claims. And, as we have
explained above, the federal common law governing interstate
pollution suits was displaced by the CAA and “no longer exists.”
Boulder, 25 F.4th at 1260; see also Milwaukee II, 451 U.S. at
314 (“[W]hen Congress addresses a question previously governed
by a decision rested on federal common law the need for such an
unusual exercise of lawmaking by federal courts disappears.”).
Defendants’ approach cannot be reconciled with AEP.
In AEP, two groups of plaintiffs, including eight States,
brought suit against the Tennessee Valley Authority and four
private companies who were allegedly responsible for 10% of
global emissions. 564 U.S. at 418. The plaintiffs brought
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federal common law and state law nuisance claims, and “sought
injunctive relief requiring each defendant to cap its carbon
dioxide emissions and then reduce them by a specified percentage
each year for at least a decade.” 564 U.S. at 419 (quotation
marks omitted). The Supreme Court held that the CAA displaced
only federal common law governing interstate emissions. Id. at
428-29. Having determined that federal common law was
displaced, the Court concluded that “the availability vel non of
a state lawsuit depends inter alia on the preemptive effect of
the [CAA].” Id. at 429. And since the parties had not briefed
whether the CAA preempted “the availability of a claim under
state nuisance law,” the Court left “the matter open for
consideration on remand.” Id.
In AEP, with regard to the plaintiffs’ state common
law nuisance claims, the relevant inquiry was not: (1) whether
federal common law preempted the remaining state law claims, and
if so, (2) whether the CAA displaced the federal common law.
Id. Instead, AEP made clear that whether the state law nuisance
claims were preempted depended only on an analysis of the CAA
because “‘when Congress addresses a question previously governed
by a decision rested on federal common law, . . . the need for
such an unusual exercise of law-making by federal courts
disappears.’” AEP, 564 U.S. at 423 (quoting Milwaukee II, 451
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U.S. at 314). 11 The Supreme Court did not analyze the federal
common law’s preemptive effect because it was displaced by the
CAA. See id. And if federal common law retained preemptive
effect after displacement, the Court would have instructed the
trial court on remand to examine whether displaced federal
common law preempted the state law claims. See id.
Simply put, displaced federal common law plays no part
in this court’s preemption analysis. Once federal common law is
displaced, the federal courts’ task is to “interpret and apply
statutory law[.]” Nw. Airlines, Inc. v. Transp. Workers Union
of Am., AFL-CIO, 451 U.S. 77, 95 n.34 (1981) (emphasis added).
Therefore, “[a]s instructed in AEP and supported by [Kivalina
II], we look to the federal act that displaced the federal
common law to determine whether the state claims are preempted.”
Boulder, 25 F.4th at 1261. The correct preemption analysis
requires an examination only of the CAA’s preemptive effect
because “AEP extinguished [] federal common law public nuisance
damage action[s], along with the federal common law public
11 There is a “significant distinction between the statutory
displacement of federal common law and the ordinary preemption of a state
law.” Baltimore, 31 F.4th at 205. Federal common law is disfavored because
“it is primarily the office of Congress, not the federal courts, to prescribe
national policy in areas of special federal interest.” AEP, 564 U.S. at 423-
24. Thus, “[l]egislative displacement of federal common law does not require
the ‘same sort of evidence of a clear and manifest [congressional] purpose’
demanded for preemption of state law.” Id. at 423. Instead, “[t]he test for
whether congressional legislation excludes the declaration of federal common
law is simply whether the statute ‘speak[s] directly to [the] question’ at
issue.” Id. at 424. When federal common law is displaced, it “no longer
exists.” Boulder, 25 F.4th at 1260.
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nuisance abatement actions.” Kivalina II, 696 F.3d at 857; see
also id. at 866 (Pro, J., concurring) (“Once federal common law
is displaced, state nuisance law becomes an available option to
the extent it is not preempted by federal law.”).
Defendants primarily rely on City of New York to argue
that their two-step preemption analysis is the correct one. In
that case, New York City filed a state-law tort suit in federal
court “against five oil companies to recover damages caused by
those companies’ admittedly legal commercial conduct in
producing and selling fossil fuels around the world.” 993 F.3d
at 86. At issue was whether New York City’s claims were
preempted by either federal common law or the CAA. Id. at 89.
The Second Circuit first looked to whether federal common law
governing interstate pollution damages and abatement suits
preempted New York City’s state law claims, holding that it did.
Id. at 95 (determining that New York City’s “claims must be
brought under federal common law”). Next, the court examined
whether the federal common law was displaced by the CAA, holding
again that it was. Id. at 98 (determining that “federal common
law claims concerning domestic greenhouse gas emissions are
displaced by statute.”). Thus, the Second Circuit held that
displaced federal common law preempted New York City’s state law
claims. Id. at 95-98.
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We agree with the Fourth Circuit’s analysis in
Baltimore, which explained why City of New York is not
persuasive in that respect:
[A]fter recognizing federalism and the need for a
uniform rule of decision as federal interests, City of New
York confusingly concludes that federal common law is “most
needed in this area” because New York's state-law claims
touch upon the federal government’s relations with foreign
nations. [993 F.3d] at 91–92. But it never details what
those foreign relations are and how they conflict with New
York’s state-law claims. See id. at 92. The same is true
when City of New York declares that state law would
“upset[] the careful balance” between global warming’s
prevention and energy production, economic growth, foreign
policy, and national security. Id. at 93. Besides
referencing statutes acknowledging policy goals, the
decision does not mention any obligatory statutes or
regulations explaining the specifics of energy production,
economic growth, foreign policy, or national security, and
how New York law conflicts therewith. See id. It also
does not detail how those statutory goals conflict with New
York law. See id. [Critically,] City of New York
essentially evades the careful analysis that the Supreme
Court requires during a significant-conflict analysis.
Id. (emphasis added) (footnote omitted).
3. Even were federal common law to control, it would not
govern Plaintiffs’ claims
Even if federal common law governing interstate
pollution claims had not been displaced, Plaintiffs’ claims
would not be preempted by it. The claims permitted by federal
common law in this area were brought against polluting entities
and sought to enjoin further pollution. 12 See, e.g., Milwaukee
12 Defendants cite to no cases recognizing federal common law claims
for interstate pollution damages. But this is neither here nor there.
Damages claims are no longer available under federal common law. In Kivalina
II, Kivalina sought “damages for harm caused by past emissions.” 696 F.3d at
857. The Ninth Circuit determined that “displacement of a federal common law
right of action means displacement of remedies.” Id. Therefore, “AEP
extinguished Kivalina’s federal common law public nuisance damage action,
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I, 406 U.S. at 93 (requesting court enjoin “pollution by the
defendants of Lake Michigan”). Indeed, in AEP, the plaintiffs
sued the Tennessee Valley Authority and other powerplant owners
and sought injunctive relief to prevent future emissions. 564
U.S. at 418. As the Supreme Court explained in AEP, this
“specialized federal common law” governed “suits brought by one
State to abate pollution emanating from another State.” Id. at
421. Thus, the source of the injury in federal common law
claims is pollution traveling from one state to another. That
is not what Plaintiffs allege here.
Rather, as the Ninth Circuit explained in earlier
proceedings in this case, Plaintiffs “allege that oil and gas
companies knew about climate change, understood the harms energy
exploration and extraction inflicted on the environment, and
concealed those harms from the public.” Sunoco LP, 39 F.4th at
1106 (emphasis added). As Plaintiffs allege, “Defendants’
liability is causally tethered to their failure to warn and
deceptive promotion,” and “nothing in this lawsuit incentivizes
— much less compels — Defendants to curb their fossil fuel
production or greenhouse gas emissions.” Simply put, the source
of Plaintiffs’ alleged injury is Defendants’ allegedly tortious
along with the federal common law public nuisance abatement actions.” Id.
We agree. Therefore, even though it appears that no court has recognized a
federal common law claim for interstate pollution damages, such claims were
displaced by the CAA. See id.
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marketing conduct, not pollution traveling from one state to
another.
Numerous courts have rejected similar attempts by oil
and gas companies to reframe complaints alleging those companies
knew about the dangers of their products and failed to warn the
public or misled the public about those dangers. The Ninth
Circuit did so in this case. See id. at 1113. And in other
cases alleging similar deceptive promotion and failure to warn
torts, the Fourth Circuit, Tenth Circuit, and the Districts of
Connecticut, Massachusetts, and Minnesota have also rejected
attempts to characterize those claims as being about emissions
and pollution. See Boulder, 25 F.4th at 1264 (Boulder’s claims
“are premised on the Energy Companies’ activities of ‘knowingly
producing, promoting, refining, marketing and selling a
substantial amount of fossil fuels used at levels sufficient to
alter the climate, and misrepresenting the dangers.’”);
Baltimore, 31 F.4th at 217 (“None of Baltimore's claims concern
emission standards, federal regulations about those standards,
or pollution permits. Their Complaint is about Defendants'
fossil-fuel products and extravagant misinformation campaign
that contributed to its injuries.”); Connecticut v. Exxon Mobil
Corp., No. 3:20-CV-1555 (JCH), 2021 WL 2389739, at *13 (D. Conn.
June 2, 2021) (“ExxonMobil’s argument on this issue fails
because the claims Connecticut has chosen to bring in this case
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seek redress for deceptive and unfair practices relating to
ExxonMobil’s interactions with consumers in Connecticut - not
for harms that might result from the manufacture or use of
fossil fuels[.]”); Minnesota v. Am. Petroleum Inst., No. CV 20-
1636 (JRT/HB), 2021 WL 1215656, at *13 (D. Minn. Mar. 31, 2021)
(“[T]he State’s action here is far more modest than the
caricature Defendants present.”); Massachusetts v. Exxon Mobil
Corp., 462 F. Supp. 3d 31, 44 (D. Mass. 2020) (“Contrary to
ExxonMobil’s caricature of the complaint, the Commonwealth’s
allegations do not require any forays into foreign relations or
national energy policy. It alleges only corporate fraud.”).
The source of Plaintiffs’ alleged injury is
Defendants’ alleged failure to warn and deceptive promotion.
See Sunoco LP, 39 F.4th at 1113 (“[t]his case is about whether
oil and gas companies misled the public about dangers from
fossil fuels.”). Even were this court to determine that federal
common law retains preemptive effect after displacement, the
federal common law cited to by Defendants would not preempt
Plaintiffs’ claims in this case. The source of Plaintiffs’
injury is not pollution, nor emissions. Instead, the source of
Plaintiffs’ alleged injury is Defendants’ alleged failure to
warn and deceptive promotion. Therefore, even if federal common
law had not been displaced, Plaintiffs’ claims would not be
preempted by it.
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4. We decline to expand federal common law, and, in any
event, Defendants waived such an argument
In their opening brief, Defendants say they “do not
seek to expand federal common law to a new sphere” and instead
“rely on extensive Supreme Court precedent establishing that
federal law already governs in this area.” Defendants have
waived any argument to expand federal common law to cover
Plaintiffs’ claims here. Second, Defendants fail to point to
any case recognizing new federal common law decided after AEP
and Kivalina II displaced the old federal common law that once
governed suits for interstate pollution damages or abatement.
We reiterate that the sources of Plaintiffs’ alleged injury are
Defendants’ alleged tortious marketing and failure to warn.
Defendants also fail to point to any case recognizing federal
common law governing tortious marketing suits.
Even if Defendants had argued federal common law
should be expanded to cover tortious marketing, that argument
would fail because the “cases in which federal courts may engage
in common lawmaking are few and far between.” Rodriguez v.
FDIC, 140 S. Ct. 713, 716 (2020). We see no “uniquely federal
interests” in regulating marketing conduct, an area
traditionally governed by state law. See id. at 717.
We also decline to create new federal common law
governing suits that “involv[e] . . . interstate air pollution.”
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(Emphasis in original.) Congress has enacted a comprehensive
legislative scheme to address interstate air pollution, and
“once Congress addresses a subject, even a subject previously
governed by federal common law, the justification for lawmaking
by the federal courts is greatly diminished.” Nw. Airlines, 451
U.S. at 95 n.34 (emphasis added). “[I]t is primarily the office
of Congress, not the federal courts, to prescribe national
policy in areas of special federal interest.” AEP, 564 U.S. at
423-24. And “[c]ases justifying judicial creation of preemptive
federal rules are extremely limited: [w]hether latent federal
power should be exercised to displace state law is primarily a
decision for Congress, not the federal courts.” In re Nat’l
Sec. Agency Telecomms. Recs. Order Litig., 483 F. Supp. 2d 934,
940 (N.D. Cal. 2007) (quoting Atherton, 519 U.S. at 218)
(quotation marks omitted). “Our commitment to the separation of
powers is too fundamental to continue to rely on federal common
law by judicially decreeing what accords with common sense and
the public weal when Congress has addressed the problem.”
Milwaukee II, 451 U.S. at 315 (internal quotation marks
omitted).
C. The CAA Does Not Preempt Plaintiffs’ Claims
Having determined that displaced federal common law
plays no part in this court’s preemption analysis, we now turn
to whether the CAA preempts Plaintiffs’ state claims. See
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Boulder, 25 F.4th at 1261 (“As instructed in AEP and supported
by [Kivalina II], we look to the federal act that displaced the
federal common law to determine whether the state claims are
preempted.”). Defendants say that federal law must govern all
suits that “involve[] interstate and international emissions.”
(Emphasis added). They say that a large damage award in effect
could regulate air pollution, 13 and that air pollution is an area
governed exclusively by “federal law.” But the question before
the court is not whether a potential damages award in this case
could regulate air pollution. If that were true, then any case
with a potentially large damage award must be dismissed because
it might regulate a field – the mere possibility of regulation,
standing alone, is not enough to dismiss Plaintiffs’ claims. A
suit does not “regulate” a matter simply because it might have
“an impact” on that matter. Pilot Life Ins. Co. v. Dedeaux, 481
U.S. 41, 50 (1987). Rather, the operative question is whether
Plaintiffs’ state law claims are preempted by federal law. To
prevail, Defendants need to show not only that Plaintiffs’
claims could lead to a large damages award that effectively acts
13 Defendants cite to Kurns v. R.R. Friction Prod. Corp., 565 U.S.
625, 637 (2012), a products liability cases involving a railroad worker
exposed to asbestos, to argue that damages awards can effectively act as
regulation. This is accurate, but incomplete. The Court did not ask only
whether such a large damages award could operate as a regulation. The Court
further engaged in a preemption analysis, and asked whether such an award was
preempted by federal law. Id. Based on prior precedent, the Court concluded
that Congress had occupied the entire field of locomotive equipment
regulation and that the worker’s claims were therefore preempted. Id.
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as a regulation, but critically, that such a large damages award
is preempted by federal law. Defendants do not do so.
The doctrine of preemption is rooted in the federal
Constitution’s Supremacy Clause, which provides that federal law
“shall be the supreme Law of the Land; . . . any Thing in the
Constitution or Laws of any state to the Contrary
notwithstanding.” U.S. Const. art. VI, cl. 2. Courts begin
with the presumption that state laws and claims are not
preempted. Wyeth v. Levine, 555 U.S. 555, 565 (2009). This is
because the “historic police powers of the States [are] not to
be superseded . . . unless that was the clear and manifest
purpose of Congress.” Rice v. Santa Fe Elevator Corp., 331 U.S.
218, 230 (1947) (citing Napier v. Atlantic Coast Line R. Co.,
272 U.S. 605, 611 (1926) and Allen-Bradley Local v. Wisconsin
Employment Relations Board, 315 U.S. 740, 749 (1942)). 14
Therefore, when determining whether a statute is preempted
through any preemption doctrine, courts primarily evaluate
whether Congress intended to preempt state law. Id.
14 The Supreme Court has applied this presumption against preemption
of historic police powers broadly. Cipollone v. Liggett Grp., Inc., 505 U.S.
504, 528-29 (1992) (requiring a showing of congressional intent to supersede
state common law duties not to make false statements or conceal facts and
holding that Congress expressed no such intent in the Federal Cigarette
Labeling and Advertising Act); CTS Corp v. Waldburger, 573 U.S. 1, 19 (2014)
(quoting Wos v. E.M.A., 568 U.S. 627, 639-40 (2013)) (“[i]n our federal
system, there is no question that States possess the ‘traditional authority
to provide tort remedies to their citizens’ as they see fit”).
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There are two types of preemption: complete and
substantive (or ordinary) preemption. City of Hoboken v.
Chevron Corp., 45 F.4th 699, 707 (3d Cir. 2022). Complete
preemption applies only in the context of federal removal
jurisdiction, which is not at issue here. 15 Id. Defendants
argue that the CAA substantively preempts Plaintiffs’ state tort
law claims.
In general, there are three types of substantive
preemption:
(1) express preemption, where Congress has expressly
preempted local law; (2) field preemption, “where Congress
has legislated so comprehensively that federal law occupies
an entire field of regulation and leaves no room for state
law”; and (3) conflict preemption, where local law
conflicts with federal law such that it is impossible for a
party to comply with both or the local law is an obstacle
to the achievement of federal objectives.
New York SMSA Ltd. P’ship v. Town of Clarkstown, 612 F.3d 97,
104 (2d Cir. 2010) (emphases added) (citing English v. General
Elec. Co., 496 U.S. 72, 78-79 (1990)).
Defendants do not specify which substantive preemption
theory they rely on. We address each preemption theory in turn.
First, express preemption does not apply. Federal law
expressly preempts state law where the federal statute contains
an express preemption clause barring state law claims in
15 The Supreme Court has only recognized three federal statutes that
completely preempt state laws: “ERISA, the National Bank Act, and the Labor-
Management Relations Act.” City of Hoboken, 45 F.4th at 707 (citing
Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 6-8, 10-11 (2003)).
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enumerated areas. Oneok, Inc. v. Learjet, Inc., 575 U.S. 373,
376 (2015) (holding that Congress may “pre-empt . . . a state
law through . . . express language in a statute”). Simply put,
the CAA contains no “express language” preempting state common
law tort claims. See id. Rather, the CAA explicitly preserves
“any right which any person (or class of persons) may have under
any statute or common law to seek enforcement of any emission
standard or limitation or to seek any other relief[.]” 42
U.S.C. § 7604(e) (2018).
Second, field preemption does not apply because the
CAA does not completely occupy the field of emissions. Field
preemption applies where (1) the “scheme of federal regulation
[is] so pervasive as to make reasonable the inference that
Congress left no room for the States to supplement” the
regulation, or (2) the “federal interest is so dominant” in a
field “that the federal system will be assumed to preclude
enforcement of state laws on the same subject.” Rice, 331 U.S.
at 230. Field preemption “reflects a congressional decision to
foreclose any state regulation in the area, even if it is
parallel to federal standards,” so “even complementary state
regulation is impermissible” when Congress has occupied an
entire field. Arizona v. United States, 567 U.S. 387, 401
(2012).
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The CAA simply does not occupy the entire field of
emissions regulation, as noted above. Merrick, 805 F.3d at 694
(holding that CAA does not bar state common law claims against
in-state emitters because “environmental regulation is a field
that the states have traditionally occupied”). “There is no
evidence that Congress intended that all emissions regulation
occur through the [CAA’s] framework, such that any state law
approach to emissions regulation would stand as an obstacle to
Congress’s objectives.” Id. at 695. Indeed, under the CAA,
each state retains regulatory power through their State
Implementation Plan (SIP), which provides for state-level
implementation, maintenance, and enforcement of CAA emissions
standards with federal oversight. 42 U.S.C. § 7410(a)(1)
(2018). While the federal government has primary authority over
emissions legislation, states are responsible for implementation
through their SIP. See id. And the CAA’s “Retention of State
authority” section expressly protects a state’s right to adopt
or enforce any standard or limitation respecting emissions
unless the state policy in question would be less stringent than
the CAA. 42 U.S.C. § 7416 (2018). 16 Congress encouraged states
16 42 U.S.C. § 7416 (2018) provides:
Except as otherwise provided in sections 1857c-10(c),
(e), and (f) (as in effect before August 7, 1977), 7543,
7545(c)(4), and 7573 of this title (preempting certain
State regulation of moving sources) nothing in this chapter
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to participate through SIPs and provided for state regulation of
any emissions standard or limitation as stringent as or more
stringent than the CAA. See 42 U.S.C. § 7410(a)(1) (2018).
Accordingly, the CAA does not occupy the field of
emissions regulation such that state law is preempted – it does
not “reflect[] a congressional decision to foreclose any state
regulation in the area.” Arizona, 567 U.S. at 401. And, even
if it did, the City’s claims do not seek to regulate emissions,
and so a claim of field preemption in the field of emissions
regulation is inapposite.
Third, conflict preemption does not apply. Conflict
preemption takes two forms. The first form is obstacle
preemption, where state law claims “stand[] as an obstacle to
the accomplishment and execution of the full purposes and
objectives of Congress,” Arizona, 567 U.S. at 399 (quoting Hines
v. Davidowitz, 312 U.S. 52, 67 (1941)). The second form is
impossibility preemption, which is a “demanding defense”, Wyeth,
555 U.S. at 573, that succeeds where state law claims are shown
shall preclude or deny the right of any State or political
subdivision thereof to adopt or enforce (1) any standard or
limitation respecting emissions of air pollutants or (2)
any requirement respecting control or abatement of air
pollution; except that if an emission standard or
limitation is in effect under an applicable implementation
plan or under section 7411 or section 7412 of this title,
such State or political subdivision may not adopt or
enforce any emission standard or limitation which is less
stringent than the standard or limitation under such plan
or section.
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to directly conflict with federal law or penalize behavior that
federal law requires. AT&T Co. v. Cent. Off. Tel., Inc., 524
U.S. 214, 227 (1998) (holding that federal statute preempts
state law when state law claims directly conflict with federal
law); Geier v. Am. Honda Motor Co., 529 U.S. 864, 873 (2000)
(holding that federal statute preempts state law where state law
penalizes what federal law requires). Neither obstacle
preemption nor impossibility preemption applies here.
1. Obstacle preemption does not apply
The CAA does not preempt Plaintiffs’ claims through
obstacle preemption because their claims arise from Defendants’
alleged failure to warn and deceptive marketing conduct, not
emissions-producing activities regulated by the CAA. Obstacle
preemption applies only where there is an “actual conflict”
between state law and a statute’s overriding federal purpose and
objective. Mary Jo C. v. N.Y. State & Loc. Ret. Sys., 707 F.3d
144, 162 (2d Cir. 2013). “[T]he conflict between state law and
federal policy must be a sharp one.” Marsh v. Rosenbloom, 499
F.3d 165, 178 (2d Cir. 2006) (quotation marks omitted). The
operative federal purpose or policy is defined by “examining the
federal statute as a whole and identifying its purpose and
intended effects,” and “[w]hat is a sufficient obstacle is a
matter of judgment.” Arizona, 567 U.S. at 400 (quoting Crosby,
530 U.S. at 363).
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The U.S. Supreme Court has applied this standard
sparingly, finding obstacle preemption in only two scenarios:
(1) where a federal legislation involved a uniquely federal area
of regulation and state law directly conflicted with the federal
program’s operation, and (2) where Congress has clearly chosen
to preclude state regulation because the federal legislation
struck a delicate balance of interests at risk of disturbance by
state regulation. 17 In re Volkswagen “Clean Diesel” Mktg., Sales
Pracs., & Prod. Liab. Litig., 959 F.3d 1201, 1212 (9th Cir.
2020). But this is a “high threshold.” Chamber of Com. of U.S.
v. Whiting, 563 U.S. 582, 607 (2011).
Here, the CAA’s identified purposes are to protect the
country’s air resources, public health, and welfare; prevent and
control air pollution; and support state, local, and regional
air pollution prevention and control efforts. See 42 U.S.C. §
7401(b) (2018); Bunker Hill Co. Lead & Zinc Smelter v. EPA, 658
F.2d 1280, 1284 (9th Cir. 1981) (“[The CAA] was intended
17 The first category historically includes areas such as foreign
affairs powers and regulating maritime vessels. Crosby, 530 U.S. at 373-74
(holding that the federal foreign affairs power is a uniquely federal area of
regulation); United States v. Locke, 529 U.S. 89, 97 (2000) (holding that
maritime vessel regulation is a uniquely federal area). The second category
historically includes criminal immigration penalties, vehicle safety device
implementation, and interstate pollution under the Clean Water Act. Arizona,
567 U.S. at 405 (holding that the federal government struck a balance in
immigration penalties that would be disturbed by an additional state law
criminal penalty); Geier, 529 U.S. at 879-81 (holding that the federal
government struck a balance in gradual airbag phase-in that would be
undermined by a state law immediate implementation requirement); Int’l Paper
Co. v. Ouellette, 479 U.S. 481, 494, 497 (1987) (holding that affected-state
claims against out-of-state polluters stand as an obstacle to the balance
struck by the Clean Water Act).
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comprehensively to regulate, through guidelines and controls,
the complexities of restraining and curtailing modern day air
pollution.”). The CAA achieves these purposes primarily by
“regulat[ing] pollution-generating emissions from both
stationary sources, such as factories and powerplants, and
moving sources, such as cars, trucks, and aircraft.” Util. Air
Regul. Grp. v. EPA, 573 U.S. 302, 308 (2014).
Plaintiffs’ state tort law claims do not seek to
regulate emissions, and there is thus no “actual conflict”
between Hawaiʻi tort law and the CAA. See Mary Jo, 707 F.3d at
162. These claims potentially regulate marketing conduct while
the CAA regulates pollution. We agree with Plaintiffs that the
“CAA does not concern itself in any way with the acts that
trigger liability under Plaintiffs’ Complaint, namely: the use
of deception to promote the consumption of fossil fuel
products.” The CAA expresses no policy preference and does not
even mention marketing regulations.
Defendants argue that the CAA preempts Plaintiffs’
claims because Congress preempted affected-state common law
claims regarding emissions through the CAA, and Plaintiffs’
claims seek to regulate out-of-state emissions. Affected-state
claims are state law actions where the injury occurred in a
different state from the state where the emission was released;
courts have held that the CAA preempts these claims. See Int’l
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Paper Co. v. Ouellette, 479 U.S. 481, 500 (1987). Source-state
claims are state law actions where the injury was suffered in
the same state as the emitting conduct; courts have held that
the CAA does not preempt these claims. See id.
Relying on Ouellette, Defendants say “[e]very federal
court of appeals to consider this issue has recognized that the
CAA does not permit States to use their state tort law to
address harms caused by emissions occurring in other States.”
Defendants are correct, but their analysis is incomplete. In
Ouellette, the Supreme Court examined whether the Clean Water
Act (CWA) preempted “a common-law nuisance suit filed in a
Vermont court under Vermont law, when the source of the alleged
injury [was] located in New York.” Id. at 483. The Supreme
Court held that affected-state common law claims arising from
polluting activity located outside the affected-state are
preempted by the CWA because “[t]he application of affected-
state laws would be incompatible with the [CWA’s] delegation of
authority and its comprehensive regulation of water pollution.”
Id. at 500. Applying affected-state common law could
potentially subject a defendant-polluter to “an indeterminate
number of potential regulations” depending on how far the
emission traveled. 18 Id. at 499; see also Merrick, 805 F.3d at
18 Defendants also cite to N. Carolina, ex rel. Cooper v. Tennessee
Valley Auth., 615 F.3d 291, 297 (4th Cir. 2010), arguing that Ouellette’s
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693 (explaining that “claims based on the common law of the
source state . . . are not preempted by the [CAA,]” but “claims
based on the common law of a non-source state . . . are
preempted by the [CAA]”).
But the rationale motivating the Ouellette court in
preempting affected-state common law claims does not apply to
Plaintiffs’ state tort claims. This is because Plaintiffs’
claims require “additional tortious conduct” to succeed. MTBE,
725 F.3d at 104. Here, that additional tortious conduct is
Defendants’ alleged deceptive marketing and failure to warn
about the dangers of using their products – the source of
Plaintiffs’ alleged injury is not emissions but the additional
alleged torts.
In this case, as in MTBE, Defendants’ alleged tortious
conduct is not production of emissions and therefore, obstacle
preemption does not apply. In MTBE, the defendant gasoline
producer used MTBE, a fuel additive that reduced emissions, to
rationale in determining the CWA preempted affected-state common law claims
should be applied to the CAA. In Cooper, the Fourth Circuit determined that
North Carolina’s nuisance action seeking an injunction against fixed
powerplants from emitting sulfur dioxides and nitrous oxides was preempted by
the CAA because the “EPA has promulgated [National Ambient Air Quality
Standards] for a number of emissions, including standards for all the
emissions involved in this case.” Id. at 299. Critically, the CAA, and the
agency it empowers (the EPA), had already expressly regulated the very
emissions (sulfur dioxides and nitrous oxides) alleged to have caused the
nuisance. Id. at 299-303. But the Cooper court refused to “hold flatly that
Congress has entirely preempted the field of emissions regulation.” Id. at
302. And it acknowledged that the “Ouellette Court itself explicitly
refrained from categorically preempting every nuisance action brought under
source state law.” Id. at 303.
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bring its gasoline into compliance with the CAA’s minimum oxygen
content requirement. Id. at 129. The CAA identified a number
of substances, including MTBE, that could have been added to
gasoline to help bring it into compliance with the oxygen
content requirement. Id. at 81. New York City and its agencies
brought ten causes of action, including strict liability failure
to warn, negligence, public nuisance, private nuisance, and
trespass, arguing that the defendant oil producer’s use of MTBE
caused detrimental contamination of groundwater. Id. at 80-83.
The defendant argued that the plaintiff’s tort claims
“conflict[ed] with and are therefore preempted by . . . the
[CAA] Amendments of 1990[.]” Id. at 95.
The Second Circuit held that New York City’s claims
were not preempted under either obstacle or impossibility
preemption. Id. at 97-103. The court held that where a party
participates in a non-polluting emissions-related activity
(i.e., choosing gasoline additives), the fact that it complied
with relevant CAA provisions did not absolve the party of any
state common law or statutory duties to warn of public hazards
or comply with an additional standard of care. Id. at 65. In
short, the Second Circuit determined that state tort law claims
are not preempted by the CAA where the alleged tortious behavior
does not produce emissions. Id. at 104-05.
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Plaintiffs’ claims simply do not risk subjecting
Defendants to “an indeterminate number of potential regulations”
because the claims do not subject Defendants to any additional
emissions regulation at all. See Ouellette, 479 U.S. at 499.
Plaintiffs are correct that where the emissions originate is
irrelevant because emissions are at most a link in the causal
chain connecting Plaintiffs’ alleged injuries and Defendants’
unrelated liability-incurring behavior. [AB at 33, ICA Dkt.
65:43] Simply put, this means obstacle preemption does not
apply.
2. Impossibility preemption does not apply
At its most demanding, the impossibility doctrine
historically required it to be a “physical impossibility” to
comply with both state and federal requirements for federal law
to preempt state law. Florida Lime & Avocado Growers v. Paul,
373 U.S. 132, 143 (1963). 19 The modern impossibility doctrine is
broader and now includes instances where state law penalizes
what federal law requires, Geier, 529 U.S. at 873, or where
state law claims directly conflict with federal law, AT&T Co.,
19 Under the Florida Lime & Avocado Growers standard, some scenarios
would yield different results than preemption doctrine’s intended effect:
“[f]or example, if federal law gives an individual the right to engage in
certain behavior that state law prohibits, the laws would give contradictory
commands notwithstanding the fact that an individual could comply with both
by electing to refrain from the covered behavior.” Wyeth, 555 U.S. at 590
(2009) (Thomas, J., concurring). In that scenario, it is not a physical
impossibility to comply with both requirements, but modern doctrine would
find a sufficient conflict between federal and state law to preempt state law
through impossibility preemption.
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524 U.S. at 227. But impossibility preemption is still a
“demanding defense.” Wyeth, 555 U.S. at 573. Defendants do not
raise impossibility preemption, and it does not apply
regardless.
MTBE is instructive again. There, the Second Circuit
declined to preempt state tort claims through impossibility
preemption where: (1) it was possible to comply with the CAA and
avoid tort liability; (2) state and federal law did not directly
conflict; and (3) the CAA did not require the alleged conduct.
MBTE, 725 F.3d at 97. The oil producer defendant could have
complied with both state and federal law if it had used other
additives (like ethanol) that did not pose the same health risk
as MTBE but would bring the fuel into CAA oxygen content
compliance without incurring prohibitively high costs. Id. at
99-101. Though the CAA identified MTBE as one additive that
would sufficiently boost oxygen content, at no point did it
require the specific use of MTBE in gasoline – it was one of
many options. Id. at 98.
The same is true here. The CAA does not bar
Defendants from warning consumers about the dangers of using
their fossil fuel products. See id. Defendants could simply
avoid federal and state liability by adhering to the CAA and
separately issuing warnings and refraining from deceptive
conduct as required by Hawaiʻi law; it is not a “physical
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impossibility” to do both concurrently. See Florida Lime &
Avocado Growers, 373 U.S. at 143; State ex rel. Shikada v.
Bristol-Myers Squibb Co., 152 Hawaiʻi 418, 438, 526 P.3d 395, 415
(2023) (rejecting a pharmaceutical company’s argument that
“there was no way [it] could have updated [a drug’s] label to
provide the warning that [state law] require[d] and at the same
time comply with federal law” regarding drug labeling).
V. CONCLUSION
For the foregoing reasons, we hold that Defendants are
subject to specific jurisdiction in Hawaiʻi and that neither
federal common law nor the Clean Air Act preempt Plaintiffs’
claims. We reiterate that federal common law retains no
preemptive effect after it is displaced. Were we to adopt
Defendants’ argument that displaced federal common law preempts
Plaintiffs’ state law claims, Plaintiffs could not recover under
Hawai‘i tort law, even where the state specifically permits
lawsuits to hold companies responsible for allegedly deceptive
marketing claims about any product, including oil and gas
products. We decline to unduly limit Hawai‘i’s ability to use
its police powers to protect its citizens from alleged deceptive
marketing.
Accordingly, the circuit court’s Order Denying
Defendants’ Motion to Dismiss for Failure to State a Claim,
filed March 29, 2022, and Order Denying Defendants’ Joint Motion
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to Dismiss for Lack of Personal Jurisdiction, filed March 31,
2022, are affirmed.
Theodore J. Boutrous, Jr.,* /s/ Mark E. Recktenwald
Joshua D. Dick,*
Melvyn M. Miyagi, /s/ Sabrina S. McKenna
Ross T. Shinyama,
Summer H. Kaiawe, /s/ Todd W. Eddins
Andrea E. Neuman,* and
Erica W. Harris,* /s/ Ronald G. Johnson
for appellants Chevron
Corporation and Chevron /s/ John M. Tonaki
U.S.A., Inc.
C. Michael Heihre,
Michi Momose,
J. Scott Janoe,*
Megan Berge,* and
Sterling Marchand,*
for appellants Sunoco LP, Aloha
Petroleum, Ltd., and Aloha
Petroleum LLC
Paul Alston,
John-Anderson L. Meyer,
Claire Wong Black,
Glenn T. Melchinger,
Theodore V. Wells, Jr.,*
Daniel J. Toal,* and
Yahonnes Cleary,*
for appellants Exxon Mobil
Corporation and ExxonMobil Oil
Corporation
Joachim P. Cox,
Randall C. Whattoff,
David C. Frederick,*
James M. Webster III,* and
Daniel S. Severson,*
for appellants Shell plc (f/k/a
Royal Dutch Shell plc), Shell
U.S.A. Inc. (f/k/a Shell Oil
Company), and Shell Oil
Products Company LLC
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Margery S. Bronster,
Lanson K. Kupau,
Kelly A. Higa Brown,
Victor L. Hou,* and
Boaz S. Morag,*
for appellants Woodside
Energy Hawaii Inc. (f/k/a
BHP Hawaii Inc.) and
appellee BHP Group Limited
Lisa A. Bail,
David J. Hoftiezer,
Jonathan W. Hughes,*
Matthew T. Heartney,* and
John D. Lombardo,*
for appellants BP plc and
BP America Inc.
Ted N. Pettit,
Shannon S. Broome,*
Shawn Patrick Regan,* and
Anne Marie Mortimer,*
For appellants Marathon
Petroleum Corporation
Crystal K. Rose,
Adrian L. Lavarias,
Sharon Paris,
Jameson R. Jones,*
Daniel R. Brody,*
Steven M. Bauer,*
Margaret A. Tough,* and
Katherine A. Rouse,*
for appellants ConocoPhillips,
ConocoPhillips Company
Crystal K. Rose,
Adrian L. Lavarias,
Sharon Paris,
Steven M. Bauer,*
Margaret A. Tough,* and
Katherine A. Rouse,*
for appellants Phillips 66 and
Phillips 66 Company
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Victor M. Sher,*
Dana M.O. Viola,
Robert M. Kohn,
Nicolette Winter,
Jeff A. Lau,
Matthew K. Edling,*
Corrie J. Yackulic,* and
Stephanie D. Biehl,*
for appellees City and County
of Honolulu and Honolulu Board
of Water Supply
*pro hac vice
Anne E. Lopez
Ewan C. Rayner
for amicus curiae
Department of Attorney General
Tara A. Buckley
for amicus curiae
Hawai͑i State Association of
Counties
Chase H. Livingston
for amicus curiae
Legal Scholars
Mark M. Murakami
for amicus curiae
Chamber of Commerce of the
United States of America
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