ExxonMobil Substantially Defeats Class Certification in Securities Action

Paul, Weiss won a major victory on behalf of ExxonMobil and certain of its former executives in a long-running putative federal securities class action in the Northern District of Texas, substantially defeating the plaintiff’s class certification motion, in one of very few decisions to apply the Supreme Court’s ruling in Goldman Sachs Group Inc. v. Arkansas Teacher Retirement System (2021).

In Goldman, which Paul, Weiss argued and won on behalf of Goldman Sachs, the Supreme Court instructed lower courts deciding class certification motions to consider “all probative evidence” regarding the existence or absence of price impact associated with a company’s alleged misrepresentations, even if that evidence overlaps with materiality, loss causation or other issues going to the merits of the plaintiff’s claims.

In the lawsuit against ExxonMobil, a Pennsylvania pension fund alleged that the defendants made a series of purportedly false and misleading statements from March 31, 2014, to January 31, 2017, about the company’s use of proxy and greenhouse gas (GHG) costs in its business planning; certain asset impairments ExxonMobil recognized in the western United States; and ExxonMobil’s assessment of certain proved reserves in Canada. The plaintiff alleged that these misstatements artificially inflated ExxonMobil’s stock price. The plaintiff further alleged that a series of seven corrective disclosures revealed the falsity of these statements and that these revelations led to a decline in ExxonMobil’s stock price, allegedly costing ExxonMobil stockholders billions of dollars.

In his opinion, U.S. District Judge Ed Kinkeade found that ExxonMobil had proven the absence of any price impact for six of the seven claimed corrective disclosures. He therefore rejected the three-year class period that the plaintiff had sought and instead certified a much narrower class of investors who purchased or acquired ExxonMobil stock between February 24, 2016, and October 28, 2016. Significantly, Judge Kinkeade also found that our clients had demonstrated that none of the alleged misrepresentations about ExxonMobil’s use of proxy and GHG costs had any impact on ExxonMobil’s stock price. He accordingly refused to certify any class concerning these alleged misstatements.

The Paul, Weiss team included litigation partners Ted Wells, Daniel Kramer (who argued the class certification motion) and Daniel Toal (who argued a res judicata, or claim preclusion, motion; examined ExxonMobil’s expert; and cross-examined the plaintiff’s expert) and counsel Jonathan Hurwitz and Matthew Stachel.