A federal judge in Texas has dismissed a lawsuit filed by Exxon Mobil against activist shareholder Arjuna Capital over a climate proposal, ruling that the case became moot after Arjuna Capital pledged not to submit a similar resolution in the future.
U.S. District Judge Mark Pittman for the Northern District of Texas made the decision on Monday following a hearing. He stated, “Arjuna has eliminated any case or controversy between the Parties here, Exxon’s claim is moot and must be dismissed without prejudice.”
Exxon Mobil had filed the lawsuit in January to prevent Arjuna Capital and another shareholder, Follow This, from presenting a proposal at its May 29 annual shareholder meeting. The proposal called for Exxon to accelerate reductions in carbon dioxide emissions.
Critics of the lawsuit argued that it could discourage future shareholder petitions. Despite Arjuna and Follow This withdrawing their proposal after Exxon’s lawsuit, Exxon continued to pursue legal action, contending that the shareholders might reintroduce a similar proposal at a later date.
Initially, Judge Pittman had allowed the lawsuit against Arjuna to proceed while dismissing the case against Follow This due to jurisdictional issues. However, he concluded on Monday that the matter was no longer relevant because Arjuna had made an “unconditional and irrevocable” commitment to refrain from submitting comparable proposals in the future.
“Arjuna was caught between a rock and a hard place,” Judge Pittman wrote in his ruling. “Arjuna is a boutique wealth management firm with offices in North Carolina and Massachusetts. Exxon is one of the largest multinational conglomerates on the planet.”
Exxon’s legal argument against Arjuna stemmed from Securities and Exchange Commission rules that allow companies to exclude shareholder resolutions concerning ordinary business operations or similar proposals made within the past five years.
“The SEC is behind the ball on this issue,” Judge Pittman noted in his ruling. “But the Court cannot advise Exxon of its rights without a live case or controversy to trigger jurisdiction.”
The dismissal marks a significant development in the ongoing debate over shareholder activism on climate-related issues within major corporations like Exxon Mobil.
