Tag: First Amendment compelled disclosure

ESGLitigation

Court denies Chamber’s motion for summary judgment that California climate disclosure laws violate First Amendment

Given the impending change in Administration in D.C.—and all that portends for regulation—the States may, in many ways, take on much larger significance. Case in point: California’s climate disclosure laws and the ongoing litigation challenges there. In January, the U.S. and California Chambers of Commerce, the American Farm Bureau Federation and others filed a complaint (and in February, an amended complaint) against two executives of the California Air Resources Board and the California Attorney General challenging these two California laws. The lawsuit seeks declaratory relief that the two laws are void because they violate the First Amendment, are precluded under the Supremacy Clause by the Clean Air Act, and are invalid under the Constitution’s limitations on extraterritorial regulation, particularly under the dormant Commerce Clause.  The litigation also seeks injunctive relief to prevent CARB from taking any action to enforce these two laws. (See this PubCo post.) California then filed a motion to dismiss the amended complaint for lack of subject matter jurisdiction and failure to state a claim. Interestingly, however, the motion did not seek dismissal of Plaintiffs’ First Amendment claim (except as to the Attorney General, whom the motion seeks to exclude altogether on the basis of sovereign immunity), even though California asserted that Plaintiffs’ First Amendment challenge was “legally flawed.”  The Plaintiffs then moved for summary judgment on the First Amendment claim, and California moved to deny that motion or to defer it, enabling the parties to conduct discovery.  In this Order, issued on election day, the Federal District Court for the Central District of California denied Plaintiffs’ motion to dismiss and granted California’s motion to deny or defer the motion for summary judgment.

/ November 7, 2024
ESGLitigationSecurities

California moves to dismiss complaint challenging climate disclosure laws

Since we’ve been preoccupied with the litigation over SEC’s climate disclosure rules, it’s time for a break. Something new and different.  How about the litigation over the California climate disclosure rules: Senate Bill 253, the Climate Corporate Data Accountability Act, and Senate Bill 261, Greenhouse gases: climate-related financial risk? (See this PubCo post.) In January, the U.S. and California Chambers of Commerce, the American Farm Bureau Federation and others filed a complaint (and in February, an amended complaint) against two executives of the California Air Resources Board and the California Attorney General challenging these two California laws. The lawsuit seeks declaratory relief that the two laws are void because they violate the First Amendment, are precluded under the Supremacy Clause by the Clean Air Act, and are invalid under the Constitution’s limitations on extraterritorial regulation, particularly under the dormant Commerce Clause.  The litigation also seeks injunctive relief to prevent CARB from taking any action to enforce these two laws. (See this PubCo post.) CARB has just filed a motion to dismiss the amended complaint for lack of subject matter jurisdiction and failure to state a claim. Interestingly, however, the motion does not seek dismissal of Plaintiffs’ First Amendment claim (except as to the Attorney General, whom the motion seeks to exclude altogether on the basis of sovereign immunity), even though CARB asserts that  Plaintiffs’ First Amendment challenge is “legally flawed.” No further explanation is provided.

/ April 1, 2024
ESGLitigationSecurities

The Chamber sues California over climate legislation

You remember California’s climate legislation signed into law just last year—Senate Bill 253, the Climate Corporate Data Accountability Act, and Senate Bill 261, Greenhouse gases: climate-related financial risk? (See this PubCo post.) The U.S. and California Chambers of Commerce, the American Farm Bureau Federation and others have just filed a new complaint against the California Air Resources Board challenging these two California laws. The lawsuit seeks declaratory relief that the two laws are void because they violate the First Amendment, are precluded by federal law, and are invalid under the Constitution’s limitations on extraterritorial regulation, particularly under the dormant Commerce Clause.  The litigation also seeks injunctive relief to prevent CARB from taking any action to enforce these two laws.  These California laws have the potential to affect thousands of companies, including companies domiciled in other states, and many will be alert to see if these laws survive this legal action unscathed. To some extent, the litigation will also function as a dress rehearsal for the litigation that’s likely to surface when the SEC finally adopts its long-awaited climate disclosure rules. What does this litigation augur for the SEC’s anticipated climate disclosure rules?  While the dormant Commerce Clause is unlikely to play much of a role in a future challenge to the SEC’s expected climate disclosure regulations, the First Amendment claim is certainly one that we have seen used successfully in the past and are likely to see again. For example, it was raised in connection with challenges to Rule 14a-8 and to the stock repurchase rules, as well as at a recent House Financial Services subcommittee hearing on oversight of the SEC’s proposed climate disclosure, where the contention that the proposal’s compelled speech would violate the First Amendment was a topic of discussion. (See this PubCo post.) Now, we’ll see how well it plays in federal court in California.

/ February 2, 2024