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U.S. Judge Dismisses Exxon’s Lawsuit Against Activist Investor

A U.S. district judge has dismissed a lawsuit filed by ExxonMobil against shareholder Arjuna Capital after ruling that the case is now moot after the activist investor had withdrawn a climate proposal and promised not to file similar proposals in the future.  

The dispute between the U.S. supermajor and Arjuna Capital emerged early this year, when Exxon sued Arjuna and Follow This in a Texas district court, aiming to block their climate proposals from going to a vote at the annual shareholder meeting, in the first such direct complaint to court instead of to the SEC. The two investors had filed a proposal for Exxon’s shareholders to vote at the annual general meeting on May 29 to have Exxon commit to further emissions reductions, including Scope 3 – emissions from the product it sells.

Arjuna withdrew the contested proposal and “unconditionally and irrevocably” promised to stop submitting similar proposals, U.S. District Court judge Mark Pittman wrote in this week’s ruling.

Exxon could sue Arjuna Capital only in case of an “actual, ongoing contovers[y],” according to the judge’s ruling.

“As Arjuna has eliminated any case or controversy between the Parties here, Exxon’s claim is MOOT and must be DISMISSED without prejudice,” the judge added.  

The lawsuit and the dispute which Exxon chose to pursue in court, instead of at the SEC, highlighted the growing divide between small activist shareholders and major oil and gas companies that are fed up with their day-to-day business challenged by proposals for shareholder resolutions.

“Our lawsuit put a spotlight on the abuse of the shareholder-access system," Exxon said in a statement carried by Reuters.

“The court has made absolutely clear that Arjuna cannot continue abusing the process. Shareholder democracy is only as strong as the rules that govern it, which must be fairly and consistently applied.”

Exxon’s critics say that the supermajor’s lawsuit against the two activist shareholders this year will chill future efforts of shareholders to seek climate accountability from Big Oil.

By Tsvetana Paraskova for Oilprice.com

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