A federal judge in Texas dismissed Exxon Mobil’s lawsuit against activist shareholder Arjuna Capital concerning a climate proposal. The judge ruled that the investor’s commitment not to submit a similar resolution in the future rendered the case moot.
Judge Mark Pittman from the Northern District of Texas decided the lack of an ongoing dispute between the parties meant the case had to be dismissed without prejudice.
Exxon Mobil had initiated the lawsuit against Arjuna Capital and another shareholder, Follow This, in January.
The goal was to prevent them from presenting a proposal at Exxon’s May 29 annual shareholder meeting, which demanded faster reductions in carbon dioxide emissions. Critics argued that such a lawsuit could discourage future shareholder activism.
Despite the withdrawal of the proposal by the two activist shareholders after Exxon sued them, the company continued its legal actions. Exxon contended that the investors might introduce a similar proposal at a future shareholder meeting.
The judge had initially allowed the lawsuit against Arjuna to proceed but dismissed the case against Follow This due to jurisdictional issues.
On Monday, Judge Pittman noted that there was no longer a dispute after Arjuna made an unconditional and irrevocable pledge not to file a similar proposal again. This pledge effectively nullified the grounds for Exxon’s lawsuit against Arjuna, leading to the dismissal of the case.
The judge highlighted the disparity between the small boutique wealth management firm Arjuna and the multinational conglomerate Exxon.
Exxon’s claims were based on SEC rules that allow companies to exclude shareholder resolutions related to ordinary business operations or similar to previous proposals within five years. However, the judge noted that the court could not provide Exxon with advisory opinions without a live case or controversy to warrant jurisdiction.
