Exxon Mobil Corp.’s attempt to derail a multistate fraud probe into whether the company fully disclosed to investors the financial risks of climate change was dealt a major blow after a Texas judge moved the case from its home turf to a federal court in Manhattan.

Texas isn’t the right venue for Exxon’s lawsuit against New York Attorney General Eric Schneiderman and his Massachusetts counterpart, Maura Healey, because the claims revolve around events in Manhattan, a judge in Dallas ruled Wednesday. Exxon argues that the joint investigation into possible consumer and securities fraud was started in “bad faith.”

The Exxon case involves “important issues,” U.S. District Judge Ed Kinkeade said in his ruling. But it belongs in New York because the alleged collusion at the center of the lawsuit took place at a “United for Clean Power” press conference on March 29, 2016, in Manhattan, he said.

The development follows questions about the role of former Chief Executive Officer Rex Tillerson, now U.S. Secretary of State, after Schneiderman found Tillerson had used a secondary email account under the alias ” Wayne Tracker” to discuss climate-change risks and other important matters with Exxon’s board. Exxon failed to disclose the emails under a subpoena, Schneiderman said in court filing. Exxon has denied that the move was intentional and instead blames a technical glitch.

Pressure Probe

In his ruling, Kinkeade spelled out Exxon’s grievances, including allegations that Schneiderman’s and Healey’s actions before and during the press conference “indicate their investigations are politically motivated” and that the pair used the probes “to pressure Exxon to change its position in the policy debate about climate change.”

Alan Jeffers, a spokesman for Irving, Texas-based Exxon, denied in a statement that the decision was a setback, even though the fight over the Texas court’s jurisdiction has been central to the case. Jeffers instead focused on Kinkead’s remarks that appear to criticize the attorneys general for refusing, during the litigation, to share information about the environmental press conference in Manhattan.

“Should not the attorneys general want to share all information related to the AGs United for Clean Power press conference?” the judge asked in the ruling. That way the public would know the probes weren’t politically motivated, he said.

The attorney general was “glad” the judge agreed with her office’s position, Chloe Gotsis, a spokeswoman for Healey said in an email. Schneiderman’s spokeswoman, Amy Spitalnick, said the ruling was appropriate.

“We will continue to pursue our investigation under New York law, ignoring Exxon’s continued campaign of delay and distraction,” Spitalnick said in an email.

‘Morally Vacant’

The states have been investigating since 2015 whether Exxon misled the public and investors for years about climate change, including the ways it could impact the company’s finances. They’re also examining whether Exxon properly valued its reserves.

Exxon, which sued in June, claims the evidence of political motivation includes meetings the attorneys general had with environmental groups and Schneiderman’s claim at the press conference that former President Barack Obama’s environmental agenda was being opposed by “morally vacant” forces.

“Exxon claims that the ultimate goal of the attorneys general is to silence everyone in the oil and gas industry from debating the climate change issue at any level,” Kinkeade said in Wednesday’s ruling.

Kinkeade in November gave Exxon an early victory by ordering Healey to appear in-person in Dallas for questioning under oath. The judge allowed the questioning by company lawyers after finding Healey’s probe may have been started “in bad faith.” Kinkeade canceled the deposition in December without giving a reason, even though he’d rejected a last-minute bid by Healey to delay it just days earlier.

With Washington divided along party lines over the state probes, House Republicans have subpoenaed Healey and Schneiderman — both Democrats — to derail their investigations citing arguments that largely parallel Exxon’s allegations. Both attorneys general have said they’ll ignore the subpoenas, hinting at a showdown in Congress with Texas Representative Lamar Smith.

The case is Exxon Mobil Corp. v. Healey, 16-cv-00469, U.S. District Court, Northern District of Texas (Fort Worth).

Topics USA Texas New York Fraud Climate Change Pollution