After suing its critics, an oil group wound up in bankruptcy – Los Angeles Times

Stories involving bullies receiving their comeuppance offer such visceral pleasures that theyve become deeply ingrained in our culture, from Angelo in Shakespeares Measure for Measure to the lascivious Count in Mozarts Marriage of Figaro right up to the deplorable Biff in the movie Back to the Future.

Heres a story from real life.

In this case, the bully is the California Independent Petroleum Assn., which lobbies for oil drilling firms around the state.

We can see harassment a mile away, and thats what this lawsuit was.

Ashley Hernandez, Youth for Environmental Justice

CIPA spent five years suing environmentalists and the city of Los Angeles to block efforts to tighten regulations for drilling in populated areas, especially minority communities, which CIPAs members knew would cost them a lot of money. Thats the bullying part.

The legal battle ended in defeat for CIPA and a court ordering the organization to pay its targets legal bills. Those came to $2.3 million, according to an order issued by Los Angeles County Superior Court Judge Malcolm Mackey on July 6.

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Most of the money was awarded to the city of L.A., which is owed about $1.03 million, and the Center for Biological Diversity, one of the environmental groups CIPA targeted, which is owed more than $1.2 million.

CIPA, asserting that it doesnt have the money to pay the bills or post the bond that would be required before it could appeal the order, has now filed for bankruptcy. Thats the comeuppance part.

You can chalk up this harvest to Californias potent anti-SLAPP law. The acronym stands for Strategic Lawsuits Against Public Participation. It refers to litigation brought by powerful interests the oil and gas industry, for example not to settle commercial disagreements or seek redress for an injury, but to intimidate critics exercising their rights of free speech or petitioning government for regulatory action.

By the way, CIPA didnt succeed in getting the regulations loosened or removed.

Big Oil for a long time has wanted to make sure there was no public participation in the permitting process for oil drilling, says Ashley Hernandez of Youth for Environmental Justice, another of the groups sued by CIPA. We can see harassment a mile away, and thats what this lawsuit was. Its no surprise that after we succeeded in the courts, the petroleum association is trying to sneak out on their obligation.

CIPA says its hoping to work out a way to pay its creditors over five years. Its chief executive, Rock Zierman, says the $2.3-million judgment is larger than CIPAs annual budget.

A meeting of CIPAs creditors, including the city and the Center for Biological Diversity, is scheduled in Bankruptcy Court for Oct. 6.

The creditors are expected to argue that CIPA has sufficient resources to pay its bills: Were going to be asking the toughest questions we can, L.A. City Atty. Mike Feuer told me. Were going to take an aggressive stance to get the attorney fees to which the public is entitled. After all, the money at stake is owed to the taxpayers of the city.

Zierman says the group has been miscast as a bully.

How can a small trade association with four employees intimidate the city of Los Angeles which has an army of full time lawyers and billions of dollars in resources? Zierman asked me by email.

Of course, thats absurd. CIPAs membership has included Exxon Mobil and Chevron, two of the most powerful corporations in the world. Over the last four quarters, Exxon Mobils revenues have come to $178.6 billion and Chevrons to $116 billion.

Since 2019 alone, Exxon Mobil has spent $322,000 in lobbying in California, and Chevron, which is headquartered in this state, has spent $12.7 million. Chevron has contributed $1.75 million to CIPA for political activities in California since 2014, according to the California secretary of state.

As for the citys army of full-time lawyers, from 2017 through mid-2019, CIPA paid out more than $2.6 million in legal fees to at least four elite law firms, including the Los Angeles-based firms Manatt Phelps & Phillips and Gibson, Dunn & Crutcher. Thats according to the organizations latest public tax filings.

So lets hear no more about how penurious and teeny-tiny CIPA is. It engaged in litigation over city drilling not for itself and its four employees but on behalf of one of the best-financed and most powerful industries in California.

Before we move on to the particulars of the litigation that got CIPA into such a fix, a few words about SLAPP suits. Since the 1990s, theyve been viewed by policymakers as a menace to the public interest.

Anti-SLAPP laws are on the books of 33 states and enshrined by case law that is, judges rulings in two more. Efforts are underway to enact a federal anti-SLAPP law, but advocates have tried to achieve the goal four times before, most recently in 2015.

The difficulty has arisen even though anti-SLAPP legislation is favored on the political left and right alike. Thats because SLAPP suits have been brought not only against environmental groups and other activists but also businesses and public officials.

Employers have been sued for disciplining or firing workers, tech companies for challenging other firms patents, Better Business Bureaus for grading businesses with an F. Government officials have been sued for enforcing regulations. Theyve all received the protection of anti-SLAPP statutes.

The issue brings together strange bedfellows, says Evan Mascagni, policy director of the Public Participation Project, an advocacy group for anti-SLAPP laws. It transcends party lines. California has one of the strongest anti-SLAPP laws in the country, but so do red states such as Texas and Oklahoma.

Anyone can get SLAPPed for any reason, Mascagni says. Bullies trying to use the legal system to silence anyone who says anything negative about them can be left wing or right wing. The main obstacle to federal enactment appears to be plaintiffs lawyers. They dont want to see anything introduced that can help a defendant.

The CIPA case began in 2015, when the Center for Biological Diversity and other environmental groups challenged the citys indulgent policies on drilling permits. We sued the city for basically rubber-stamping permits for new drilling without complying with the California Environmental Quality Act, says Maya Golden-Krasner, a senior attorney for the center.

The city was especially lax about considering environmental, health and safety effects of drilling applications in majority Latino and Black communities, the plaintiffs asserted, even though CEQA required those issues to be taken into consideration. Thats important because fumes from oil and gas drilling are associated with a host of health problems, including asthma and cancer, among nearby residents.

In 2016, the city settled the lawsuit and issued an internal memo instructing zoning officials to require environmental assessments and public hearings for all new drilling applications, including changes sought for existing permits.

CIPA then sued the organizations and the city, alleging they had reached a secret deal while shutting the oil industry out of settlement negotiations. The group asked for the settlement to be invalidated.

CIPA kept the environmental groups in the case, even though they had settled with the city and dropped their own lawsuit, by asserting that they were acting as agents of the city. The groups disputed that, since they have no authority to force the city to do anything related to drilling permits.

Throughout the litigation, CIPA portrayed the process as virtually a matter of life or death for its members, and it pointed the finger at the environmentalists.

For these people who are attacking my clients in a regular basis in these lawsuits, a CIPA attorney asserted during a court hearing in 2016, this is tantamount to a holy war.

The case dragged on until a state appellate court threw out CIPAs claims in February 2019 and instructed the trial court to assess attorney fees against CIPA. CIPA appealed to the state Supreme Court, which refused to take up the case.

CIPAs Zierman groused to me that the judges $2.3-million assessment was out of line three times higher, he said, than any other anti-SLAPP assessment in California history.

Judge Mackey was explicit, however, about why the city and environmental groups deserved so much. This case involves complex land-use and constitutional law, was vigorously litigated for about 5 years, and involved appellate and supreme court proceedings, he wrote.

In effect, the judge issued a warning: Anyone who tries to run up the costs of litigation for the opponents in a SLAPP suit may find the bill landing back on their own desk, like a boomerang.

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After suing its critics, an oil group wound up in bankruptcy - Los Angeles Times