Key Points

  • The First Department unanimously affirmed dismissal of New York City's Consumer Protection Law suit against ExxonMobil, Shell and BP for failure to state a claim.
  • The court held that the challenged gasoline ads, which disclosed that the products were gasoline and claimed only lower emissions relative to other gasolines, lacked the capacity to deceive under either the reasonable-consumer standard or the 'ignorant, unthinking and credulous' standard, leaving the choice between them unresolved.
  • The city's own allegation of widespread public awareness that fossil fuels drive climate change defeated its theory that the ads deceived by omitting that fact.
  • Corporate statements about renewable-energy investments fell outside Administrative Code 20-701(a) because they were not made in connection with the sale or offering for sale of consumer goods or services, a limit absent from General Business Law 349 and from the statutes applied in greenwashing rulings in Connecticut, D.C., Vermont and Massachusetts.
  • The court did not reach Shell's statute-of-limitations defense or the companies' First Amendment argument.

A New York appeals court on Thursday upheld the dismissal of New York City's lawsuit accusing Exxon Mobil Corp., Shell and BP of "greenwashing," ruling that the companies' ads for lower-emission gasoline could not mislead consumers who, by the city's own account, already know that burning fossil fuels drives climate change.

A five-justice panel of the Appellate Division, First Department, ruled unanimously in an opinion by Justice David Friedman. Presiding Justice Dianne T. Renwick and Justices Barbara R. Kapnick, Bahaati E. Pitt-Burke and Kelly O'Neill Levy concurred. The panel affirmed a January 2025 order by Justice Anar R. Patel of Supreme Court, New York County, which had dismissed both of the city's claims.

The ruling turned on the city's Consumer Protection Law, which bars deceptive trade practices "in connection with the sale" of consumer goods or services. The panel held that the gasoline ads were not deceptive and that the companies' statements about their renewable-energy investments fell outside the law because they were not tied to anything sold to consumers.

The suit was not the city's first against the companies. In 2018 the city sued them and other energy companies in federal court, seeking climate-change damages under nuisance and trespass law. The U.S. Court of Appeals for the Second Circuit affirmed the dismissal of that suit in 2021, holding that a municipality may not "utilize state tort law to hold multinational oil companies liable for the damages caused by global greenhouse gas emissions." The city filed the current suit on April 22, 2021, three weeks later, claiming that the same advertising violated its consumer law.

The complaint's first claim, which the city called "product greenwashing," targeted ads for BP's Invigorate fuel additive, Shell's Nitrogen Enriched Cleaning System and V-Power Nitro+ Premium gasoline, and ExxonMobil's Synergy fuels, which the companies promoted as helping "reduce CO2 emissions" or producing fewer emissions. The city alleged that the ads failed to disclose that the products "generate large amounts of greenhouse gas emissions that contribute significantly to climate change."

Justice Friedman wrote that "the City does not claim that any challenged statement is false." Read in full, he wrote, the ads were comparative, telling consumers that the improved gasolines would produce fewer emissions than other gasolines. The city's omission theory, the opinion said, "conflicts, however, with the premise of the entire action," namely the city's allegation that the public knows fossil fuel use causes greenhouse-gas emissions.

The city's own theory, he reasoned, depended on that awareness. "After all, if the public did not know or care about the link between fossil fuels and climate change, highlighting the reduced-emissions feature of a gasoline product would not motivate consumers to buy it," he wrote. Because the ads disclosed that the products were gasoline, he concluded, "even unsophisticated consumers" would understand that using them contributes to climate change.

The panel likened the case to a 2019 Second Circuit decision rejecting a claim that the word "diet" in Diet Coke's marketing led consumers to expect weight loss. "Not even the least sophisticated consumer could be led to believe that, by using the advertised gasoline products, he or she would be able to drive a vehicle without producing a significant amount of emissions," Justice Friedman wrote.

The panel left open which consumer the law protects. The companies argued for a "reasonable consumer" test. The city urged a standard from a 1977 decision protecting "the ignorant, the unthinking and the credulous who, in making purchases, do not stop to analyze but are governed by appearances and general impressions." The panel said the reasonable-consumer test "appears to be better supported in current law" but held that the claim failed under either.

The panel also rejected the city's argument on appeal that the ads should have quantified the emissions reductions. Justice Friedman wrote that the complaint did not articulate that theory and that "the City cites no precedent requiring a seller, in advertising a product as offering a benefit relative to other products of the same kind, to quantify the magnitude of that benefit."

The second claim, which the city called "corporate greenwashing," accused the companies of exaggerating their clean-energy investments to "portray [defendants] as leaders in the fight against climate change, even though their products are the primary driver in causing it." The complaint cited BP's description of itself as "one of the major wind energy businesses in the US" and ExxonMobil's claim to be "the leader in carbon capture."

The panel held that the claim failed because the city did not allege that the companies sell consumers anything based on the alternative technologies they promoted. Justice Friedman wrote that the city had not identified "any court decision in which a corporation's statements about itself solely for purpose of branding or public relations, without connection to the sale of any particular goods or services to consumers, have been held to run afoul of" the city law.

The requirement of a link to a consumer sale, the court said, distinguishes the city law from the state's General Business Law, which reaches deceptive practices "in the conduct of any business, trade or commerce," and from other jurisdictions' consumer laws. On that basis the panel found "inapposite" greenwashing decisions the city had cited from courts in Connecticut, the District of Columbia, Vermont and Massachusetts.

The panel did not decide Shell's argument, which Justice Patel had accepted, that claims based on its conduct before April 22, 2018, were time-barred. Nor did it reach the companies' First Amendment defense to the corporate greenwashing claim.

The city was represented by the office of Corporation Counsel Muriel Goode-Trufant. Lawyers for the oil companies included Kannon K. Shanmugam of Paul, Weiss, Rifkind, Wharton & Garrison LLP.

The panel affirmed without costs and directed the clerk to enter judgment accordingly. Justice Patel's order had directed that judgment be entered for ExxonMobil, Shell and BP.