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Exxon Drilling Speed Class Action Lawsuit Overview:
- Who: Exxon has asked a federal judge to dismiss a class action lawsuit filed against it by Mendi Yoshikawa, who is representing investors.
- Why: Exxon argues investors’ claims it misled them about its drilling speeds are without merit.
- Where: The class action lawsuit was filed in Texas federal court.
ExxonMobil has asked a Texas federal judge to toss a securities class action lawsuit lobbied against it by investors claiming the company intentionally misled them about its drilling speeds in the state’s Permian Basin.
Plaintiff Mendi Yoshikawa filed a class action lawsuit against Exxon following a Jan. 15 Wall Street Journal report that the US Securities and Exchange Commission was investigating the natural gas company over a whistleblower’s claims it had coerced workers to exaggerate the speed at which wells could be drilled in the area.
Yoshikawa claims Exxon did this to make the oil wells appear more valuable than they actually were, and that the company’s stock price dropped after the whistleblowers’ claims went public, injuring investors.
Exxon Fights Whistleblower Claims, Investor Class Action Lawsuit
Exxon—which has denied the whistleblowers’ claims—argues the investors’ class action did not allege actionable misrepresentations that would be enough to trump safe harbor provisions given to the company by the Private Securities Litigation Reform Act.
“The safe harbor protects forward-looking statements if they are accompanied by meaningful cautionary language or if Plaintiffs fail to plead actual knowledge,” the company said. “ExxonMobil’s production goal statements easily meet both prongs.”
Exxon also argues it included warnings with its projections, which ultimately came up short after the COVID-19 pandemic damaged the global marketplace.
“Plaintiffs haven’t alleged that any Defendant actually believed the projections were false. And setting aside this statutory bar, predictions that are not framed as guarantees are not actionable,” Exxon said.
Further, Exxon claims that the estimates it put out for its production at the Permian Basin were accurate and reliable when it came to the efficiency and speed of its drilling processes.
“Plaintiffs’ own expert analysis shows that ExxonMobil dramatically decreased how long it took to drill wells — the very thing that plaintiffs now challenge,” the company said. “That analysis shows that ExxonMobil rapidly improved its median drilling time in the (Permian Basin) from nearly 50 days in 2019 to about 35 days in 2020 and boosted total production in the Permian as a whole by about 30% over the same period.”
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