In an unusual lawsuit that pairs individual wrongful termination allegations with class action securities law claims, a former employee and present shareholder of a unit of the UK-based publishing and data analytics firm RELX PLC alleges that the company fired him in retaliation for raising concerns about the company’s “greenwashing.” He also alleges that the company misled investors about the company’s climate commitments and its climate-related actions. The complaint alleges that the company made public commitments to climate remediation but at the same time continued to engage in business activities contrary to these commitments. As discussed below, this new lawsuit, although unusual, underscores the fact that climate related allegations, including greenwashing allegations, continue to represent a significant potential source of D&O liability. A copy of the August 6, 2024, complaint can be found here.

Background

RELX is a publishing company that also owns the data companies LexisNexis and Martindale-Hubbell. Elsevier is a book publishing subsidiary of RELX. Cell Press, a publisher of scientific journals, is a subsidiary of Elsevier.

Kip Lyall was an employee of Cell Press from 2014 to August 2023. Lyall was an illustration and design program manager for Cell Press. In 2021, Lyall became a RELX shareholder when he purchased four shares of RELX stock.

Lyall alleges in his complaint that in 2020, he came to believe that RELX as engaging in “greenwashing,” in that while the company made numerous public climate commitments, the company was “actively supporting fossil fuel expansion.” Lyall says he decided to speak up regarding his climate-related concerns, but that rather than discussing his concerns, the company “intimidated and harassed him,” and in August 2023, terminated him, allegedly for speaking out.

Lyall also alleges that the company misled investors about its climate commitment. He alleges that while the company signed the Climate Pledge stating its commitment to minimize climate impacts as part of global efforts to achieve net zero emissions by 2050, and contrary to the companies “bold representations and pledges to environmental sustainability,” the company made “numerous business decisions that contradict their climate pledges.” For example, Lyall alleges that contrary to the Climate Pledge, the company continued to support new fossil fuel projects, and continued to publish journal for oil and gas technology and strategies for petroleum exploration. Lyall also alleges that the company’s political action committee (PAC) supports politicians who deny climate change.

With respect to his wrongful termination claims, Lyall alleges that in response to his expression of his concerns about the company’s climate change actions, the company “specifically pressured, harassed, retaliated [sic] and terminated [him] for advocating for Defendants to align their actions with their sustainability pledges.” The complaint quotes Lyall as saying “The pressure put on me to conform to the company’s ‘narrative’ turned my paycheck into a bribe, and the guilt from that blended with the overwhelming feeling that I was not doing enough given the scale of this emergency.”

Lyall also alleges that he “experienced severe decline in his mental health” as a result of “anxiety and helplessness” and also that he “experienced grief and despair.” The complaint alleges that Lyall sought counseling and therapy, and that as a result of a mental health professional’s written letter, requested an accommodation limiting mandatory meetings to a maximum of 45 minutes, because additional time “poses a threat to [Lyall’s] health.” The company alleges that the rather than accommodation Lyall, the defendants terminated him.

The Complaint

Lyall’s August 6, 2024, complaint, filed in the District of Massachusetts against RELX, Elsevier, and Cell Press, contains multiple counts filed on behalf of Lyall alone, relating to his wrongful termination claim. The individual claims include alleged violations of the Americans with Disabilities Act; the Massachusetts Fair Employment Practices Act; wrongful discharge, under Massachusetts law; and promissory estoppel.

In addition to these individual claims, the complaint also sets for a separate class action claim in which Lyall alleges that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. These claims purport to be filed on behalf of a class of investors who purchased RELX shares in the five-year period preceding the date of the complaint’s filing. The complaint alleges that the defendants’ statements artificially inflated the price of RELX shares. The complaint alleges that the class members were harmed and seeks to recover damages on behalf of the class.

Discussion

I have to say that the packaging up of the securities class action claim with the plaintiff’s wrongful termination claims sort of feels like trying to hook up a sea-going ocean liner to the back of a Toyota Camry. The plaintiff (and his attorneys) may well believe that the securities law allegations are legitimate and meritorious, but more cynically minded people may see only an attempt to try to bootstrap a straightforward wrongful termination claim into a much bigger-seeming deal.

Just the same, and even though it is only a part of what is otherwise just a wrongful termination lawsuit, the complaint does contain a securities class action claim on behalf of a class of investors. To that extent, at least, it does represent yet another example of a securities suit filed based on greenwashing allegations. To the same extent, the lawsuit, or at least the suit’s securities law claim, is yet another example of how ESG and climate change-related lawsuits are being filed not against ESG laggards – that is, company’s that are not focused on ESG-related issues—but rather are being filed against companies that overstated their ESG commitment. The new lawsuit also shows how the actions of activists can lead to ESG-related litigation.

While this is a rather unusual complaint, it does also serve as an illustration of the ways in which ESG continues as a potential source of D&O claims and a potential source of corporate liability exposure. For a lot of reasons, ESG may have faded from the top of the headlines in the business press, but it has not gone away as a potential D&O liability exposure.

This case has only just been filed and it remains to be seen how it will fare. The securities claims will face a host of hurdles. For starters, the only three defendants named in the suit are RELX, Elsevier, and Cell Press. Since securities law liability only applies to the “makers” of supposedly misleading statements, it seems likely that Elsevier and Cell Press should be able to get themselves dismissed, as they did not “make” the supposedly misleading statements. When the time comes to test the sufficiency of the plaintiff’s allegations, the court will have to look long and hard to find anything that would remotely satisfy the plaintiff’s obligation to plead scienter with particularity. The complaint also fully anticipates that the plaintiff’s securities law claims, in whole or in part, may have statutes of limitations issues.

Regardless of how this lawsuit ultimately turns out, it is a reminder that companies continue to face ESG-related liability risks. It also underscores the fact that companies that made elaborate climate change commitments may face scrutiny and may be held to account to the extent later actions fall short of earlier pledges.

I will say this: I know a lot of people that wish they had a note from their doctor saying that the can’t be forced to sit in a meeting longer than 45 minutes. I think we all know that meeting longer than 45 minutes can be crazy-making even if you aren’t obsessed with global climate change.