The Case of the Cows, the Gas, and the Money with Kelsey Eberly and Skye Walker

Mariann Sullivan: I'm thrilled to have you here because we're going to be talking about, as I just said to you before we started recording, Kelsey, I don't know whether it's my favorite subject or my least favorite subject, but something I hate with such a passion, and we've already done an interview about it, but now we have an amazing case to add to that wealth of knowledge and we're talking about biogas.

And if you don't know what it is, you soon will and you will hate it as much as I do. I think actually though, the best place to start is not with what biogas is, but just to set the scene, maybe a little background on what a carbon offset is and how they work in general. I know we've all heard of them, but when I think about it, I actually don't really know that much about them.

That's an integral part of this case. So can you just kind of tell us what a carbon offset is and what it's designed to do?

Kelsey Eberly: Sure. So a carbon offset is basically a sort of a [00:01:00] market mechanism. You know, you've probably seen them if you've bought a plane ticket recently, you're offered the chance to offset your emissions. It's basically a market mechanism whereby you buy, ostensibly, the right to pollute and in exchange, you know, someone else is supposed to remove or avoid the equivalent greenhouse gas emissions, in order to offset yours. There are both regulatory carbon offset markets of, of a sort, and then there are voluntary carbon offset markets. And the kind that are at issue in this case are really the voluntary ones. And so you're choosing to purchase a, a product or enter into a service whereby, you know, you cancel out or mitigate your greenhouse gas emissions.

And we can talk about this much more, but carbon offsets have come under a lot of scrutiny because, basically they're not, in general, they're not doing what people say they're doing. You know, there have been some studies [00:02:00] showing a huge percentage of carbon offsets aren't actually meaningfully avoiding or removing carbon dioxide or, you know, greenhouse gas emissions equivalent to what's being represented. So that's what is really at issue in this case.

Mariann Sullivan: Yeah. And carbon offsets I think great on a lot of people's nerves, but we're not talking just about carbon offsets are bad here. We're talking about some carbon offsets that are not carbon offsets, but are pretending they are. You did lay out, I think they were federal guidelines, and if you could just go through some of the things that indicate to us whether it's... I don't like to use the term legitimate because we're well past the idea where anybody should be offsetting anything. We just need to stop it all. But there are much more legitimate carbon offsets than others.

And what are some of those standards?

Kelsey Eberly: Sure. So I would say the biggest one is the idea of additionality or being additional. So that just means essentially that the, you know, reduction of emissions or the avoidance of emissions would not have happened, but [00:03:00] for the crediting mechanisms. So, the offset has to represent a new removal or avoidance of emissions that wouldn't have otherwise happened. And that can either be the case because the offset represents actually physically removing emissions from the atmosphere, or additionality can be satisfied when the avoidance of emissions wouldn't otherwise have happened.

So that's the biggest one. There are several others though. So one other really important one is sort of the idea of uniqueness. So you can't double count the emissions avoidance. You can't tell one entity that it is responsible for the carbon offset, but then say the same thing, you know, to another person.

Another really important factor is permanence. So, you know, if you buy a carbon offset and the emissions are avoided, but then let's say something happens later and the emissions happen anyway, then it's not a carbon offset anymore.

And another one is monitoring and [00:04:00] verification. So, you know, are the emissions reductions actually happening on the ground in the real world? And how is that being measured and quantified?

Mariann Sullivan: We could probably also use some background information before we get to the case on what biogas or renewable natural gas is. And I mentioned we did an interview about this before, so people might wanna listen to that, but can you kind of give us the basics?

'Cause it's the most annoying thing on the face of the earth.

Skye Walker: Yeah. So biogas, what we call factory farm gas, it's basically anytime that organic matter, so whether that be cow manure, food waste, waste water, it breaks down in an oxygen free environment, usually in something called a digester or an anaerobic digester. It creates methane. That process creates methane and then that methane can be captured, and one of two things usually happens after it's captured. It's either burned on site to create electricity or heat, or it's refined to an upgraded product called [00:05:00] bio methane.

The industry calls that renewable natural gas or RNG for short. The idea is that pipeline quality RNG is essentially interchangeable with fossil natural gas in the gas grid, or it can be used as a transportation fuel. So that's kind of the theory of it, but as we'll get into today, like there's a lot of issues when you actually look under the hood in terms of using that as an energy source. And the fossil fuel industry and big ag giants like Cargill and Smithfield have really gone all in on biogas and RNG from cow manure specifically. Because industrial dairy farms generate massive amounts of manure, that they have to figure out something to do with, right? So why not make money off of it by generating biogas and RNG?

It's become so lucrative that some people even call the manure brown gold, which is kind of funny. So yeah, there's a lot of state and federal and even private mechanisms to incentivize the adoption of manure biogas projects to [00:06:00] construct digesters to construct RNG refineries. So, there's all sorts of levers out there that have really enabled this to become what it is. One of those is the California Low Carbon Fuel standard, which I'm sure you're familiar with and your listeners may be. It's essentially a cap and trade system where people can generate credits from producing biogas and RNG, which is considered to be very carbon negative in terms of how they rate the energy scores. And then they can sell those credits to other polluting industries that are, you know, required to lower their emissions, to become compliant essentially with state regulations.

Mariann Sullivan: I think when people hear about cows and gas or whatever, they hear about cow burps, cause that's what the industry likes to, kind of set out. That's not at all what we're talking about, right? They're not capturing cow burps.

Skye Walker: They are not and that's a big reason why biogas and renewable natural gas fail to live up to their name. The amount of greenhouse gas emissions from enteric fermentation, which like you described, is the breaking down [00:07:00] of matter in ruminant systems. So a cow stomach. When they burp, that produces enormous amounts of methane, that is in no way offset or captured by these digesters.

So you can kind of divide it into two buckets, right? There's enteric fermentation and there's waste management. The emissions from those are different, and you cannot offset enteric emissions through digesters.

Mariann Sullivan: There was also something in the briefs, I think, or the papers about, which I had not heard before, or at least I didn't remember it. There's two kinds of management, dry and wet management, and they could either be using one or the other and they're using the bad one. Is that right?

Skye Walker: That's right. Dairy specifically intentionally choose wet manure management systems that are known to generate methane. There are alternatives to those that they could be using and they're not, and so that's a big part of our theory is they're intentionally creating this methane. It's avoidable and they're creating it to then capture the methane and generate revenue off of it.

Mariann Sullivan: You mentioned the term methane digester, which I [00:08:00] think like a lot of terms in this area, I think it's pretty deceptive because it sounds like you're getting rid of the methane, you're digesting it, which sounds very good, but they're not making the methane go away. Right?

They wanna sell the methane. A methane digester basically takes manure and refines it in some way to get the methane out of it so they can use it and sell it? Is that what a methane digestor does? I mean, I know that's probably a very primitive explanation, but.

Skye Walker: Yeah, so Kelsey might have some insights on this too, but essentially like the process of if you have a manure lagoon, for example, with manure in it, you cover that.

Mariann Sullivan: Lagoon another one of my favorite terms in this area. Alright, I'm sorry. Go ahead.

Skye Walker: No worries. Yeah. So when you cover it, that creates the oxygen free environment I was talking about earlier.

That's what allows that anaerobic digestion process to take place. And there's kind of two outputs from that. There's the methane gas, and then there's the physical derivative of that which is called digestate.

They [00:09:00] separate those and then the digestate is allegedly used to produce something like animal bedding, for example. But yes, they separate out the methane. And then, the process of making RNG, you have to further refine it in a refinery or facility of some sort. Um, 'cause there's a lot of upgrading that has to happen there. Do you have anything to add on that, Kelsey?

Kelsey Eberly: You know, when you use these terms, I think you might get the idea that this is sort of a high tech system. These are just tarps put over these giant cesspools. It's not, you know, some amazing technology. And the technology has also been around, if you can call it that, for years. You know, this is not a new idea.

People have been doing this for a while. Like Skye mentioned, there have been federal and state incentives to cover these lagoons and do methane digestion for many, many years.

Mariann Sullivan: Yeah. And my understanding of the way this all works, and I need you to correct me if I'm wrong, has always been that if you're gonna produce methane, it is better to use it than to just [00:10:00] release it into the air. It's, the worst thing you can do is just release it into the air and certainly a huge part of the problem here is that they are just releasing a lot of it into the air instead of capturing it. But it's much better for the climate just not to produce it at all.

Because even when you use it, it's not like it breaks down into water, it breaks down into carbon dioxide, which is also a greenhouse gas. It's just not as bad as releasing the methane into the air.

Is that right?

Kelsey Eberly: I think so. Yeah. I mean, I think it's better if you capture it. I think as soon as you create an incentive to use it by promoting it as a transportation fuel, then that's where you run into trouble. Because it's one thing to incentivize its capture and it's another thing to incentivize the methane that comes from covering the cesspool, and capturing that methane.

Mariann Sullivan: Yeah, I understand that it's so profit like these dairy farms tend to think of themselves now as, milk is the byproduct, the real money's in [00:11:00] the gas. But the bottom line is even if we were really good at capturing it, even if we didn't use it, the best climate solution would be not to have dairy farms.

I mean, there's an easy answer here, just don't produce it. And, the other thing that I think that I should clarify that I didn't used to understand, I used to think, well, there were all those buffalo out on the plains, and they must have been producing a lot of methane too. But it's the putting all of the manure into the lagoons. It's the process that they use that really, really increases the amount of methane that is produced. Right? If these cows or if buffalo were in the wild just pooping wherever they poop or whatever, it would be not nearly as much. Is that right?

Skye Walker: Yeah. There's methods, like I mentioned of managing manure using dry systems that produce naturally very little amounts of methane. It's a matter of the lagoon system.

And one thing I wanted to mention too is like, you know, it's not always true that the methane would've vent it out into the atmosphere anyway, because methane can actually combust when it interacts with ambient air. And [00:12:00] so a lot of jurisdictions actually require that facilities burn or flare some of that methane that's capturable so that it doesn't vent out into the atmosphere and create all sorts of safety issues. So just kind of going back to Kelsey's point on additionality, right?

Like, are we really saving methane that would've otherwise been venting to the atmosphere in this situation? Well, probably not.

Mariann Sullivan: So in addition to the facts that not all of the methane released by the cows goes into the digester, and in addition to the fact that even if it worked perfectly, methane produced by methane digesters would release carbon dioxide when they were burned.

They don't work perfectly, right? I mean, there is a lot of flaws in the system. Even if it worked perfectly, it would be bad, but it's much worse.

Skye Walker: Yeah. There's considerable leakage that happens along biogas and RNG supply chains. There's a lot of good literature on that now. So the systems just don't work as well as they make them out to be.

Mariann Sullivan: Okay. I think that's enough [00:13:00] intro. So let's get into some of the specifics. What is Northwest Natural Gas and what are the programs that they have that are at issue here?

Kelsey Eberly: So Northwest Natural Gas is a large utility company in the Pacific Northwest. They're, you know, primarily in Oregon, but also serve some Washington customers. And they sell natural gas, which is primarily methane. The program that is at issue in this lawsuit is called the Smart Energy Program, and that is a product, you know, service that Northwest Natural offers to its customers, ostensibly to enable them to offset the greenhouse gas emissions associated with their natural gas use.

As our lawsuit alleges, that's not in fact what Smart Energy is doing at all.

Mariann Sullivan: So what do they tell their customers? I'm not saying that all of Western Oregon is extremely progressive, but we certainly know that some parts of it probably are full of people who care about the climate and would like to do something virtuous. What are they being [00:14:00] told by Northwest?

Kelsey Eberly: Sure. So Northwest Natural tells its customers and I should also back up and say. You know, this is not a single posting on a website. This is not a single flyer. This is a marketing campaign that includes videos and flyers included in people's utility bills and website representations. And in fact, as we describe in the complaint, a promotion, you know, an invitation to join Smart Energy every time the natural gas customer signs onto their account on the website.

And the message is simple. It is, we are going to mitigate or offset the carbon emissions from your natural gas use. We're going to allow you to make your natural gas climate neutral. Customers are given the option of making their natural gas climate neutral or enrolling in sort of the offsetting the emissions of the average natural gas user. So, you know, it's a specific promise to mitigate all of [00:15:00] the greenhouse gas emissions from the customer's natural gas use.

Mariann Sullivan: You get to pay in order to be virtuous.

Kelsey Eberly: Yes, exactly. Yeah. So, you know, the average home option that's around $8 a month. If you choose the option that's specific to how much natural gas you use, and that varies, you know, each month depending on, on your usage.

Mariann Sullivan: And so aside from all the other problems, it, I mean, this may seem obvious at this point, and if anybody hears a little banging around, it is Kelsey's cat, so you just have to deal

Kelsey Eberly: Sorry.

Mariann Sullivan: Um, this program can actually encourage the production of methane because now they're getting paid to gather energy in this particular way. Just to pin down what seems to be obvious at this point, right?

Kelsey Eberly: Well, certainly it tells customers, let's say you're a natural gas customer. You're worried about your emissions. You're looking to do something to lessen the impact of your natural gas. It's speaking to that customer's trying to, you know, tell customers that they can make their natural gas [00:16:00] climate neutral.

Mariann. Sullivan: Hi everybody. Just a heads up, we're changing mics here, so if the sound changes, that's why it's not you. Okay. Let's get to the next question though, because I wanna ask something else before we get to the lawsuit because because aside from all the problems we just said with what they're doing with this money, they're not even actually even spending it all on this program.

Right? They're collecting this money, but some of it's going kind of to other things.

Kelsey. Eberly: That's right. We discovered that almost 25% of the money that, you know, customers are paying into the program is going not to fund carbon offsets, but instead for Northwest Natural's marketing and administration of the Smart Energy program. So customers are essentially funding this marketing that's coming back to them telling them to enroll in the program. We also discovered that Northwest Natural was very y interested in essentially counting customers smart energy [00:17:00] greenhouse gas reduction for its own climate obligations under Oregon state law. Essentially trying to piggyback off of, you know, customers greenhouse gas reductions, which is deceptive to say the least, you know, when it's telling customers that they're funding these new offsets.

Mariann. Sullivan: Wow, that's really unbelievable. Kind of double dipping.

Skye. Walker: Yeah.

Mariann. Sullivan: All right, so finally we're gonna get to the lawsuit. Let's just start with the court, what court are you in? You're in state court, right?

Skye. Walker: Yep. We're in Multnomah County Circuit Court.

Mariann. Sullivan: And, who exactly are the named plaintiffs and what is their relationship to the defendants?

Kelsey. Eberly: Sure. So, our plaintiffs are Nicholas Blum and Claire Gates. They're Oregon residents and Northwest Natural customers, and they both enrolled in the Smart Energy program and that's why we're bringing claims on their behalf. They did not get what was being marketed to them.

Um, they were promised a carbon offset of the greenhouse gas emissions [00:18:00] associated with their natural gas, and that's not what they got.

Mariann. Sullivan: Yeah, I can imagine how pissed off I would be if I found out about this, because these are people who are trying to do the right thing and you know, they, they read what they can, but we can't all devote our lives to researching every claim that's made to us. We're just trying to do the right thing. All right, so this is, I know this is meant to be a class action, but I feel like you're not really there yet. So maybe I'll save a question about that for the end as to next steps, not go into that at this moment. So let's start with the causes of action under the UTPA, and obviously it would be great for the rest of us if you could explain what the UTPA is, I know it's a very long, complex statute.

So describe the specific sections at issue here.

Kelsey. Eberly: Sure. So the UTPA stands for the Unfair Trade Practices Act, and this is Oregon's. sometimes they're called little FTC, little federal Trade Commission Acts. Basically, states have their own consumer protection laws and, and this is Oregon's and some states laws are very [00:19:00] simple.

You know, like California's unfair competition laws, very straightforward. But Oregon's has many, many, many provisions, you know, things that the Oregon legislature has said are unfair trade practices. And so we are bringing claims on behalf of plaintiff Blum under four of those provisions.

So this is, 646.608, um, one B, E, F, and G.

Mariann. Sullivan: Now everybody remember that?

Kelsey. Eberly: Exactly, so we claim that Northwest Natural is causing a likelihood of confusion or misunderstanding as to the source and the certification of the carbon offsets or RNG In the Smart Energy program. We allege they are representing that the carbon offsets and the RNG have characteristics and benefits that they don't have, that they are representing that carbon offsets as new when they're really used.

That's sort of a creative one, but you know, essentially by promising customers that, [00:20:00] you know, they're investing in these new projects that are gonna reduce greenhouse gas emissions. You know, that's a representation that the offsets are not actually existing projects that were supported by something else.

Mariann. Sullivan: Oh, you, you had mentioned that when we were talking about the facts and I didn't realize how relevant it was to one particular statute. Yeah.

Kelsey. Eberly: Yeah. Yeah. And then finally, we're bringing claims that they represent the carbon offsets and RNG as being, you know, of a high grade or quality when they really are the opposite.

Mariann. Sullivan: Now, I know they moved to dismiss for failure to state a claim. And I know this is pretty basic and we all learned it in law school, but I do find that some people who don't litigate still confuse summary judgment and motions to dismiss for failure to state a claim. So could you just like go over the standard here?

'Cause I think it's really important at this juncture. This is a really basic standard

Kelsey. Eberly: Yeah, yeah. The court is required to take everything in our complaint as true, to take inferences in the plaintiff's favor. It is not an evidentiary, you know, [00:21:00] battle of the experts situation.

This is just about, have we stated its sufficient facts to, you know, plead claims under the Unfair Trade Practices Act and claim for breach of contract. So. is not supposed to be an evidentiary battle at this stage,

Mariann. Sullivan: Right. Just, they actually say that even if every single allegation you're saying is true, they still haven't broken the law. So one of their specific arguments is that the carbon offsets and their, quote unquote environmental credits are not goods under the statute.

How does that relate to the statute and what is your position?

Kelsey. Eberly: Well, this is about several of the provisions of the UTPA because, you know, for three of the four provisions, there has to be a representation about goods or services. So the question is, what is a good or service under the act? Interestingly, you know, we, we make the argument that, this could be both a good or a service. You know, the carbon offsets are goods. They're not tangible goods. You can't pick up a carbon offset, but certainly it has [00:22:00] commercial value and it is used for household purposes. And it's bought and, and sold on markets.

So, I mean, like that is the definition of a good, basically. But even if it's not, it could be a service, a carbon offsetting service. Their argument was based on a case about a bottle bill deposit not being a good, so we think, you know, that's really easily distinguishable.

Carbon offsets, you know, are, are a financial good that we all see traded all over the place. So. it's sort of a silly argument in our view.

Mariann. Sullivan: Their arguments do seem, well, you know, I always think so at this point, but they do seem to be really reaching. So I think they also argue that there are no allegations that would establish that they caused a likelihood of confusion. I think it, it's as to the source sponsorship approval or certification, but I think maybe it's you're limiting it to source, they're causing confusion as to both source and certification of these.

Uh, you know, it seems obvious that this is wildly confusing, but I only read your brief, so explain to me what they mean and why they're wrong.

Kelsey. Eberly: [00:23:00] Well, they basically said, you know, in your claims section, you don't give information about how Northwest Natural is causing likelihood of confusion about the source, or certification of the goods and so therefore you haven't stated any facts. But of course that ignores the facts in the other 149 paragraphs of the complaint, which very clearly set out multiple ways in which Northwest Natural is misleading customers about, you know, where these offsets come from, the source. It's saying that these are new greenhouse gas emission reduction projects when that's not the case. And also about certification. You know, they're representing these offsets as verifiably canceling out specific quantities of carbon emissions, which suggests that they're certified to do that. And those allegations are, are throughout the complaint, so, so really, you know, being willfully blind to them doesn't help Northwest Natural.

Mariann. Sullivan: Okay. Mens Rea, this one I really didn't get. They argue that there are insufficient [00:24:00] allegations that they acted willfully, which I understand in Oregon, or at least under the statute means negligently, which is kind of unusual, but you know, that's fine. So, willfully, recklessly, and knowingly. I think you point out that you do have to establish at least recklessness in order to go forward with a class action. Is that right? But, can you explain what their position is? I mean, it doesn't seem like they were unaware of anything here. It seemed like they knew what they were doing. They just thought it was fine.

Kelsey. Eberly: Yeah. So, in order to seek statutory damages on behalf of the class, we have to allege that Northwest Natural acted knowingly, uh, with respect to, uh, recklessly knowing with respect to their violations of the Unfair Trade Practices Act. And I think this is a case in which, you know, I, I think we have much more than we typically do in a consumer case about both their knowledge, their intent, you know, we tell the story in the complaint of how they [00:25:00] needed a way to convince their Oregon customers that natural gas was clean, safe and reliable. They needed a way to communicate that they were, you know, doing the right thing for the climate, and they really zeroed in on, for themselves, you know, promoting RNG and for customers, the Smart Energy program. And they really pushed, within the Smart Energy program, these manure digesters. So you would think a company representing to customers that, you know, manure digesters are offsetting specific quantities of their, you know, carbon emissions would have to verify that that was true. And they had all the information at their disposal that would've allowed them to say, oh wait, maybe these manure digesters actually aren't doing what we say that they're doing. They had that information and they just ignored it. Um, and that's sort of the definition of acting, you know, recklessly or knowingly being, being willfully blind to that

Skye. Walker: Yeah. And quite ironically, you know, [00:26:00] Northwest Natural's position was that the plaintiffs should have been aware of that information? It was, right? It was,

Mariann. Sullivan: true. True

Skye. Walker: But you know, Northwest Natural shouldn't have been. So that was.

Mariann. Sullivan: me of like cruelty cases where, undercover investigate. I mean, this is kind of a weird, uh, analogy, but they're the same people doing it. Investigators go in, they find like, you know, the workers like playing basketball with live chickens or whatever horrific thing is going on and the company is always like, oh my gosh, we had no idea this was happening.

Uh, but this is even worse. I mean, it's their program. They designed it for this purpose. They kind of have a responsibility to know whether it's serving this purpose. It's, it's just a bad argument.

Kelsey. Eberly: Alright. They also have a free speech defense, under both the First Amendment and the Oregon Constitution. I assume that has to do with commercial speech, which is a big factor in this case. Can you talk a little bit about that claim?

Sure, [00:27:00] so this sort of dovetails with, I'm sure, we'll, we'll talk about their anti-SLAPP motion, but

Mariann. Sullivan: Yeah.

Kelsey. Eberly: of in this similar theme. You know, of course companies have First Amendment rights, you know, just like others have First Amendment rights, but there's been a pretty long standing and uninterrupted, you know, chain of precedent from the Supreme Court and in Oregon courts that, commercial actors have free speech rights, but they don't have the right to mislead customers about their products and services. And that's why courts in Oregon and in other places have consistently found that these unfair trade practices, laws that specifically target making false and misleading statements about products and services, but those don't run afoul of the First Amendment and they don't run afoul of the Oregon Constitution.

So, the idea that we can't proceed with these unfair trade practices claims because, of Northwest Natural's commercial speech rights, you know, just really doesn't have any in authority. And I think, you know, Northwest Natural is really trying to lean [00:28:00] on precedent. You know, talking about the importance of protecting public speech on issues of public concern, and of course speech about climate change. A, you know, classic issue of public concern is incredibly important to protect. But that doesn't mean that courts can't stop a company from making misleading climate related statements about its products and services under the Oregon Constitution or the US Constitution.

Mariann. Sullivan: Yeah, and, and we will talk about this more down the road but I just think it's just unbelievable. Like I really do. I say this in the middle of almost every interview on the, on the Animal Law Podcast. You know, I start off thinking, you know, this is interesting. Then I'm like, oh my God. They're actually taking the fact that climate change is an issue of public interest and differing opinions, and basically argue... and recalling that we have to take your allegations as true here, that they're being completely deceptive. Like basically arguing that those deceptions are just like part of the [00:29:00] discourse about this issue of public interest, you know, that people have passions about. Doesn't mean that companies can sell you a bill of goods.

Uh. Hopefully it doesn't mean that, it's just such an outrageous argument. There's a few more arguments before we get to the anti-SLAPP case, or complaint. There's also a breach of contract claim, uh, just to, you know, cross all our ts, explain how the plaintiffs allege an enforceable contract that then, uh, they are claiming was breached. Cause I think they're claiming that there wasn't an enforceable contract to provide these services. Is that right? Am I right?

Skye. Walker: Yes, that is what they're arguing. And we go to length in our opposition to explain why there was an enforceable contract here. It's actually a pretty low bar to create an enforceable contract. Um,

Mariann. Sullivan: paying for this.

Skye. Walker: e exactly. Yeah. People, when they enrolled in the program, you know, Northwest Natural clearly made an offer to them.

You know, they offered to offset 100% of customers monthly natural [00:30:00] gas emissions in exchange for those customers paying every single month, basically a surcharge on top of their normal natural gas bill. So there's clearly kind of an exchange of we're gonna provide this if you provide this, that's a contract.

So yeah, our position is that they did enter into contract with those customers and, clearly Northwest Natural breached the contract in all of the ways we lay out in the complaint. Those customers suffered damages as a result of the breach of contract, and that's really all you need to allege a breach of contract claim.

It's quite simple.

Mariann. Sullivan: And under this cause of action, are the damages only the extra that they paid or are there additional damages? Because, you know, they didn't get what they paid for and I'm sure they're saying they should be compensated, but the fact that they continued to use this product that was in violation of their principles or whatever. I don't know whether you've gotten there yet or not, but I'm just wondering if there are damages for that as well.

Skye. Walker: So what's available under Oregon Law, under my understanding is for a breach of contract, you can get [00:31:00] actual damages, is what they call it. I don't think there's like other kind of specialized categories of damages like there might be under certain statutes. The basic theory is that customers here would never have signed up for Smart Energy had they known what it truly was.

And so those are the actual damages is Yeah. The money they paid into the program that, you know, they wouldn't have otherwise paid into.

Mariann. Sullivan: And that's why it's so important, if this does go forward, that it be a class action 'cause otherwise it's not a meaningful amount. I mean, at least under this cause of action. Alright, there's something about tariffs in here and we're all talking about tariffs, but this isn't at all what we're talking about when we talk about tariffs, right?

Like this, this is a different meaning of the word tariff,

than, than the Trump tariffs. So can you explain what a tariff is in the context of utility pricing and what the claim is here?

Skye. Walker: Yeah. So a tariff is, like all regulated utilities have a tariff and it's essentially kind of a publicly filed document that guides the utilities relationship with its customers. It sets out the rates that [00:32:00] utility customers are supposed to pay.

It can provide details on particular services and sort of set out what Northwest Natural and other utilities are supposed to do.

It's sort of like the law governing utilities essentially. The, the regulatory body that oversees, you know, a utilities compliance with the tariff is the Public Utilities Commission, which there's one in each state. Here we have the Oregon PUC. Um, and so there is a tariff, Northwest Natural has a tariff, and one of the provisions in the tariff, allows Northwest Natural to offer the Smart Energy program.

It's called Schedule 400. And their position is that, because Schedule 400 exists, which again allows them to offer Smart Energy, it provides what rate they can offer the program at, and a couple other kind of details about sort of the broader structure of the program. So their argument is because of that tariff, right, this is a matter that should be regulated by the Oregon PUC. This is not a matter courts should dip their toes into because it's really [00:33:00] outside of the bounds of what courts handle. Right?

There's a few doctrines that I won't go into the details kind of underpinning that argument. And, you know, we explain, and there's a lot of law on this, just because this tariff exists doesn't mean that, you know, Northwest Naturals contracts with customers, the ones that I explained just a moment ago are, you know, suddenly invalidated. These are two completely different things we're talking about. And, you know, the existence of one doesn't nullify the other.

And moreover, you know, this is definitely something courts can handle. This is, you know, court's bread and butter is deciding, you know, common law claims, like breach of contract and deciding statutory false advertising claims under generally applicable laws like the UTPA.

This is not what the PUC is structured to do. It's you know, an economic body whose sole purpose is to make sure that rate payers are being charged fair rates. And, and we're not arguing that the Smart Energy rate was unreasonable. You know, we're not arguing that Northwest [00:34:00] Natural didn't have authority to offer the program in the first place.

Our position is that if they are gonna offer this program, they need to be very upfront and clear about what it is. And here they offered one thing and they delivered another, and that's both deceptive and violating the contract that Northwest Natural had with customers.

Mariann. Sullivan: Yeah, it does seem like that's an argument that they're throwing in to give the court an opportunity to get rid of this if the court would really love to avoid it. And I really hope that, I mean, most courts I don't think are eager to do that. Most courts are, I like to call them gimme the ball. Judges like wanna take the case, but let's hope that's the case in this one.

Has that covered the arguments on the motion to dismiss or did I miss something?

Skye. Walker: I think that covered it.

Mariann. Sullivan: Right, let's get to this anti-SLAPP. Is it a motion or a separate complaint? And it's really just the icing on the cake of outrageousness in this case. This made me so angry. Probably, most people know what an anti-SLAPP law is, but can you explain what the law provides and what their argument is here?

Kelsey. Eberly: [00:35:00] Sure. So this is a motion, it's called a special motion to strike. And, Oregon has one of these anti-SLAPP laws just like many other states, SLAPP stands for strategic lawsuit against public participation and, anti-SLAPP law, including Oregons, their main function is to protect citizens from sort of retaliatory lawsuits filed by powerful, you know, like corporate interests, you know, against citizens speaking out on issues of public concern. Ironically, Northwest Natural, here says that it is the citizen that is being punished for its speech on issues of public concern by our plaintiffs filing this consumer protection lawsuit. In order to make this argument, they have to say that their, speech that is at issue in our suit, is, public speech on issues of public [00:36:00] concern. And so they go through our whole complaint and they pick out each allegation and say how it somehow is about their, sort of neutral, you know, advocacy or point of view about climate change, when really these are commercial advertisements for their commercial product. You know, unfortunately for them, Oregon is one of a few states that has a special exemption that specifically applies to exactly what Northwest National is trying to do here. So, California, Oregon, Texas have these exemptions that say, know, when the claim at issue is about, you know, a commercial actor's speech about its products and services, that commercial actor can't bring an anti-SLAPP motion against the claim. That clearly applies here.

Mariann. Sullivan: That's a pretty recent edition, right?

Kelsey. Eberly: It yeah, it's 2023, I believe. and, the model, this came from the Uniform Law Commission's model, anti-SLAPP law. And, you know, the [00:37:00] commission sort of explained, this is, for situations where a mattress company is, misleading customers about its mattresses like. The way the model law describes the purpose of the exemption is just exactly what our claims, are about. So, I mean, I don't think it could be any clearer. And their argument that this exemption didn't apply was not based in reality.

Mariann. Sullivan: It's unbelievable. It really is. And I mean the fact that they did recently adopt this exemption, and that they got it from other states, shows that this is a thing that companies have been doing or else they didn't think of this when they first passed these laws that companies would do things this outrageous, and now they're like, oh, geez, we better make clear this is not what we meant.

Kelsey. Eberly: Exactly. No, I mean California has had one of these exemptions for years, you know? Probably unsurprisingly because of the amount of consumer protection, litigation that happens in California. But yeah, the California legislature saw big companies using the anti-SLAPP law to do exactly the opposite [00:38:00] of what it was supposed to do.

Essentially grind consumer protection lawsuits to a halt by filing these motions preventing plaintiffs from getting to discovery, and it acted to stop that. And that's the same thing that Oregon just did in 2023.

Mariann. Sullivan: Yeah. Alright, so assuming you're successful on these motions, I think all the papers have all the papers been submitted at this point and you're just waiting for decisions, but,

Kelsey. Eberly: Oh, we're waiting for their reply

Mariann. Sullivan: Oh, you haven't gotten the reply yet. Okay. So it'll be a little bit more time but assuming you're succ, if you're not successful, I don't know what to say, like. Other than, oh my God. But, um, if you are successful, what are the next steps? I mean, this case is still in very early days.

Skye. Walker: Yeah, if we defeat the motion to dismiss and the anti anti-SLAPP motion. Oregon law actually allows Northwest Natural to appeal the anti-SLAPP denial. It immediately goes up to the Oregon Court of Appeals and it's an appeal as of right. Meaning the court must review it.

There's no [00:39:00] discretion.

Mariann. Sullivan: the consumers who are supposed to be bringing these actions.

Kelsey. Eberly: Exactly.

Skye. Walker: Exactly. So if that happens, we're looking at quite a significant delay in this case. It could really slow things down for potentially, a few years even. Appeals can be really time consuming and that's really unfortunate. And then, you know, the Oregon Court of Appeals would decide the anti-SLAPP issue again, if we won at that level, my understanding is it would, you know, go back down to the lower court to proceed to the merits of the case.

Mariann. Sullivan: If they go that route, is there any possibility that they can be sanctioned in any way? If the court finds that their argument is frivolous or whatever?

Skye. Walker: Yeah, they can, well, we actually ask for attorney's fees in the motions we just filed under Oregon law.

You know, if it turns out that, an anti-SLAPP motion was filed, you know, frivolously or with the intent to just delay. You know exactly what we're arguing Northwest Natural is doing here, the other side can get attorney's fees, which is really great. And then there's other sort [00:40:00] of legal mechanisms in Oregon law, in terms of seeking sanctions. That's kind of different from the attorney's fees, provision, but.

Mariann. Sullivan: And, at this point we mentioned in the beginning, this is still just a putative class action. So when does it become a real class action and what are the steps to get there?

Kelsey. Eberly: Yeah, so, basically, you know, whenever we're back before the trial court, hopefully you know, if they lose this, they won't appeal and we'll be there sooner rather than later. But if they appeal and it comes back down, then we would go into discovery and then at some point, early on, we would be facing, you know, a motion for class certification, which is just asking the court to say that the class action vehicle is the proper procedural route for a case of this nature.

And that involves, you know, questions about numerosity, how many people are involved, how typical are your client's claims of the class member's claim. So going through those usual class certification questions. And then, you know, hopefully, we would get the class certified and we would [00:41:00] move ahead.

Mariann. Sullivan: All right. So, I've asked all my questions. Is there anything I should have asked you that I didn't?

Kelsey. Eberly: I guess one thing I didn't mention about the anti-SLAPP motion that I think bears mentioning is, you know, so anti-SLAPP motions kind of have a two step process. The first is like, do the claims arise from the defendant's protected conduct? You know, does the anti-SLAPP law apply at all? Then we go to the second step where the burden shifts to the plaintiff to have to show that their claims have some merit. Part of what is so, sort of, pernicious about, you know, big companies using this tactic against consumer plaintiffs is it requires the plaintiff to put in evidence at this early stage before discovery has happened to prove their claims. And so we just did that. We put in evidence at this early stage to say, you know, these claims have merit. We had a declaration, from a county expert, [00:42:00] and she, you know, went through the program and talked about how Northwest Natural is not giving customers what it promised. Again, at this early stage of the case, something you don't usually have to do, but we have had to do now, because of the motion that Northwest Natural filed. And we're confident about that.

Mariann. Sullivan: It's doing the exact opposite of what anti-SLAPP suits are supposed to do. It's, it's forcing plaintiffs to do more and more work and early on, so you are at risk of tipping them off as to what your evidence is. And so both strategically and just for the amount of work that's involved, it's discouraging people from taking action.

Skye. Walker: Yep, that's right. And unfortunately it's just becoming a more common tactic even by Northwest Natural, they recently filed an anti-SLAPP motion as well in a different case, filed by Multnomah County. You might not be aware of this, Mariann, but there was a deadly heat dome incident back in 2021 in Portland.

A lot of people lost their lives and Multnomah County filed a suit alleging [00:43:00] that particular entities in Oregon, including Northwest Natural were, you know, their activities were the cause of that climate change event. And Northwest Natural has filed an anti-SLAPP motion in that case as well, unfortunately, and

Um, Northwest Natural has just been sort of at the forefront of fighting any sort of meaningful climate change legislation or regulation in Oregon.

They just recently sued to invalidate the Oregon Climate Protection Program, which is kind of like a cap and trade program, you know, with the intent of lowering greenhouse gas emissions from fossil fuels and they were, you know, very quick to try and get rid of that.

And, that's just one example. So unfortunately this is, uh,

Mariann. Sullivan: Yeah, no. They've discovered their favorite tool and they're hoping to use it, it's

Skye. Walker: That's right.

Mariann. Sullivan: just a tragedy. It really is. Glad you're fighting the good fight. Let's just hopee that the courts wake up to this because, right. This use of anti-SLAPP laws is outrageous, [00:44:00] but biogas is unbelievably outrageous. It makes me furious. Absolutely furious. Ugh. Ugh.

Skye. Walker: Yeah, I know. And.

Mariann. Sullivan: this to these cows just for their shit.

Skye. Walker: And biogas, like we've alluded to before, it is the core, piece of this program. Like they really are.

Mariann. Sullivan: all they've got. If they wanna pretend they're climate friendly, it sounds like they don't have any other, arguments. I'm sorry, I interrupted you.

Kelsey. Eberly: No, I, I think, I mean, it's no accident that, you know, a company whose main business is selling methane would be, you know, so fervently promoting this system, on industrial farms that rewards the production of excess methane, uh, you know, that that isn't a surprise.

Mariann. Sullivan: And so many people just don't realize that methane is not just a fossil fuel. It's not just coming out of the ground. That we're creating it, like we're creating it all the time to create more and more and more, and then we're [00:45:00] releasing it into the air or, as, as we pointed out before, even using it in and even using it is a terrible thing to be doing for the climate. I'm glad you're on the side of good here and before I let you go, just tell us a little bit more about FarmSTAND and some of the work it's doing in addition to this case. And I just wanna mention that I interviewed Holly Bainbridge of FarmSTAND not too long ago about a Wisconsin zoning law and a great case.

And she just totally won it, right?

Kelsey. Eberly: That's right. Yeah.

Mariann. Sullivan: So go, go back. If you haven't listened to that, interview, go back and listen to it, 'cause it, it's great imaginative use of the law. But tell us, about FarmSTAND generally as well.

Kelsey. Eberly: Sure. Yeah. So FarmSTAND is a nonprofit legal advocacy group. Our mission is to transform the food system. We want to stop the harmful polluting, exploitative animal agriculture system that we have now, and create a food system that is humane, regenerative, you know, serves all of us, serves [00:46:00] communities, serves consumers, serves workers, serves farmers.

We do that through a combination of litigation, like Skye and I do, and movement building. So, you know, building up the power of these community organizations like the one that Holly represents, so that they can fight factory farming, and also, communication. So, you know spreading the word about the system and the need to dismantle it and rebuild something better. So we have work across a broad sphere of issues. We are representing farm workers in various cases. We have another climate related suit against, um, against Tyson. We are, you know, litigating a behalf of communities. So we really take a systematic approach to this issue.

Mariann. Sullivan: Yeah, it seems like you're doing incredibly powerful work. Thank you so much for sharing with us, the details on this case. We'll be looking forward to hearing what happens and the other work that you guys are doing. 'cause I'm really excited about it.

Kelsey. Eberly: Thanks Mariann.

Skye. Walker: Thank you.

Kelsey. Eberly: Thanks for having us.