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SCOTUS considers what happens next in a climate suit between Colorado, Exxon (XOM), and Suncor (SU). (00:14) Pressure is mounting on Mattel (MAT). (02:04) McDonald’s (MCD) faces an AI pricing legal battle. (02:59)
This is an abridged transcript.
The Supreme Court is weighing a lawsuit brought by Boulder County, Colorado, against Exxon Mobil (XOM) and Suncor Energy (SU).
The lawsuit claims the companies deceived consumers about the dangers of their oil and gas operations and their effects on climate change through their advertising and marketing.
The justices appeared divided during oral arguments Monday as they debated whether communities can sue big energy companies for billions of dollars to pay for local harms allegedly caused by climate-related damages that scientists say are tied to the worldwide burning of fossil fuels.
The Colorado Supreme Court allowed the suit to continue to state court, but the oil companies have asked the justices to overturn the ruling, arguing that Boulder’s claims are preempted by the Clean Air Act.
“If Boulder’s claims are allowed to go forward, some 90,000 municipalities across the country will have the ability to make national and international energy policy by asking juries to impose catastrophic damages on selected fossil fuel producers,” Suncor’s (SU) attorney told the court.
According to the WSJ, by the end of the day’s arguments, only one member of the Supreme Court—Justice Kavanaugh—appeared squarely in the companies’ camp, saying prior Supreme Court cases have made clear that air and water pollution are exclusively federal, not state, issues.
Justice Alito, who owns stock in several energy companies, has recused himself, raising the possibility that the court could deadlock 4-4, which would leave in place the lower court decision that Boulder’s lawsuit should proceed toward trial but without setting a nationwide precedent affecting other cases.
A decision is expected in the coming months.
A major Mattel (MAT) shareholder is pushing the Barbie maker to explore a sale or other strategic alternatives.
Reuters reported that Ariel Investments, which owns a 5.4% stake in Mattel, outlined several options for Mattel, including the divestiture of significant assets, a merger, or an outright sale of the company.
The push comes as Mattel’s (MAT) profitability weakened after the 2023 “Barbie” boost. The toymaker has also been dealing with higher costs and increased investment in its brands and entertainment strategy.
Ariel’s push follows similar pressure from Southeastern Asset Management, which in May urged Mattel to consider strategic alternatives, including a sale or going private.
Last week, Mattel (MAT) also drew takeover interest from Authentic Brands Group at more than $20 a share, or $6B.
McDonald’s (MCD) is facing a proposed nationwide class-action lawsuit in federal court in Chicago, alleging that McDonald’s illegally coordinates menu prices across its franchised and company-owned restaurants using an AI-powered pricing system.
The lawsuit, filed on Friday, said the company violated US antitrust law by conspiring with independent franchisees to fix prices using algorithms trained on nonpublic data.
Reuters reported last week that McDonald’s pricing engine uses machine-learning algorithms to continually analyze data from millions of daily transactions across its nearly 14,000 restaurants.
The lawsuit cited the article, which said other fast-food companies are also turning to AI to help with pricing and other operations. “Independent businesses must set their prices independently,” the lawsuit said.
McDonald’s (MCD), in a statement on Monday, called the allegations speculative and uninformed. “AI does not set the price of a Big Mac or any other menu item,” the company said, according to the news agency. It said franchisees make their own pricing decisions and that the use of pricing recommendation tools and analytics is widespread across industries.
If you’d like to know more about Exxon (XOM), Suncor (SU), Mattel (MAT), and McDonald’s (MCD) but on a quant level, be sure to check out an extended edition of Wall Street Breakfast on TikTok, YouTube, and X. The show is with our head of Quant, Steve Cress. You can find the show on all platforms @cresstopstocks.
Catalyst watch:
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Notable investor events include Zscaler’s (ZS) Investor Day and Nomad Foods’ (NOMD) Investor Day. The tech sector will have its eyes on Marvell Technology’s (MRVL) Investor Day, which will feature CEO Matt Murphy and other executives discussing the company’s strategy, growth opportunities, and role in next-generation AI and data-center infrastructure.
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The three-day NACS Show will begin. The annual convenience-store and fuel-retailing conference will include participation from Casey’s General Stores (CASY), Accenture (ACN), Dollar General (DG), 7-Eleven, QuikTrip, Love’s, Circle K, and Sunoco (SUN).
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Executives with NXP Semiconductors (NXPI), Palo Alto Networks (PANW), and Booz Allen Hamilton (BAH) will give speeches at the ICS Cybersecurity Conference.
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The mega media merger between Paramount Skydance (PSKY) and Warner Bros. Discovery (WBD) is expected to close. Skydance will be the name of the combined company, and the new ticker will be SKYD.
Stock index futures are in the green.
Crude oil is down 1.7% at $87. Brent crude is down 1.7% at $98.
The FTSE 100 is up 0.9% and the DAX is up 0.9%. China’s (SHCOMP) markets closed. Mainland Chinese markets remained closed for the Golden Week holiday, with trading scheduled to resume Thursday.
One stock on the biggest movers list: Option Care Health (OPCH) +22%. The stock surged following a report that McKesson (MCK) and private equity firm Clayton, Dubilier & Rice are nearing a deal to acquire medical infusion services provider Option Care Health (OPCH) at a valuation exceeding $5 billion, including debt.
Economic calendar:
