BlackRock, other funds clash with Republican states over evidence in climate-investing case

By Ross Kerber and Niket Nishant

(Reuters) -A lawyer for BlackRock said on Monday that Republican states' claim that asset managers violated antitrust law through their work with industry climate groups was not "plausible," as several firms pressed to have the case dismissed.

But a lawyer for the states, which include Texas and 12 others, told the U.S. District Judge Jeremy Kernodle that even calling attention to environmental matters, such as by signing on to industry agreements, could have an impact.

BlackRock, the world's largest asset manager, Vanguard and State Street are seeking to dismiss the claims in the closely watched antitrust case. The case, filed last November, claims the firms violated antitrust law through climate activism that reduced coal production and boosted energy prices.

In pressing for dismissal, Gregg Costa, an attorney for BlackRock, said on Monday that, among other things, the fund firms never voted against the same coal company directors during the years in question, weakening the case. Nor did the plaintiffs bring forward any material such as from a whistleblower showing direct talks among the companies to coordinate their activities.

"It's hard to see how this alleged conspiracy is even possible, let alone plausible," Costa said.

Robert Wick, an attorney for Vanguard, said while the firm held discussions with coal companies, that was only in line with its role as an asset manager. There were no allegations "that Vanguard ever used its shares to coerce or pressure a coal company to cut its production," Wick said.

Speaking for the states, Cooper & Kirk attorney Brian Barnes said the firms' actions could still have a market impact.

"Jawboning by these defendants as to decisions about market strategy just very clearly has the potential to influence output decisions at the coal company," Barnes said.

The outcome of the lawsuit could have major implications for how the companies, which together manage some $27 trillion, manage their holdings and passive funds.

One possible remedy sought by the plaintiffs would be for the fund firms to divest holdings in coal companies, which BlackRock has said would harm the companies' access to capital and likely raise energy prices.

Kernodle, of the U.S. District Court for the Eastern District of Texas, said he would take the matter under advisement. He also said that like many Americans he owns shares in various index funds from the firms, including the Vanguard S&P 500 ETF and the BlackRock iShares Core S&P Small Cap fund..

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