The Amazon Pink Dolphin’s Voice on Chevron: Chevron Stymied in Ecuador Case

Chevron Stymied in Ecuador Case

NEW YORK—Chevron Corp. suffered a setback in a U.S. court Friday in its attempt to keep a group of Ecuadoreans from collecting a multibillion-dollar judgment over environmental damage in that country.

Earlier this week, an Ecuadorean appellate court upheld an $18.2 billion judgment over alleged oil damage in the country’s Amazon region by Texaco Inc., which Chevron acquired in 2001.

In a separate racketeering lawsuit the oil company filed in New York last year, Chevron claimed the Ecuadorean plaintiffs and their lawyers manufactured evidence of pollution and improperly influenced the Ecuadorean court in obtaining the judgment there. In the racketeering case, Chevron had sought a so-called prejudgment attachment against the assets of the Ecuadorean plaintiffs and their lawyers, including their interest in the Ecuadorean judgment.

However, on Friday, a U.S. judge said that Chevron had failed to demonstrate that it was likely to recover “any specific amount of damages” from the U.S. lawsuit.

“Apart from the fact that the amount of the judgment is known, however, Chevron has made no effort to quantify the damages it allegedly has sustained to date, let alone to support any such damage claim with evidence,” the judge said U.S. District Judge Lewis A. Kaplan in Manhattan in an order Friday.

The environmental litigation has been ongoing for more than a decade, originally being heard in New York before it was moved to Ecuador.

In seeking the attachment order, Chevron’s lawyers had argued that the Ecuadorean plaintiffs were “scheming to enforce the fraudulent \[Ecuadorean\] judgment in foreign jurisdictions where they, their counsel and their other conspirators have influence” against Chevron entities that had no connection with the underlying Ecuadorean claims and outside the reach of U.S. courts. The company also argued the assets from the judgment would likely be dispersed before Chevron could prevail on its own damages claims.

In February, an Ecuadorean court granted the $18 billion judgment against Chevron. But in March, Judge Kaplan issued a preliminary order barring the Ecuadorean plaintiffs from pursuing Chevron’s assets outside of Ecuador as part of the separate racketeering suit.

In September, a U.S. appeals court vacated the U.S. injunction and placed the legal proceedings in New York on hold.

On Thursday, Chevron filed an emergency motion asking the U.S. Second Circuit Court of Appeals to reinstate the injunction and lift the hold on the New York proceedings pending additional arguments before the appellate court

“We appreciate the Court’s prompt response to our motion,” said Kent Robertson, a Chevron spokesman. “The court decided the motion on very narrow grounds and did not question the strength of Chevron’s fraud evidence. Clearly, the court has left the door open to a future attachment filing. We look forward to the balance of our racketeering case proceeding and remain committed to holding the plaintiffs’ lawyers accountable for their misconduct.”

Karen Hinton, a spokeswoman for the Ecuadorean plaintiffs, said Friday’s court decision marked “another rebuke” for Chevron.

Source: The Wall Street Journal

NY Court: Judge Can’t Block $18B Chevron Judgment

By LARRY NEUMEISTER Associated Press
NEW YORK January 26, 2012 (AP)

A judge overstepped his authority when he tried to ban enforcement around the world of an $18 billion judgment against Chevron Inc. for environmental damage in Ecuador, a federal appeals court said Thursday.

The three-judge panel of the 2nd U.S. Circuit Court of Appeals explained why it lifted the ban last year and blocked a judge from staging a trial to decide if the judgment was obtained fairly.

It said the judge has authority to block collection if Ecuadorean plaintiffs move against Chevron in New York, but law does not give him authority “to dictate to the entire world which judgments are entitled to respect and which countries’ courts are to be treated as international pariahs.”

The judgment came last February after nearly two decades of litigation that stemmed from the poisoning of land in the Ecuadorean rainforest while the oil company Texaco was operating an oil consortium from 1972 to 1990 in the Amazon. Texaco became a wholly owned subsidiary of Chevron in 2001.

Chevron obtained an order from U.S. District Judge Lewis A. Kaplan in March blocking Ecuadorean plaintiffs from trying to collect the $18 billion until he could stage a trial to determine whether the judgment was fraudulently obtained.

The Ecuadorean plaintiffs appealed Kaplan’s ruling to the 2nd Circuit. The appeals court heard oral arguments and then issued an order in September lifting Kaplan’s block on collection efforts. On Thursday, it went a step further, tossing out the portion of Chevron’s challenge to the judgment that sought to block its enforcement anywhere in the world.

“It is a particularly weighty matter for a court in one country to declare that another country’s legal system is so corrupt or unfair that its judgments are entitled to no respect from the courts of other nations,” the 2nd Circuit wrote. “In such an instance, the court risks disrespecting the legal system not only of the country in which the judgment was issued, but also of other countries, who are inherently assumed insufficiently trustworthy to recognize what is asserted to be the extreme incapacity of the legal system from which the judgment emanates.”

It added that the court issuing such a ban “sets itself up as the definitive international arbiter of the fairness and integrity of the world’s legal systems.”

The appeals court said Kaplan had not addressed the legal rules that would “govern enforceability of an Ecuadorean judgment under the laws of France, Russia, Brazil, Singapore, Saudi Arabia or any of the scores of countries, with widely varying legal systems, in which the plaintiffs might undertake to enforce their judgment.”

In a statement, Chevron said the appeals court decision was “a narrow procedural ruling” that would not affect the ultimate outcome of the case.

“Chevron believes this corrupt judgment will be unenforceable in any country that adheres to the rule of law and we will continue to defend Chevron’s interests against any attempts to enforce the fraudulent judgment,” it said.

Karen Hinton, a U.S. spokesperson for the Ecuadoreans, said the decision set right “a grave injustice against the Ecuadoreans.”

“Once Ecuadorean law allows enforcement of the judgment, it will become even more evident that the only fraud committed in Ecuador in the context of this historic environmental litigation was Chevron’s,” she said.

Source: ABC News

Ecuador Update: One Door Shuts, Another Opens, and Chevron Lists Its Law Firms—All 39 of Them

                                                              Posted by Michael D. Goldhaber

Last week, after an intermediate Ecuadorian appellate court affirmed last year’s $18 billion judgment against Chevron over oil pollution in the Amazon, we noted that Chevron had three near-term strategies to halt enforcement by the Ecuadorian plaintiffs. Well, two down, one to go.

The first option failed on January 6, when Manhattan federal district court judge Lewis Kaplan rejected Chevron’s attempt to get a preemptive order to attach any assets the plaintiffs might collect. Then, on January 19, the U.S. Court of Appeals for the Second Circuit rejected Chevron’s bid for a second shot at restoring Judge Kaplan’s previous decision to enjoin the plaintiffs from enforcing the Ecuadorian judgment. In a brief order, the Second Circuit denied a motion by Chevron to reargue the issue and to vacate the appellate court’s September decision canceling Judge Kaplan’s injunction.

This may suggest that the Second Circuit’s problems with a U.S. anti-foreign-suit injunction in this context go beyond ripeness–and that the U.S. injunction will never be restored. “The Ecuadorian communities affected by Chevron’s contamination are one step closer to justice as a result of today’s ruling,” plaintiffs’ spokesperson Karen Hinton stated with satisfaction. “Chevron’s legal options to evade the Ecuador judgment continue to narrow.”

In the near term that leaves Chevron angling to ensure that its ongoing arbitration against Ecuador in The Hague will stop the $18 billion judgment from becoming final and enforceable. The precise form of that argument was unveiled Friday in a press release announcing Chevron’s decision to appeal the $18 billion judgment to Ecuador’s National Court of Justice. As Chevron explained: “Based on the [arbitral] Tribunal’s order, Chevron has asked that the Ecuadorian [intermediate] appellate court take all steps to suspend enforcement of the Lago Agrio judgment until further order of the Tribunal, including suspension of any requirement that Chevron post a bond to prevent enforcement of the judgment during the [current appeal]. Any demand that Chevron post a bond in this case would be a violation of Ecuador’s international obligations under the order of the [Bilateral Investment Treaty] Tribunal, and Chevron has no obligation to post such a bond.”

Plaintiffs’ spokesperson Hinton quickly responded: “It is the position of the [Amazonian] communities that the relief Chevron is seeking is beyond the scope of the authority given the arbitration, and in any event would violate Ecuador’s laws and international treaties protecting the fundamental human rights of indigenous groups and others who continue to suffer from the abuses visited upon them by Chevron. These rights include the right to life and the right to seek legal redress.”

All of these legal developments, meanwhile, threaten to overshadow some very juicy law firm gossip. In a recent discovery filing, Chevron disclosed that it is employing no fewer than 39 law firms in the Ecuador matter (including four law firms representing the related individual defendants, but not including non-U.S. counsel retained in connection with potential enforcement actions). By the Ecuadorian plaintiffs’ count (which we did not verify), Chevron employs close to 500 outside lawyers or paralegals to counter their claims.

Among the 39 law firms listed are 15 Am Law 100 firms—Akin Gump; Ballard Spahr; Boies, Schiller; Crowell; Gibson Dunn; Holland & Knight; Jones Day; King & Spalding; Mayer Brown; Nutter McClennen; Pillsbury; Schulte Roth; Skadden; Sonnenschein; and Steptoe—and four smaller firms that qualify for the NLJ 250.

According to the plaintiffs’ unverified count, Chevron lists 60 lawyers from Gibson, Dunn & Crutcher alone. The plaintiffs estimate that Gibson Dunn charged Chevron $250 million in 2010, and the same amount again in 2011, but they don’t explain their calculations. This number seems at least two times too high, since according to The American Lawyer‘s published figures Gibson Dunn’s total litigation billings in 2010 were approximately $595 million. Moreover, 60 lawyers would represent only a bit over 10 percent of Gibson Dunn’s 575-lawyer litigation department.

When queried, Gibson Dunn’s Theodore Boutrous, Jr., e-mailed: “We’re not going to respond to Ms. Hinton’s irresponsible press releases, which are filled with false statements and blatant distortions, including regarding legal costs. We are litigating to stop this fraudulent case from going any further and to stop the plaintiffs’ lawyers from causing Chevron to incur any more costs as a result of their bad-faith activities.”

Boutrous added: “Chevron will also continue to prepare to resist any efforts by the plaintiffs to enforce the judgment in other countries in the event Ecuador chooses to defy the [arbitral] tribunal’s order. Chevron has uncovered overwhelming evidence of fraud and does not believe that the Ecuador ruling is enforceable in any court that observes the rule of law.”

In other words, Chevron is hardly out of options. If the company’s third effort to preempt enforcement fails, it will then contest enforcement, while it seeks final arbitral remedies and pushes its New York RICO action against the Ecuadorian plaintiffs’ lawyers. That’s good news for the company’s 39 law firms, and climbing.

Source: ALM



~ by FSVSF Admin on 27 January, 2012.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: