Trials & Litigation

Federal judge rules for Chevron in civil-racketeer case, bans collection of $9B enviro award in US


In the latest blow to the plaintiffs and their lawyers in hard-fought litigation against Chevron Corp. over environmental damage in Ecuador, a federal district court judge in New York has issued a blistering ruling in an unusual civil racketeering case. It blocks their ability to collect, here in the U.S., an earlier $9.5 billion judgment by an Ecuadorian court.

In a nearly 500-page opinion (PDF), U.S. District Judge Lewis A. Kaplan on Tuesday said the course of justice had been “perverted” in the Ecuador case. Attorney Steven Donziger of New York led a team including Ecuadorian lawyers for the plaintiffs that submitted fraudulent evidence and offered a judge in Ecuador $500,000 to let them ghostwrite the opinion, Kaplan said, finding that the plaintiffs’ legal team engaged in bribery, coercion and money laundering in pursuit of the 2011 Ecuador verdict. It was originally $18 billion but was later cut to about $9.5 billion by Ecuador’s highest court.

“The decision in the Lago Agrio case was obtained by corrupt means,” Kaplan wrote in the opinion. “The defendants here may not be allowed to benefit from that in any way.”

The Associated Press, Bloomberg, the New York Times (reg. req.), Reuters, the San Francisco Chronicle and the Wall Street Journal (sub. req.) have stories.

“We believe Judge Kaplan is wrong on the law and wrong on the facts and that he repeatedly let his implacable hostility toward me, my Ecuadorian clients and their country infect his view of the case,” Donziger said in a written statement e-mailed to the news media, vowing to appeal Kaplan’s decision.

“The conspirators who committed that fraud are shameless, and they are tenacious, but Chevron hopes that today’s ruling hastens the end of their scheme,” said R. Hewitt Pate, who serves as general counsel for Chevron. “We don’t think any serious court will entertain enforcement of the fraudulent judgment.”

Although Kaplan’s decision today blocks the plaintiffs in the environmental case from seeking help from U.S. courts to collect on the $9.5 billion Ecuadorian judgment, they can still pursue efforts to do so in Argentina, Brazil and Canada, where Chevron also has assets.

The 2011 judgment in Ecuador resulted from a 2003 lawsuit in that country by villagers in its Lago Agrio region. They alleged environmental damage from oil exploration work by Texaco Inc. that occurred from the 1960s and 1990s. Chevron became a defendant in the case because it acquired Texaco in 2001. It contended that the company did its part to clean up the Texaco site and paid $40 million to do so before exiting the area years ago.

Related coverage:

ABAJournal.com: “Racketeering case filed by Chevron against lawyer who won $18B enviro award goes to trial”

Mail & Guardian: “Ecuador digs deep to fight oil tyranny”

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