Looks like I wasn't the only person thinking Thursday about
Chevron's motion to attach the assets of the Ecuadorean
plaintiffs who won appellate affirmance of their $18 billion
judgment against the oil company earlier this week.
In a post yesterday on what I called Chevron's "Plan B," I
highlighted the unusual pre-trial attachment motion -- which
Chevron filed in November in its Manhattan federal court
racketeering suit against the Ecuadoreans and some of their
lawyers and experts -- as a way for the oil company to effect,
in essence, the same enforcement ban the U.S. Court of Appeals
for the Second Circuit lifted in September. Faced with an
Ecuadorean lawyer's threats that he plans to launch worldwide
actions to enforce the now-affirmed $18 billion judgment,
Chevron renewed its request that U.S. District Judge Lewis
Kaplan of Manhattan federal district court issue a temporary
restraining order barring the Ecuadorean plaintiffs "from
assigning, alienating, transferring, encumbering or otherwise
dispersing their interest in the fraudulent Ecuadorean judgment, or otherwise collecting proceeds."
On Friday Kaplan said no -- at least for now. In a six-page opinion the judge denied Chevron's attachment motion,
concluding that the oil company hadn't sufficiently specified
its alleged damages, aside from citing the $18 billion
Ecuadorean judgment. "In these circumstances, Chevron has not
demonstrated a likelihood of recovering any specific amount of
damages," Kaplan wrote.
But lest anyone think the judge has changed his mind about
the fraud evidence that prompted him to issue a worldwide
injunction barring enforcement of the judgment last spring,
Kaplan went on to suggest he hasn't -- despite the Second
Circuit's skepticism about his power to interfere with the
judgment of a foreign court. "This is not to say that Chevron
is unlikely to prevail on its claim that the judgment was
procured by fraud or is unenforceable for other reasons," wrote
Kaplan, who has been notably quiet in Chevron's RICO case since
the Second Circuit's September order. "It is not to say that
Chevron's ability to enforce any damages judgment it may secure
in this case would not be frustrated by transfers of the sort
that it here seeks effectively to prevent. Nor is it to say
that Chevron could not make out a sufficient case for some
order of attachment, now or in the future."
Chevron counsel Randy Mastro of Gibson, Dunn & Crutcher
painted the opinion as a mere temporary setback. "We appreciate
Judge Kaplan's prompt ruling and the guidance he has given on
how to proceed," he told me. "We look forward to litigating our
case before him."
A spokesperson for the Ecuadoreans sent this comment on
Kaplan's opinion: "It is clear that Chevron's motion had no
legal basis and was designed yet again to distract attention
from the company's fraudulent misconduct in Ecuador." The
Ecuadoreans -- plaintiffs in the suit against Chevron and
defendants in Chevron's RICO case -- have begun a campaign to
counter Chevron's fraud allegations with their own filings
accusing the oil company of fraudulently manipulating the
evidence before the Ecuadorean appellate court.
Kaplan's opinion did not address Chevron's motion to lift
his stay on discovery in the racketeering suit, which has been
pretty quiet this fall, perhaps in anticipation of a full
opinion from the Second Circuit panel that lifted Kaplan's
injunction. When Kaplan does dig into the Chevron suit again,
he'll have quite a tantalizing question before him. In a
fascinating motion to dismiss filed way back in May, the
defendants argued that the U.S. Supreme Court's 2010 ruling in
Morrison v. National Australia Bank precludes Chevron's suit
under the Second Circuit's interpretation of Norex Petroleum Limited. (I'm abashed that as a Morrison groupie, I didn't
previously pick up the ruling's potential implications in the
Chevron litigation; my thanks to the loyal reader who raised
the question with me Thursday.)
"Chevron's RICO allegations leave no doubt that the RICO
defendants' purported racketeering scheme is centered in and
focused on Ecuador and overwhelmingly involves conduct
occurring outside the United States," the brief said. The
Chevron complaint's assertion of peripheral activity inside the
United States, the RICO defendants argued, "are not alleged to
be the direct cause of Chevron's injuries [and] 'are
insufficient to support extraterritorial application of the
RICO statute'" under Norex.
Chevron countered in its opposition to the motion to dismiss that its RICO suit is nothing like the Norex case the
Second Circuit dismissed on Morrison grounds. "It isn't even a
close question," Chevron counsel Mastro told me. "Our RICO
complaint alleges a conspiracy organized, orchestrated, and
largely operated New York to target a U.S. company. ... Norex
involved activity almost entirely committed outside of the
U.S."
I left a request for comment on the Morrison arguments with
Craig Smyser of Smyser Kaplan & Veselka, defense counsel for
the Ecuadoreans in the RICO case, but didn't hear back.
(Reporting by Alison Frankel)
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