Thomson Reuters News & Insight
Featured Content from WESTLAW
Beginning in June, Thomson Reuters News & Insight content will be available exclusively on WestlawNext®, as part of its Practitioner Insights offering. On June 21, the Thomson Reuters News & Insight website, iPhone® app and newsletters will be discontinued. See Frequently Asked Questions to learn more.

Legal

  •  
  •  

MBS put-back plaintiffs: Be careful how you draft complaints  read more »

SCOTUS pay-for-delay ruling: New scrutiny for nonpharma patent deals?  read more »

Muni bond insurers take beating in California Chapter 9 bankruptcies  read more »

Marketing Popup

With Ecuadorean plaintiffs poised to collect, Chevron has Plan B

1/5/2012 COMMENTS (0)

In a conference call with reporters Wednesday, Pablo Fajardo, an Ecuadorean lawyer for the Lago Agrio plaintiffs whose $18 billion judgment against Chevron was upheld by an Ecuadorean appellate panel this week, said he is poised to launch international litigation to enforce the judgment as soon as it's legally feasible. "We're going to start the necessary actions for the ruling to be enforced in several continents and countries where Chevron has assets," Fajardo said. "We'll go to many courts in the world to demand that Chevron pays for the crime it committed in the Amazon."

The Ecuadorean plaintiffs can act to collect their $18 billion thanks to the U.S. Court of Appeals for the Second Circuit, which (as you'll doubtless recall) lifted a preliminary injunction barring enforcement in a stunning order in September.

The U.S. appeals court still hasn't issued an opinion explaining its decision to reverse the worldwide enforcement ban imposed by U.S. District Judge Lewis Kaplan of Manhattan federal court and to stay an imminent declaratory judgment trial before Kaplan on Chevron's assertion that the Ecuadorean judgment was the result of fraud. But it's clear from the transcript of the Sept. 17 oral argument that the 2nd Circuit panel was fundamentally uncomfortable with a U.S. judge summarily concluding that the courts of another country are corrupt. "Don't we have some sense of comity to the legitimacy of the process?" said appeals judge Richard Wesley. "Are we just to say to the people of Ecuador, 'You're all corrupt and your process doesn't matter to the United States?'"

The posture of the case is slightly different now that the Ecuadorean appeals court has upheld the initial judgment, but it's not likely that the 2nd Circuit will endorse any revised attempt bu Chevron to bar enforcement around the world through a U.S. injunction. The U.S. appellate judges would be offering more of a snub than ever to international comity if they did, given the vehemence of the Ecuadorean appeals court's ruling against Chevron. Chevron and its lawyers at Gibson, Dunn & Crutcher have a pending injunction count in their still-alive racketeering suit against the Lago Agrio plaintiffs and many of their lawyers and experts. I don't think it's going to fly.

But the always-crafty Gibson Dunn has already come up with a Plan B that could have the same effect as an injunction barring enforcement. On Nov. 29, as if anticipating the Ecuadorean appeals court's ruling, Chevron filed a motion for a pre-trial order of attachment in its racketeering suit against the Lago Agrio plaintiffs, which is still before Kaplan. (The Ecuadoreans had asked the 2nd Circuit for a writ of mandamus against Kaplan, who has consistently sided with Chevron, but it was denied.) Noting the judge's own finding of "ample evidence" that the Ecuadoreans and their lawyers engaged in fraud, Chevron asked Kaplan to attach their assets, "particularly their alleged interests in the fraudulent Ecuadorean judgment against Chevron." Without an attachment order, Chevron claimed, the Ecuadoreans would divert anything they recovered from Chevron to the offshore accounts of their litigation financiers, out of Chevron's reach if it won a judgment in the RICO suit. In essence, Chevron asked Kaplan to attach Chevron's own assets.

"It's bizarre," said Craig Smyser of Smyser Kaplan & Veselka, who represents the Ecuadorean plaintiffs in the RICO suit before Kaplan. Smyser cautioned that the Ecuadoreans can't begin enforcement actions on the $18 billion judgment for at least 30 days, which is Chevron's deadline to seek a hearing at Ecuador's highest court. (That appeal would require the oil company to post a bond, Smyser said, though not for the entire $18 billion.) Smyser said, however, that Chevron's attachment motion is a naked attempt to accomplish in the RICO suit what the 2nd Circuit said it could not. "It's the same relief in different form," he told me.

Smyser and other counsel for the RICO defendants (who, confusingly, include Ecuadorean plaintiffs in the suit against Chevron) also argued in their Dec. 13 brief in opposition to the attachment motion that the attachment order request contravenes two previous 2nd Circuit rulings, the September order lifting the worldwide injunction and a May order that set limits on the Kaplan injunction.

Winning a preliminary attachment order is anything but a sure thing for Chevron. For one thing, Kaplan stayed the RICO suit this summer, when it seemed that a trial of Chevron's declaratory judgment suit would take place in November. After the 2nd Circuit's Sept. 20 order stayed that trial, Chevron asked Kaplan to lift the stay in the RICO suit, but he hasn't yet done so.

I asked Smyser if he thought the judge would permit the RICO suit to start up again, now that the Ecuadorean appeals court has ruled. He said he had "no way of handicapping what Judge Kaplan will do," but noted that the 2nd Circuit's "healthy skepticism" may influence the judge to wait and see what the appeals court says in its opinion. On the other hand, Smyser said, "Judge Kaplan is indicated a clear receptiveness to Chevron's arguments."

Chevron counsel, Randy Mastro of Gibson Dunn, declined to comment.

(Reporting by Alison Frankel)

Follow Alison on Twitter: @AlisonFrankel 

Follow us on Twitter: @ReutersLegal 


Register or log in to comment.

© 2013 Thomson Reuters