10.31.2011 0

Chevron Defies New York State Officials Who Seek Settlement in Ecuador Case

By Kevin Mooney — Chevron is not backing down to New York State officials who are pressuring the company to settle a multibillion-dollar lawsuit that involves plaintiffs from Ecuador who are suing over alleged environmental damages.

On Oct. 7, Chevron submitted a Freedom of Information Law (FOIL) request to the office of New York State Comptroller Thomas DiNapoli in an effort to flush out and detail the assistance he and his predecessor Alan Hevesi furnished to the plaintiffs’ lawyers and the consultants.

A copy of Chevron’s FOIL request can be downloaded here with related documentation here and here.

The litigation began in New York back in 1993, but the case was moved to Ecuador a decade later. Although Chevron has never operated in Ecuador, it purchased Texaco Petroleum in 2001, which was the subject of the initial suit. Plaintiffs accused Texaco of dumping oil-drilling waste in unlined pits they claim later contaminated the forest and caused illness to the local population. In response, Chevron pointed out that Texaco remediated environmental impacts that resulted from its operations. Moreover, this remediation was certified by government agencies in Ecuador.

“All legitimate scientific evidence submitted during the litigation in Ecuador proves that TexPet’s remediation was effective and that the sites it remediated pose no unreasonable risks for human health or the environment,” Chevron officials have pointed out. Moreover, Ecuador’s state-owned company, Petroecuador, was actually the majority owner of the consortium that included Texaco and bears responsibility, with the government of Ecuador, for any environmental damage that has occurred in the region, Chevron has argued.

Nevertheless, in Feb., an Ecuadorian court in Lago Agrio issued an $18 billion judgment against Chevron. Since then the company has fought back vigorously. It claims the ruling is illegitimate and unenforceable because of documented evidence of fraud on the part of the plaintiffs, the Ecuadorian government and that country’s judiciary.  Judge Lewis Kaplan of the Southern District of New York concurred after hearing the evidence and issued a preliminary injunction that barred any attempt to enforce Ecuadorian judgment outside of that country.

Diapoli has leaned on Chevron to settle the suit claiming that it could impact the state pension fund’s $780 million investment in Chevron stock, according to a report in the New York Times. The plaintiffs working through their representatives have also cajoled DiNapoli into taking a public stand against Chevron, the report says.

Gov. Andrew Cuomo also interjected himself into the case while serving as state attorney general at the behest of an aide who was being paid $10,000 a month by a group that collaborated with the plaintiffs the New York Times reported.

Chevron has filed a RICO (Racketeer Influenced and Corrupt Organizations Act) suit that claims plaintiffs’ lawyers and consultants provided “clandestine assistance” to the Ecuadorian court in drafting the judgment against Chevron.

Chevron’s RICO suit alleges that the defendants and key co-conspirators have used the lawsuit to threaten the company, dupe U.S. government officials and harass Chevron employees. Those named in the suit include: New York City-based plaintiffs’ lawyer Steven Donziger; his Ecuadorian colleagues Pablo Fajardo and Luis Yanza; their front organizations, the Amazon Defense Front and Selva Viva; and Stratus Consulting, a Boulder, Colo.-based consulting firm.

Donziger, the New York attorney, has stepped down as the lead attorney and has declined to make any recent media comments. The plaintiffs have reacted to recent developments through Pablo Fajardo, an attorney in Ecuador.

Judge Lewis Kaplan of the Southern District of New York, has issued a preliminary injunction order against RICO defendants. The order “enjoins and restrains” the defendants from receiving any benefits, directly or indirectly, until after a final determination is made about the RICO suit.

Below is a rundown of the court action that has occurred since the beginning of the year.

Plaintiffs are now working to remove Judge Kaplan from any further involvement in the legal proceedings. Additional background on the case can be found at:

February 14 – Judgment in Lago Agrio rendered, assessing more than $18 billion in damages and penalties against Chevron.  Company proclaims the verdict to be “illegitimate and unenforceable.”

March 7 – Judge Kaplan of the Southern District of New York enters a preliminary injunction barring attempts to enforce the Ecuadorian judgment outside of Ecuador.

March 11 – Chevron appeals Lago Agrio judgment, detailing the pattern of fraud by the plaintiffs’ lawyers, supporters and others, as well as the numerous legal and factual defects in the judgment.

March 17 – Second Circuit denies the government of Ecuador and Lago Agrio plaintiffs’ appeals of the Southern District of New York ruling on the permissibility of Chevron’s BIT claim.

April 15 – Judge Kaplan grants Chevron’s motion to bifurcate its claims under RICO, setting a November 14 trial date on Chevron’s claim seeking a declaration that the Ecuadorian judgment should not be recognized or enforced.

April 18 – Judge Kaplan rejects a request to stay the preliminary injunction, finding that “It is difficult to see any substantial reason to allow the defendants and others bound by the preliminary injunction to prepare to enforce a judgment that the Court already has held they probably never will be permitted to enforce outside Ecuador.”

April 19 – Judge Henry H. Kennedy, Jr. of the District Court in the District of Columbia dismisses a complaint previously filed against Chevron by the law firm Patton Boggs LLP, one of the Lago Agrio plaintiffs’ law firms named as a non-party co-conspirator in the RICO action.  In denying Patton Boggs leave to assert a tortious interference claim against Chevron and its counsel at Gibson Dunn & Crutcher LLP, Judge Kennedy wrote, “Patton Boggs misunderstands the law.”

April 21 – Chevron files amended RICO complaint introducing new evidence of fraud in the text of the Lago Agrio judgment.

April 22 – Lago Agrio plaintiffs appeal the preliminary injunction and move to recuse Judge Kaplan.

Kevin Mooney is a contributing editor to Americans for Limited Government. You can follow Kevin on Twitter at @KevinMooneyDC.

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