Federal judge rules $9.5B judgment against Chevron was product of fraud, racketeering

NEW YORK (Legal Newsline) - The U.S. District Court for the Southern District of New York ruled on Tuesday that the $9.5 billion judgment against Chevron Corporation in Ecuador was the product of fraud and racketeering, finding it unenforceable.

"This ruling is a resounding victory for Chevron and our stockholders," the company said. "It confirms that the Ecuadorian judgment against Chevron is a fraud and the product of a criminal enterprise. Steven Donziger and his associates can now be held accountable and will not be allowed to profit from their illegal acts.

"Any court that respects that rule of law will find the Lago Agrio judgment to be illegitimate and unenforceable."

Chevron presented overwhelming evidence of fraud during the civil RICO trial that concluded in November, the court ruled.

Han Shan, the U.S. spokesperson for the Lago Agrio plaintiffs in Ecuador, said while the Ecuadorians respect the rule of law in all countries, they do not accept this court's jurisdiction, nor the ruling.

"The affected communities long ago gave up hope that a U.S. court would provide them relief from Chevron's contamination, which has taken their loved ones, poisoned their lands and imperiled their cultures," Shan said. "Their focus now is on enforcing their judgment in countries where they can receive a fair hearing about Chevron's pollution of the rainforest and the company's refusal to abide by a legitimate ruling from the courts in Ecuador, where Chevron demanded the case be heard."

Attorney Donziger and his litigation team were found to have "engaged in coercion, bribery, money laundering and other criminal conduct in pursuit of" a multibillion-dollar 2011 verdict in Ecuador, wherein allegations of environmental damages were leveled against Chevron.

Chevron faced contamination allegations in Ecuador. In February 2011, an Ecuadorian court found Chevron liable for dumping billions of gallons of toxic waste into the Amazon, causing an outbreak of disease and decimating indigenous groups.

The oil giant has vowed never to pay the judgment. Instead, it alleges that the Ecuador suit has been used to threaten the oil company, mislead U.S. government officials, and harass and intimidate its employees - all to extort a financial settlement from the company.

Kaplan's opinion bars Donziger and his two co-defendants from profiting from that verdict.

"The saga of the Lago Agrio case is sad," Kaplan wrote in his opinion. "It is distressing that the course of justice was perverted. The LAPs received the zealous representation they wanted, but it is sad that it was not always characterized by honor and honesty as well. It is troubling that, in the words of Jeffrey Shinder, what happened here probably means that 'we'll never know whether or not there was a case to be made against Chevron.'"

The case against Donziger was first filed in February 2011.

"We expect Judge Kaplan's decision to be overturned on appeal and to be ignored by courts in countries where the Ecuadorian villagers are enforcing their judgment," Donziger's website says.

U.S. District Court for the Southern District of New York case number: 1:11-cv-00691

From Legal Newsline: Kyla Asbury can be reached at classactions@legalnewsline.com.