Chevron sues plaintiffs lawyers in Ecuador lawsuit

Jessica M. Karmasek Feb. 8, 2011, 3:45pm

NEW YORK (Legal Newsline) - Chevron Corporation has filed a lawsuit against a group of trial lawyers and consultants who, it says, are leading a fraudulent litigation and public relations campaign against the company.

Chevron filed the suit on Feb. 1 under the Racketeer Influenced and Corrupt Organizations, or RICO, Act and other state and federal laws.

The company's RICO claim addresses what it says is "pervasive misconduct" relating to the defendants' efforts to extort money from Chevron "using the pendency of a lawsuit in Lago Agrio, Ecuador, directed and funded by American trial lawyers and their allies."

Chevron's suit alleges that the defendants, and certain "non-party co-conspirators," have used the Ecuador lawsuit to threaten Chevron, mislead U.S. government officials, and harass and intimidate Chevron employees -- all to extort a financial settlement from the company.

Among those named in Chevron's complaint are New York City-based plaintiffs' lawyer Steven Donziger; his Ecuadorian colleagues Pablo Fajardo and Luis Yanza; their organizations, the Amazon Defense Front and Selva Viva; and Stratus Consulting, a Boulder, Colo.-based consulting firm retained by the plaintiffs' lawyers to "secretly prepare a damages report that was then presented as having been written by an allegedly independent, court-appointed expert," the company said.

"The Lago Agrio plaintiffs' lawyers' aim has been to extort a multi-billion dollar payment from Chevron through fabricated evidence and a campaign to incite public outrage," R. Hewitt Pate, Chevron vice president and general counsel, said in a statement.

"Chevron has no intention of giving these plaintiffs' lawyers the payday they seek. Rather, we intend to see the RICO defendants held accountable for their misconduct," he said.

The company says the suit, before the U.S. District Court for the Southern District of New York, lays out "overwhelming evidence" demonstrating that the plaintiffs' lawyers and consultants have engaged in a "sustained pattern" of racketeering, including attempted extortion, mail and wire fraud, witness tampering, obstruction of justice, and money laundering.

Chevron points to the following as "proof" of the defendants' alleged misconduct:

- Documents, sworn deposition testimony and outtakes from the movie "Crude," showing Donziger and his environmental consultants, including Stratus Consulting, plotting to secretly write the report of the Ecuadorian court expert -- Richard Stalin Cabrera Vega -- who was appointed at the plaintiffs' lawyers' insistence to serve as the Lago Agrio court's "global damages expert";

- Documents and e-mails demonstrating that, after ghostwriting Cabrera's initial report recommending more than $16 billion in damages, Donziger, Stratus and their co-conspirators pretended to criticize the report and demand that the damages be increased;

- Plaintiffs' documents, including Donziger's own detailed notes, as well as outtakes from "Crude" revealing a campaign of judicial intimidation by Donziger and his colleagues;

- Evidence of a concerted effort by the defendants and others conspiring with them to deceive members of the U.S. Congress, U.S. and state government regulatory agencies, and others into believing that the company faces a multibillion-dollar liability and has sought to mislead investors -- all with the aim of forcing Chevron to settle; and

- Correspondence, memos, e-mails and agreements documenting the financing of the fraudulent scheme and the planned division of the windfall.

"It is sad to see American citizens organizing a shakedown of a U.S. company while pretending to be helping Ecuadorians and the environment," Pate said. "Equally sad is the pattern of fraud and obstruction in multiple U.S. federal courts in a vain attempt to try to keep the truth from coming out.

"But now, the truth has been revealed."

Chevron is seeking a court declaration that any judgment against it in the Ecuador lawsuit is the result of fraud and therefore unenforceable. The company also is seeking damages associated with the cost of defending the Ecuador litigation, it says.

The company, based in San Ramon, Calif., explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products; manufactures and sells petrochemical products; generates power; and produces geothermal energy.

From Legal Newsline: Reach Jessica Karmasek by e-mail at

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