State Department has no input on Chevron lawsuit

Jessica M. Karmasek Feb. 17, 2011, 1:10pm


NEW YORK (Legal Newsline) - The U.S. Department of State, in a letter to a federal judge, says it will not comment on a lawsuit filed by Chevron Corporation earlier this month.

U.S. Attorney Preet Bharara wrote in a Feb. 15 letter to District Judge Lewis A. Kaplan, for the Southern District of New York, that the department "appreciates the court's invitation. The Department of State does not, however, have any specific comment at this time regarding the implications of this matter on relations between the United States and Ecuador or with respect to any legal issues presented by the plaintiffs motion."

Chevron filed its lawsuit on Feb. 1 against a group of trial lawyers and consultants who, it says, are leading a fraudulent litigation and public relations campaign against the company under the Racketeer Influenced and Corrupt Organizations, or RICO, Act and other state and federal laws.

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

Earlier this week, an Ecuadorian court ruled that Chevron must pay more than $8 billion for environmental damage caused to the country's Amazon region by its Texaco unit.

Chevron said in a statement following the ruling, "The Ecuadorian court's judgment is illegitimate and unenforceable. It is the product of fraud and is contrary to the legitimate scientific evidence."

The company said in its statement that it plans to appeal the decision.

The company'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 suit are 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 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.

On Feb. 5, Chevron filed a memorandum of support, saying its order for a temporary restraining order and preliminary injunction against the defendants should be granted. The 83-page memorandum followed an order to show cause filed by the company on Feb. 3.

Kaplan granted the temporary restraining order on Feb. 8. However, he set an argument on the motion for the preliminary injunction for Friday.

In a separate order filed Feb. 9, Kaplan sought the opinion of the Department of State, saying the motion "may implicate relations between the United States and Ecuador and, in addition, raise issues in which the United States has an interest."

The department, which had until Feb. 15 to submit its position, did not elaborate in its one-page letter to the judge.

Also in the case this week, Kaplan has extended the temporary restraining order to 11:59 p.m. March 8.

In an order filed Monday, the judge explained that papers in opposition to the preliminary injunction were due on Feb. 11; however, none of the defendants, except for Hugo Gerado Camacho Naranjo and Javier Piaguaje Payaguaje, had filed opposition papers.

Chevron argues that injunctive relief is proper where a defendant has committed or intends to commit a RICO violation, and "exhibits a reasonable likelihood of committing future violations."

"Defendants have engaged in a multi-year, many-pronged conspiracy to extort a multi-billion dollar payment from Chevron through sham litigation, fraud, money laundering, obstruction, witness tampering, and a massive campaign of false publicity," the company wrote in its memorandum of support.

"They have sustained this conspiracy despite significant setbacks, including exposure of their fraudulent conduct, and have responded by merely upping the ante of claimed damages.

"Defendants' persistence shows that it is not merely a likelihood, but a virtual certainty, that, if not enjoined, they will continue to engage in racketeering activity."

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

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