Chevron wants separate trial for judgment against Ecuador verdict

Jessica M. Karmasek Mar. 14, 2011, 2:56pm


NEW YORK (Legal Newsline) - Chevron Corp. is asking a federal judge for a separate and expedited trial on its request for a declaratory judgment that would say an Ecuadorian court's multibillion-dollar judgment against it is "non-recognizable" and "unenforceable."

The other trial would focus on the company's racketeering claims against defendants New York City-based plaintiffs' lawyer Steven Donziger; his Ecuadorian colleagues Pablo Fajardo and Luis Yanza; the Amazon Defense Front and Selva Viva; and Stratus Consulting, a Boulder, Colo.-based consulting firm.

Chevron, in its 17-page memorandum filed Friday, argues that bifurcation promotes the interests of "convenience" and "judicial efficiency," and "expeditious resolution of the manner and order of trial is necessary to structure discovery and other pre-trial matters and to allow for prompt and orderly resolution of the case."

Bifurcation and prompt resolution of the declaratory judgment claim is especially necessary, Chevron says, because representatives of the Lago Agrio plaintiffs "have made clear that they will not abide by this court's preliminary injunction, vowing that they will 'use all the relevant legal tools available in Ecuador and all over the world to accomplish enforcement of the judgment in whatever part of the world where it's most convenient and where Chevron has assets.'"

Last week, U.S. District Judge Lewis A. Kaplan, for the Southern District of New York, granted Chevron's motion for a preliminary injunction to stop the collection of more than $8 billion from the company.

An Ecuadorian court, in a ruling last month, ordered Chevron to pay $8.6 billion for environmental damage allegedly caused to the country's Amazon region by the company's Texaco unit.

Bifurcation, the company argues, also will allow "streamlined consideration" of the declaratory judgment claim.

"The case against the extortionate enterprise operated by Steven Donziger and his numerous associates is necessarily lengthy, multifaceted and complex," Chevron wrote.

"But the issues and parties relevant to resolving whether the Ecuadorian judgment is recognizable under the criteria set forth in New York's Recognition Act, C.P.L.R. 5304, are more limited, and can be efficiently tried separately from Chevron's (Racketeer Influenced and Corrupt Organizations) and state-law claims."

Last month, Chevron filed a lawsuit against the group of trial lawyers and consultants who, it says, are leading a fraudulent litigation and public relations campaign against the company under the 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.

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.

To "further reduce any overlap" with the RICO and state-law claims, Chevron said the court could order trial of the non-fraud statutory bases under C.P.L.R. 5304, and then resolve the fraud basis for non-recognition either as part of an additional, separate proceeding or as part of a consolidated trial with the RICO and state-law claims.

Bifurcation, Chevron says in its memo, also will streamline the proceedings "by narrowing the claims to be resolved in the first instance and eliminating certain purported defenses as irrelevant to their disposition."

"For example, no amount of allegedly 'unclean hands' can possibly justify a judgment rendered under conditions denying due process or impartial tribunals," the company wrote.

If the court decides to bifurcate, Chevron further requests that it set a schedule that will result in resolution within the next three to six months.

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

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