Federal judge denies stay in Ecuador Chevron case

Jessica M. Karmasek Apr. 7, 2011, 3:29pm


NEW YORK (Legal Newsline) -- A federal judge has denied a motion to stay a preliminary injunction filed last week by lawyers representing the Ecuadorian plaintiffs in their case against oil giant Chevron.

U.S. District Judge Lewis A. Kaplan granted Chevron's motion for a preliminary injunction on March 7. The order aims to prevent the plaintiffs and their counsel from taking any steps to enforce the $9.5 billion legal judgment against the company issued Feb. 14.

Kaplan, in his 10-page memorandum and order filed Wednesday, said the Lago Agrio Plaintiffs Representatives "are not likely to prevail on appeal."

"The balance of the equities strongly favors Chevron," the judge wrote.

"The public interest does not alter the balance in favor of a stay pending appeal. Accordingly, so much of the LAP Representatives' motion as seeks a stay of the preliminary injunction pending appeal is denied."

The court, he said, reserves decision on the balance of the motion.

Chevron said the plaintiffs' request for a stay of all proceedings pending appeal is "unsupported" and would "substantially harm" its legitimate interests.

"It is just another tactic in their long-running strategy of delay. At the same time that their cohorts assert their intention to disobey this Court's preliminary injunction in the near future, the (Lago Agrio Plaintiffs) Representatives claim that Chevron should just trust in their good offices to respect that Order, and thus there is no legitimate need for a final -- as opposed to preliminary -- finding of unenforceability.

"But any such trust would be unreasonable, since their Ecuadorian co-conspirators and American spokespersons insist that this Court's Order is 'completely... unenforceable, inapplicable for countries other than the United States.'"

Chevron argues it needs the court's final decision as "quickly as reasonably possible," and that the plaintiffs' only claimed harm -- "the routine expenditure of resources that accompanies all litigation" -- is "insufficient to warrant the 'extraordinary remedy'" of a stay of proceedings.

Lawyers for the Ecuadorian plaintiffs contend Chevron is divesting itself of overseas assets that could be used to enforce the hefty legal judgment against it.

The plaintiffs requested, in addition to their motion to stay the preliminary injunction, that Kaplan increase a Chevron bond of $21.8 million to reflect the value of assets recently sold, which they say surpasses at least $1.7 billion.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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