Judge splits trial over Ecuador lawsuit

Jessica M. Karmasek Apr. 19, 2011, 12:50pm


NEW YORK (Legal Newsline) - A federal judge has granted Chevron Corp.'s motion to bifurcate its lawsuit against the lawyers who brought a class action against it in Ecuador.

U.S. District Judge Lewis A. Kaplan, of the Southern District of New York, made his ruling in a 22-page memorandum opinion filed Friday.

"The interests of justice, convenience, the avoidance of prejudice, and the desirability of an expedited resolution of Count 9 all support conducting a separate trial on that claim," Kaplan wrote in the opinion.

Chevron, in a memorandum filed March 14, sought bifurcation on its request for a declaratory judgment that an Ecuadorian court's multibillion-dollar judgment against it is "non-recognizable" and "unenforceable."

The other trial, Chevron said, 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; their front organizations, the Amazon Defense Front and Selva Viva; and Stratus Consulting, a Boulder, Colo.-based consulting firm.

Chevron, in its 17-page memorandum, argued 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 said, 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.'"

Donziger, in a 30-page response filed March 21, said the oil giant wants to avoid "actually having to prove any of its claims and to duck any discovery into its own pervasive wrongdoing."

"Chevron instead wants to put the Republic of Ecuador on trial, because one of its courts had the temerity to issue a detailed, carefully-reason judgment condemning both Chevron's environmental violations and its years of litigation misconduct undertaken to avoid liability for its environmental damage," he wrote.

Chevron alleges that Donziger and the other defendants are leading a fraudulent litigation and public relations campaign against the company, and filed a lawsuit against them in February under the Racketeer Influenced and Corrupt Organizations Act and other state and federal laws.

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.

Karen Hinton, spokeswoman for the Ecuadorians suing Chevron, has said that the company's charges are nothing more than a desperate attempt to avoid responsibility for the $9.5 billion judgment against it.

"It is clear from Judge Kaplan's ruling that Chevron's extortion charges are a ruse to obtain a favorable opinion on enforcement from a U.S. federal judge who continues to exhibit his bias against the Ecuadorians," she said in a statement.

"The enforceability of this judgment is before an Ecuadorian Court of Appeals. It is outrageous that a U.S. Court is trying to stand between the Ecuadorians and justice in their own country. In their defense, their American lawyers will continue to insist upon a jury trial on all counts."

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

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