Brief urges appeals court to uphold Chevron injunction

Jessica M. Karmasek Jul. 14, 2011, 10:00am


WASHINGTON (Legal Newsline) -- A Washington D.C.-based legal foundation is urging a U.S. appeals court to uphold an injunction that prevents a group of Ecuadorian plaintiffs from trying to collect a multibillion dollar judgment against Chevron Corp.

In February, after an eight-year trial, an Ecuadorian court found Chevron liable for dumping billions of gallons of toxic waste into the Amazon, causing an outbreak of disease and decimating indigenous groups. Damages were found to be up to $18 billion.

Chevron, which has vowed never to pay the judgment, filed a racketeering lawsuit, alleging that the Ecuador suit has been used to threaten the oil company, mislead U.S. government officials, and harass and intimidate its employees -- all to extort a financial settlement from Chevron.

U.S. District Judge Lewis Kaplan then issued an injunction blocking worldwide enforcement of the judgment.

Kaplan's ruling is under an expedited appeal before the Second Circuit Court of Appeals in New York, with arguments set for Sept. 12.

In a brief filed last week, the Washington Legal Foundation argued that the district court appropriately issued a worldwide anti-suit injunction because the United States has a strong public policy interest in policing the judicial conduct of those within the jurisdiction of its courts.

According to its website, the Washington Legal Foundation works with its allies in government and the legal system to maintain balance in the courts and help the government strengthen America's free enterprise system. The foundation champions free market principles, limited and accountable government, individual rights, business civil liberties, and legal ethics, it says.

The foundation argues that where -- as here -- there is evidence that those within the jurisdiction of the New York federal court have engaged in a massive fraud against a litigant, it is appropriate for the court to enter an order designed to prevent them from continuing to carry our their fraudulent scheme.

WLF asserted that the injunction does not raise comity concerns because there are no ongoing judicial proceedings that the oil company seeks to enjoin.

"Although they object to the district court's injunction, the Ecuador plaintiffs make little effort to contest the court's findings of fraud," WLF Chief Counsel Richard Samp said in a statement, after filing the foundation's brief.

"We find it ironic that they are accusing others of not showing proper 'respect' to foreign courts when there are largely uncontested findings that they engaged in a massive fraud on the Ecuadorian courts," he said.

Ecuador's government, in a court filing last month, asked the Second Circuit to rein in Kaplan for his "belittlement" of their country's court system.

The Republic of Ecuador was one of five entities to file an amicus brief with the appeals court, asking that the judge's injunction be dissolved because it "lacks legal authority." An amicus brief from 16 international legal scholars also called the injunction "futile" and a violation of international law.

"The undisguised castigation of, and lack of respect afforded, the Ecuadorian justice system by the District Court runs counter... to long-established jurisprudential norms," lawyers for the government wrote.

Ecuador said its legal system is "predicated on fundamental principles of justice and due process" deeply rooted in the Ecuador Constitution, which, like the U.S. Constitution, guarantees the independence of the judiciary and provides for separation of powers.

Lawyers for the government also asserted that Chevron's complaints about Ecuador's courts are "hypocritical" given that the company repeatedly praised the same courts from 1993 to 2002 to convince a U.S. judge to shift the Aguinda lawsuit to the South American nation.

Ecuador's brief appears to mark the first time a Latin American government has asked a U.S. appeals court to reverse a U.S. trial judge for interfering in its court system.

"This is an extraordinary situation where an American judge has expressed open contempt for the legal system of a U.S. ally and trading partner, has belittled citizens of that country who have fought courageously for justice, and has tried to assert jurisdiction over that country's courts in clear violation ofinternational law," Karen Hinton, spokeswoman for the Ecuadorian plaintiffs, said in a statement.

The legal scholars, in their own brief, called Kaplan's injunction "breathtaking in its attempts to arrogate a world-wide and exclusive jurisdiction" to a U.S. court over a judgment obtained in a foreign legal system.

Their brief, also filed last month, was signed by professors and practitioners from South Africa, Australia, Spain, Italy, Finland and the United States.

Also filing a brief asking the Second Circuit to uphold Kaplan's injunction are Dow Chemical, Shell and Dole.

Hinton says she's not surprised the three companies are in support of the oil giant.

Like Chevron, all three have been targeted in legal actions for dumping toxins into the environment and exposing people to illegal and harmful levels of contamination, she said.

"Chevron, Dow, Shell and Dole each have consistently relied on a business model which artificially inflates their profits by dumping pollutants into the environment and then doing whatever is necessary to avoid having to pay for a clean-up," she said in a statement Wednesday.

"It is utterly unsurprising that these notorious polluters have risen to Chevron's defense. After all, they're operating on the same basic principle: profits first and concern for the environmental and human rights, last."

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

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