Second Circuit denies Ecuadorians' motion to extend stay

Jessica M. Karmasek Dec. 14, 2011, 12:14pm


NEW YORK (Legal Newsline) - A federal appeals court, in an order filed Tuesday, denied a recent motion by the Ecuadorian plaintiffs suing Chevron Corp. to extend its stay to all proceedings before a lower court.

"Upon due consideration, it is hereby ordered that the motions to extend this court's stay to all proceedings before the district court are hereby denied without prejudice to renewal once the after the district court decides Chevron's attachment motion," the U.S. Court of Appeals for the Second Circuit wrote in its two-page order.

In September, the Second Circuit issued an order vacating in its entirety the preliminary injunction by U.S. District Judge Lewis Kaplan and staying all proceedings before the district court on count nine of the complaint, with an opinion still to follow.

Kaplan had issued an injunction blocking enforcement of the $18 billion judgment against the oil giant in March.

Then, in November, Chevron moved for an order of attachment in the U.S. District Court for the Southern District of New York in connection with its fraud and RICO claims against the Ecuadorian plaintiffs, which were unaffected by the Second Circuit's stay.

Last week, the Ecuadorians moved to extend the Second Circuit's September stay to all proceedings before the district court pending the release of the appeals court's opinion.

The Second Circuit said the "mere possibility" of future injury -- unless it is the cause of some "present detriment" -- does not constitute requisite hardship.

Karen Hinton, spokeswoman for the Ecuadorians, said Wednesday that the Second Circuit's decision was "purely procedural."

"The court simply said the stay will not be ripe for review until Judge Kaplan rules," she said. "The Second Circuit is clearly watching how Judge Kaplan will handle this motion."

Given the judge's prejudicial comments from the bench about the Ecuadorians and their lawsuit, Hinton said they are assuming he will once again rule in the company's favor. If so, they will seek a stay then, she said.

"We will argue Chevron's motion is yet another attempt, not to prevent injury to itself, but to cut off the Ecuadorians' ability to fund their defense," she said.

"The Second Circuit has stated clearly that the Ecuadorians have the right to raise funds, and we would expect a similar ruling from the appeals court again."

Also Tuesday, the Ecuadorians filed a response in district court regarding Chevron's motion for attachment.

In it, they allege the company is using an "imminent harm" claim to justify an attachment order that would function as a de facto worldwide injunction.

"The truth is that Chevron faces no risk of 'imminent harm.' There is still no final, enforceable judgment in Ecuador, the appellate court in Ecuador has not rendered a decision, and the Ecuadorian plaintiffs continue to abide by their commitment to the Second Circuit that they will not commence enforcement proceedings until the court in Ecuador issues a decision," according to the Ecuadorians' 36-page filing.

"Nevertheless, Chevron tries to circumvent the Second Circuit's stay by asking the court to take an action that would have the same practical effect as a worldwide injunction and that is just as offensive to the courts of foreign sovereigns and the principles of international comity."

The plaintiffs argue Kaplan should deny Chevron's request to attach the proceeds from the judgment that the company itself may someday owe because Chevron has no valid causes of action and because it has suffered no harm.

"Chevron's apparent aim is not to prevent any injury to itself but rather to cut off the Ecuadorian plaintiffs' ability to fund their defense in this case and in the multitude of other actions brought by Chevron," they wrote.

"The request for attachment is Chevron's latest attempt to re-litigate the entire Ecuadorian litigation before the Ecuadorian appellate court issues a final judgment and should be rejected."

In February, an Ecuadorian court found the oil giant 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, then 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 the company.

The company has said it remains committed to its "consistent goal" of obtaining judicial review on the merits of the Ecuadorian plaintiffs' lawyers' fraud before they are allowed to attempt enforcement of the Ecuadorian judgment.

Chevron says it is "confident" that once that full facts are examined, the judgment will be found unenforceable and those who procured it will be "required to answer for their misconduct."

"There is no legitimate evidence supporting any finding of liability against Chevron because Texaco Petroleum Company cleaned up its share of environmental impacts in Ecuador and the remaining impacts are the responsibility of the government of Ecuador and its state-owned oil company, Petroecuador," the company said in a statement in September, following the Second Circuit's order to vacate Kaplan's injunction.

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