Second Circuit denies Chevron motion to lift stay on injunction

Jessica M. Karmasek Jan. 20, 2012, 7:55am


NEW YORK (Legal Newsline) - A federal appeals court has denied a motion by Chevron Corp. to lift the stay on the injunction to block an $18 billion judgment against the company in an Ecuador court.

The U.S. Court of Appeals for the Second Circuit filed its one-page order Thursday.

"On January 5, 2012, Chevron Corp. moved this Court for an order (1) vacating this Court's order of September 19, 2011; (2) ordering reargument on the merits of the appeal; and (3) lifting the stay imposed upon the proceedings below.

"Upon due consideration, it is hereby ordered that the motion is denied in its entirety," the Second Circuit wrote.

Karen Hinton, spokeswoman for the Ecuadorians, said her clients are "one step closer to justice" as a result of Thursday's ruling.

"For almost two decades, Chevron has stood in the way of a comprehensive cleanup of billions of gallons of crude oil and toxic waste water it deliberately dumped into the pristine rain forest. Thousands of people have died or suffered as the oil giant and its legions of lawyers have fought to distract attention from the overwhelming evidence against the company," she said in a statement.

"Now a U.S. appellate court has refused to grant Chevron relief from blocking the $18 billion judgment of an Ecuadorian court that it should pay for a clean-up. With its promise to fight the Ecuadorians until hell freezes over, Chevron reveals its callous disregard for the rule of law and the humanity of indigenous groups."

Hinton said the company's legal options to evade the judgment "continue to narrow."

"Chevron's shareholders must now understand that the company's management team is putting their interests at great risk due to the company's bungling of the Ecuador litigation," she said.

In a statement on the order, Chevron said it was "disappointed" that the Second Circuit did not grant its motion to lift the stay. It said it would await the court's opinion.

"The order of the international BIT tribunal obligating Ecuador to prevent enforcement of the corrupt judgment pending the outcome of the BIT proceedings remains in place," the company said.

"Chevron will also continue to prepare to resist any efforts by the plaintiffs to enforce the judgment in other countries in the event Ecuador chooses to defy the tribunal's order. Chevron has uncovered overwhelming evidence of fraud and does not believe that the Ecuador ruling is enforceable in any court that observes the rule of law."

This most recent setback for the oil giant comes weeks after an appellate court in Ecuador upheld the $18 billion judgment against the company for its "intentional contamination" of the country's rain forest.

The adverse ruling was issued by a panel of three temporary judges presiding over appellate proceedings in the Provincial Court of Justice of Sucumbios in Lago Agrio.

The ruling, which stems from an environmental lawsuit involving Texaco Petroleum Company, confirmed a lower court's ruling last February.

The lower court had 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.

Chevron, which has vowed never to pay the $18 billion judgment, subsequently filed a racketeering lawsuit in the Southern District of New York, 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.

In March, Judge Lewis Kaplan, for the Southern District, had issued an injunction blocking enforcement of the judgment.

In September, the Second Circuit ordered that the injunction be vacated.

Chevron then filed a motion for attachment last month, seeking to prevent the Ecuadorian plaintiffs from collecting any monies based on the "fraudulent" judgment.

That motion, too, failed. Kaplan denied it in an opinion earlier this month.

From Legal Newsline: Reach Jessica Karmasek by email at

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