Federal judge refuses to dismiss Chevron RICO lawsuit

Jessica M. Karmasek May 16, 2012, 11:00am


NEW YORK (Legal Newsline) - A federal judge on Monday mostly upheld Chevron Corp.'s complaint in a lawsuit over an $18 billion judgment against the company.

U.S. District Judge Lewis Kaplan, of the Southern District of New York, allowed the company's racketeering claims to continue, but dismissed other claims that included tortious interference.

More specifically, Kaplan's order upheld Chevron's complaint for racketeering, fraud, conspiracy and New York Judiciary Law 487, which provides for civil damages against an attorney who engages in deceit or collusion with intent to deceive a court.

"Chevron's extortion allegations are more than sufficient," the judge wrote in his 55-page order.

Hewitt Pate, vice president and general counsel for Chevron, said Monday the company was "pleased" with the court's ruling.

"We are eager to move forward with our racketeering case to hold the perpetrators of this unprecedented fraud and misconduct accountable," he said in a statement.

In January, an appellate court in Ecuador upheld the $18 billion judgment against Chevron for its "intentional contamination" of the country's rain forest.

The adverse ruling was issued by a panel of three temporary judges presiding over the 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 in February 2011.

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, subsequently filed the 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.

In March, Kaplan had issued an injunction blocking enforcement of the judgment. However, in September, the U.S. Court of Appeals for the Second Circuit ordered that the injunction be vacated.

In a separate, seven-page order, also issued Monday, Kaplan declined to grant Chevron's motion to attach the assets of the Ecuadorians and their counsel.

"Chevron will continue to use all means at its disposal to defend against the fraud being perpetrated by the plaintiffs' lawyers," Pate said in response.

Karen Hinton, spokeswoman for the Ecuadorians, said Monday Kaplan's rulings are "yet another devastating setback for Chevron's prospects to avoid paying the Ecuador judgment."

"In the last year, Chevron has seen courts in Ecuador and the U.S. vacate its worldwide injunction against enforcement of the Ecuador judgment; affirm the Ecuador trial court judgment; reject an international investor arbitration attempt to block the Ecuador trial; deny a motion to attach the assets of the Ecuadorian rainforest communities; and throw out a good portion of its fraud case against the Ecuadorians and their American lawyers," she said in a statement.

"Given that it still refuses to pay the Ecuador judgment, it is Chevron that now faces attachment actions against billions of dollars of company assets in courts around the world for intentionally polluting the Ecuadorian rainforest."

As for the company's RICO charges, Hinton said they've "always been baseless," calling them a "public relations stunt" to hide its environmental abuses and fraud in Ecuador.

"If the RICO case proceeds to trial, which is highly doubtful in light of (Monday's) ruling, the rainforest communities and their counsel plan to file counterclaims against Chevron and certain of its executives for fraud and are confident that the case will result in a finding of additional liability against individuals in Chevron who are responsible for the environmental disaster and cover-up," she said.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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