Lawyers seek to withdraw from Chevron case, citing judge's bias and unpaid bills

By Jessica M. Karmasek | May 7, 2013

NEW YORK (Legal Newsline) -- The law firms defending New York attorney Steven Donziger and two Ecuadorian plaintiffs against Chevron Corp. are seeking to withdraw from the case, filed by the oil giant in a New York federal court in 2011.

Keker & Van Nest filed the motion Friday before Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York, citing Kaplan's ongoing bias.

"Chevron's litigation tactics, which this court has endorsed and encouraged throughout these proceedings, notwithstanding the dictates of Federal Rule of Civil Procedure 1, have made the costs of this litigation unsustainable to Donziger," lead attorney John Keker wrote in the 11-page memorandum. "Simply put, Donziger cannot afford to pay what is required to litigate effectively against a hostile wealthy corporation in a hostile court."

According to the memorandum, since September, Donziger has fallen into "significant payment arrears" such that Keker & Van Nest is now owed more than $1.4 million in unpaid fees and costs, including for work presently being conducted.

To even "stay alive" in the case, without appearing at depositions or other "frills," through discovery and trial will cost another $6 million to $10 million in attorney time and costs, Keker says -- an amount about equal to what the firm estimates Chevron is paying its lawyers each month.

"There is no reasonable prospect of payment of the current receivable, nor of payment of the future fees and costs anticipated to be incurred through trial," Keker wrote.

Read Keker & Van Nest's full memorandum here.

Keker also was the attorney for prominent Mississippi attorney Richard "Dickie" Scruggs during two judicial bribery cases. Scruggs pleaded guilty to both and received 7 1/2 years in prison.

Federal prosecutors charged Scruggs with offering $50,000 to Lafayette County Circuit Judge Henry Lackey in exchange for a ruling compelling arbitration in a dispute over attorneys fees earned in Hurricane Katrina cases.

They also charged Scruggs, whose brother-in-law is former U.S. Sen. Trent Lott, with offering consideration for a federal judgeship to former Hinds County Circuit Court Judge Bobby DeLaughter. DeLaughter allegedly took the deal and entered a favorable ruling in a dispute over fees between Scruggs and his former business partners in asbestos litigation.

Separately, and for similar reasons, Houston-based law firm Smyser Kaplan & Veselka also is seeking to withdraw from the case on behalf of the two Ecuadorian rainforest residents who have appeared, Javier Piaguaje and Hugo Camacho.

According to the firm's eight-page memorandum, also filed Friday, Camacho and Piaguaje are unable to pay and have not paid its fees in accordance with their contractual arrangement.

Currently, the firm says, the defendants' payments for representation are in arrears for an amount in excess of $1.77 million.

"Due to Chevron's legal blitzkrieg, which included an army of over 100 lawyers at Gibson Dunn & Crutcher LLP alone, SKV has had to bill over 16,000 hours on this representation since June 2011," lead attorney Craig Smyser wrote. "Many of those hours were spent defending Camacho and Piaguaje against an unfounded worldwide anti-enforcement injunction that was ultimately reversed and dismissed by the (U.S. Court of Appeals for the) Second Circuit.

"The rest of those hours have been spent defending Camacho and Piaguaje against a legally infirm cause of action for third-party fraud, in a jurisdiction with which they have no contacts and which they contend lacks personal jurisdiction over them."

The firm contends that Chevron's goal is apparently to "bulldoze" a result using its limitless financial resources to win a "self-created war of attrition" in New York.

"Camacho and Piaguaje and their representatives have made efforts to raise sufficient funds to pay their contractual obligations but have been unable to do so, in part because of Chevron's efforts to scare off funders by suing or subpoenaing persons and entities that have contributed funds to the case," Smyser wrote.

Read Smyser Kaplan & Veselka's full memorandum here.

In a statement Friday, Donziger praised Keker for fighting "valiantly" against Chevron.

However, he admitted that the company's strategy has succeeded in the short term, to the point he can no longer afford to pay his lawyers to represent him in the New York proceeding.

"I thank those at Keker & Van Nest who have fought valiantly to give me a voice in a courtroom run by a judge who regularly maligns me from the bench, has refused to recuse himself and has not just encouraged but has co-engineered Chevron's strategy to exhaust our limited resources through pointless motion practice, one-sided decisions and massive discovery obligations," he said.

Donziger said he will proceed pro se against Chevron, with the option of trying to rehire his lawyers "should circumstances change."

He also reiterated his call for Kaplan to step aside, allowing the case to be reassigned to a judge who "takes seriously the obligation of courts to be fair and impartial."

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

More News

The Record Network