Chevron wants fraud trial to be held in two parts; says it's prepared to drop damages claims

By Jessica M. Karmasek | Sep 11, 2013

NEW YORK (Legal Newsline) -- In motions filed earlier this week, Chevron Corp. said it is prepared to drop its claim for money damages against two Ecuadorians and their U.S. lawyer.

Chevron said it it will definitely drop damages claims against the Ecuadorians, Hugo Gerardo Camacho Naranjo and Javier Piaguaje Payaguaje.

However, the company hasn't decided for certain if it will drop damages claims against New York attorney Steven Donziger.

The oil giant also asked that the fraud trial, set to begin Oct. 15 in the U.S. District Court for the Southern District of New York, be bifurcated, or separated into two parts -- one before a jury and the other before a judge.

"The liability of Defendants Steven R. Donziger, The Law Offices of Steven R. Donziger, and Donziger & Associates PLLC (the 'Donziger Defendants') on all claims shall be tried to a jury," Chevron's attorneys wrote in a motion Sunday. "Upon a verdict of liability, the amount of compensatory and punitive monetary damages owed to Chevron Corporation by the Donziger Defendant shall be tried to a jury.

"Upon conclusion of the jury proceedings, and to the extent the Court deems necessary based on the outcome of the jury proceedings, the liability of Defendants Hugo Gerardo Camacho Naranjo and Javier Piaguaje Payaguaje on all claims to which they are defendants (as to which Chevron now seeks only equitable relief against them), all equitable relief and equitable defenses, and the personal jurisdiction and collateral estoppel defenses, will be tried to the Court without a jury."

A Chevron spokesman explained the move to Bloomberg Monday.

"Chevron has uncovered extensive evidence that the 2011 Ecuadorian judgment was fraudulently obtained by the Lago Agrio plaintiffs," Morgan Crinklaw told the website in an e-mail. "However, their international campaign to enforcement that judgment has not gained much traction to date.

"The equitable relief Chevron continues to seek against the Lago Agrio plaintiffs will enable us to protect our assets, and those of our subsidiaries, from being seized by the Lago Agrio plaintiffs or in their name."

Donziger and the Ecuadorians aren't buying it. They believe the move is a "bombshell 11th-hour retreat" that suggests the company doesn't believe its own allegations.

"Chevron has shown over and over that its only legal strategy is to outspend everyone and continue to run from the law for another 20 years," Chris Gowen, an attorney advising Donziger, Camacho and Piaguaje, said in a statement Tuesday. "When a litigant tries to avoid a jury, you can be certain that litigant knows it has no case."

He added, "This is an extraordinarily telling moment that suggests a collapse of confidence in the Chevron camp."

On Monday, Judge Lewis Kaplan, who is presiding over the RICO lawsuit, rejected a request by Donziger and the Ecuadorians to temporarily suspend the case until the U.S. Court of Appeals for the Second Circuit rules on their petition for reassignment.

Donziger, Camacho and Piaguaje filed a petition for writ of mandamus with the federal appeals court in June. They want the judge to be removed from the case for his alleged bias.

In a notice filed Aug. 14, the Second Circuit set Sept. 26 for oral argument on the petition to reassign Kaplan.

"The motion to delay the trial is without merit, represents a radical change in defendants' nominal position (though it is entirely consistent with a years-old strategy of delay wherever possible), and comes far too late," Kaplan wrote in his 22-page order.

"The motion to delay the trial on the theory that it should await disposition of the mandamus petition, taken at face value, is entirely unpersuasive. The petition, even if granted, would not be case dispositive. It seeks to vacate a few interlocutory orders that relate principally to whether the defendants' affirmative defense of collateral estoppel rests in part on the Ecuadorian judgment against Chevron (the 'Judgment') and, if so, whether defendants should have been permitted to withdraw it in this action without prejudice to asserting that Judgment elsewhere."

He continued, "A ruling vacating those orders would not significantly affect the scope or duration of the trial or of the preparation for it."

Kaplan previously denied a request by Donziger for a trial stay.

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

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