Judge issues injunction against $8B judgment in Ecuador

By Jessica M. Karmasek | Mar 8, 2011

Judge Lewis Kaplan wrote, "The purpose of such multiplicitous and burdensome proceedings against a company like Chevron is plain. By their own admissions, it is to exert pressure on Chevron by means of this litigation strategy to force a quick and richer settlement."

NEW YORK (Legal Newsline) - A federal judge has granted Chevron Corp.'s motion for a preliminary injunction to stop the collection of more than $8 billion from the company. U.S. District Judge Lewis A. Kaplan, for the Southern District of New York, had delayed his decision on whether to grant Chevron's motion for an injunction last month. An Ecuadorian court, in a ruling last month, ordered Chevron to pay $8.6 billion for environmental damage allegedly caused to the country's Amazon region by the company's Texaco unit. Chevron said in a statement following the ruling, "The Ecuadorian court's judgment is illegitimate and unenforceable. It is the product of fraud and is contrary to the legitimate scientific evidence." The company argued that injunctive relief is proper where a defendant has committed or intends to commit a Racketeer Influenced and Corrupt Organizations violation, and "exhibits a reasonable likelihood of committing future violations." "Defendants have engaged in a multi-year, many-pronged conspiracy to extort a multi-billion dollar payment from Chevron through sham litigation, fraud, money laundering, obstruction, witness tampering, and a massive campaign of false publicity," the company wrote in a recent memorandum of support. "They have sustained this conspiracy despite significant setbacks, including exposure of their fraudulent conduct, and have responded by merely upping the ante of claimed damages. "Defendants' persistence shows that it is not merely a likelihood, but a virtual certainty, that, if not enjoined, they will continue to engage in racketeering activity." Kaplan, in an opinion filed late Monday, granted Chevron's motion for a preliminary injunction against all defendants other than Stratus Consulting, Douglas Beltman and Ann Maest, "as there is no evidence that they have any intention of attempting to enforce, or interest in, the Ecuadorian judgment." The preliminary injunction takes effect immediately, Kaplan said Monday. Its continuation beyond 4 p.m. on March 15 is "conditioned upon the posting by then of security as required in the court's opinion of even date," he wrote. Kaplan, in his 131-page opinion, called the case "extraordinary." "The amount involved is large," he wrote. "Chevron challenges the fairness and integrity of the judicial system of Ecuador and thus implicates considerations of international comity. There are issues concerning the reach of U.S. law and questions pertaining to the conduct of the New York lawyer and others. There are other concerns. "The court is mindful of the seriousness of each of them and does not act lightly." However, Kaplan questioned the defendants' motives. "The purpose of such multiplicitous and burdensome proceedings against a company like Chevron is plain," he wrote. "By their own admissions, it is to exert pressure on Chevron by means of this litigation strategy to force a quick and richer settlement." Last month, Chevron filed its lawsuit against the group of trial lawyers and consultants who, it says, are leading a fraudulent litigation and public relations campaign against the company under the RICO Act and other state and federal laws. Chevron's RICO claim addresses what it calls "pervasive misconduct" relating to the defendants' efforts to extort money from the company through the Lago Agrio lawsuit. The company's suit alleges that the defendants, and certain "non-party co-conspirators," have used the Ecuador lawsuit to threaten Chevron, mislead U.S. government officials, and harass and intimidate Chevron employees -- all to extort a financial settlement from the company. Among those named in Chevron's suit are New York City-based plaintiffs' lawyer Steven Donziger; his Ecuadorian colleagues Pablo Fajardo and Luis Yanza; their front organizations, the Amazon Defense Front and Selva Viva; and Stratus Consulting. Chevron described Stratus as a consulting firm retained by the plaintiffs' lawyers to "secretly prepare a damages report that was then presented as having been written by an allegedly independent, court-appointed expert." Meanwhile, the Amazon Defense Front claimed on Tuesday it has "a new, 42-page sworn affidavit, backed by hundreds of pages of exhibits" outlining "in stunning detail" Chevron's 18-year effort to undermine the Ecuadorian court. "After decades of exploiting the country and wielding its influence like a club as it extracted riches from the Napo Concession, Chevron believed it could use that same power to buy or bully its way to a swift dismissal of this case, or, at the very least, to delay the day of reckoning indefinitely," Ecuadorian attorney Juan Pablo Saenz wrote in declaration to Kaplan. The declaration was filed in opposition to extortion charges filed by Chevron against the Ecuadorian citizens bringing the original lawsuit, and their lawyers and advisors. The organization claims that Chevron's lawsuit was filed "to try to block enforcement of a judgment based on the overwhelming scientific evidence of contamination caused by the company's actions." "Chevron's attempts to portray itself as the 'victim'... are an insult to Your Honor's intelligence," Saenz wrote. "In light of the history of this case, Chevron's latest move in its game of jurisdictional musical chairs is a slap in the face to both the Ecuadorian and United States judicial systems." From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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