Jury Averted in Chevron's Ecuador Fraud Case
MANHATTAN (CN) - Chevron's eleventh-hour decision to waive a claim for money damages related to the allegedly extortive $19 billion judgment it faces in Ecuador means a jury will not hear the case.
In 2011, a court in the rainforest region of Lago Agrio ordered Chevron to pay billions to repair environmental and public health in a petroleum-soaked region of Amazon, where its predecessor Texaco drilled for decades.
Chevron claimed that U.S.-based lawyers who spearheaded the trial in Ecuador corrupted the case by bribing a judge and fixing the scientific studies. The company skewered attorney Steven Donziger in particular, as well as his co-counsel and his indigenous clients, in a federal complaint filed in Manhattan days before the Ecuadorean ruling.
Under federal anti-racketeering law, victory for Chevron in New York would have forced their Donziger et al. to pay three times the amount of the alleged fraud - roughly $57 billion.
Chevron would have been hard pressed to recover such an award, however, and it would have given Chevron's courtroom opponents the right to a jury trial.
With the trial slated to start on Oct. 15, the oil giant moved Monday to waive its money damage claim. Its spokesman Morgan Crinklaw said: "The equitable relief we are seeking from the court will accomplish this quickly and efficiently by preventing Steven Donziger and his associates from profiting from this fraudulent judgment."
The maneuver guarantees a bench trial before U.S. District Judge Lewis Kaplan, whom the Ecuadoreans repeatedly have accused of bias, to seek an order prohibiting the defendants from collecting the award.
Although the 2nd Circuit has overruled one of Kaplan's rulings before, the appellate court has rejected two attempts to force him off the bench and otherwise stayed silent about his handling of the case.
Chevron meanwhile has gained some high-profile witnesses in the lead-up to trial.
The first of five judges to hear the case in Ecuador, Alberto Guerra, swore in a deposition that he was secretly paid to ghostwrite the final judgment against the oil company. Stratus Consulting, a scientific firm formerly named as a co-defendant, repudiated their former findings of Amazon pollution as allegedly engineered by Donziger. Burford Capital, the financial backers for the Ecuadoreans, also later jumped ship.
In a 43-page motion last month, the defendants claimed that Chevron gained its witnesses only through "promises of money or threats of career and personal destruction." They took particular aim recently at Guerra, whom they called a "proven liar," for entering into a $320,000 agreement to testify for Chevron.
"Chevron's case rests almost entirely on this man's credibility," Donziger said in a recent statement. "Clearly, a jury of American citizens can better determine whether this man's claims are true than a single judge. We believe that is what the U.S. Constitution requires in a case of this nature because it reflects what is fundamental about core American values."
Before signing up as a Chevron witness, Stratus accused the oil company of trying to "bring Stratus to its knees and render it financially incapable of defending" itself.
"When the pressure simply became too great to bear, Stratus capitulated," the brief states.
Chevron shot back in its reply brief that its witnesses had been "vilified, slandered, sued, condemned as 'enemies of the state,' and in Guerra's case, driven into exile," by Donziger and his Ecuadorean allies.
Insisting it handled the case "ethically, legally, and forthrightly," Chevron said that it disclosed all payments to Guerra, which it claimed to be necessary to protect him from political prosecution in Ecuador. The defendants claimed that Guerra never earned even half of what Chevron is paying him. Chevron replied that this amount did not go as far in the United States, and barely provided the quality of life the judge and his family had in Ecuador.
The car that Chevron gave Guerra, "a 2011 Honda CRV," was "the exact same make, model, and year" that he had in Ecuador, according to the brief.
Chevron also argued that the forensic and physical evidence collected over two years of discovery would corroborate the witness testimony at trial, which will begin two weeks from now.