Patton Boggs Concedes That Fighting Chevron in Ecuador Was Folly
MANHATTAN (CN) - Patton Boggs agreed today to pay Chevron $15 million in a settlement over the D.C. powerhouse law firm's role in an environmental lawsuit now labeled fraudulent.
The stunning development is the latest in a series of victories for the oil giant as it averts liability for oil pollution in Ecuador where Texaco drilled for decades before Chevron acquired it in 2001.
Though an Ecuadorean court had ordered Chevron in 2011 to pay residents of the Amazon nation $9.5 billion, a federal judge in New York this year blocked Steven Donziger and two others from collecting the verdict they "procured by corrupt means."
Donziger and the Ecuadoreans called the Patton Boggs settlement an "unethical betrayal" and said they will try to have it legally nullified.
The battle between Chevron and the D.C. law firm had been one of many offshoots to the labyrinthine case. When the Ecuadoreans retained Patton Boggs in 2010, the firm brainstormed a strategy in the so-called "Invictus Memo" to collect the judgment they foresaw in Lago Agrio, Ecuador.
Chevron alleged that the document was a blueprint to extort a fraudulent judgment, leading Patton Boggs to accuse Chevron in federal lawsuits in Washington and New York of smearing and intimidating any attorney helping the Ecuadoreans.
"Chevron's playbook has long been transparent - for 17 years, the company has done everything it can to avoid engaging on the merits, to obstruct the progress of the case, and to deprive the Ecuadorian plaintiffs of legal representation and aid," a complaint that the firm filed in 2010 states.
A federal judge in Washington later dismissed the lawsuit, and shot down multiple attempts to amend it.
U.S. District Judge Lewis Kaplan, who presides over the New York proceedings involving Chevron, had not ruled on Patton Boggs' pending claims but recently said Chevron could amend its claims against the firm.
The $15 million settlement that the parties announced Wednesday at 11 a.m. EST puts a cork in those plans.
"We are pleased that Patton Boggs is ending its association with the fraudulent and extortionate Ecuador litigation scheme. Chevron detailed its objections to Patton Boggs' conduct in its counterclaim, and today's agreement brings that litigation to an end," Chevron vice president and general counsel Hewitt Pate said in a statement. "Chevron encourages others to disassociate themselves from this fraud."
Per its obligations in the settlement, Patton Boggs issued a statement in which it said it "regrets its involvement in this matter."
"The recent opinion of the United States District Court for the Southern District of New York in the Chevron v. Donziger case includes a number of factual findings about matters which would have materially affected our firm's decision to become involved and stay involved as counsel here," the firm said.
Chevron said the settlement requires Patton Boggs to dissociate itself from Donziger, whom the oil giant blames as the architect of the "extortionate" case in Lago Agrio.
Donziger is appealing Kaplan's February ruling to the 2nd Circuit.
In his statement with the Ecuadoreans responding to the Wednesday settlement, Donziger called Patton Boggs "the latest victim of Chevron's campaign of intimidation."
"Once again, the American legal system has failed the Ecuadorian rainforest communities who now have been whipsawed by Chevron in various courts for two decades, with little end in sight," Donziger added.
The statement thanks the many Patton Boggs attorneys "who internally opposed this settlement agreement and fought against this sad and unethical betrayal of their clients."
"The firm's overall decision to surrender to Chevron's pressure campaign is a violation of its ethical duty to its clients, in this case the vulnerable rainforest communities of Ecuador who have suffered for decades," Donziger added.
Attorney-client privilege will help the Ecuadoreans unravel the deal, according to the statement.
"With the announcement of this settlement, Patton Boggs already has prejudiced its former clients in violation of its ethical obligations," Donziger added. "The communities also will be exploring options to seek an injunction blocking Patton Boggs from turning over any privileged materials to Chevron, including the details of current enforcement actions targeting the company's assets."