Lawyers Retreat from Chevron's Case Over Ecuadorean Judgment
MANHATTAN (CN) - With their clients unable to afford fighting claims that they fraudulently snared a $19 billion judgment against Chevron in Ecuador, two law firms now seek to withdraw.
"This is an extraordinary case, which has degenerated into a Dickensian farce," John Keker of the San Francisco-based firm Keker & Van Nest wrote in a 15-page motion.
Indeed, the two-decade long litigation over oil contamination of Ecuador has been compared to the fictional case of Jarndyce v. Jarndyce, in which generations of Charles Dickens characters die before the resolution of a case over a large inheritance.
Litigation over the Amazon pollution began in New York in 1993, when dozens of rainforest aborigines sued Chevron's predecessor, Texaco, in Manhattan federal court, claiming that the oil company left behind an environmental and public health crisis in a region home to 30,000 people.
In 2001, Chevron acquired Texaco and convinced the New York court to let the case play out in Lago Agrio, Ecuador, where the drilling occurred.
The case there went through several judges, the majority of whom were recused amid allegations of corruption and scandal, before the final judge ordered Chevron in February 2011 to pay billions a decade later.
Shortly before the ruling, Chevron sued Steven Donziger, a New York-based attorney for the Ecuadoreans, in New York, telling a Manhattan federal judge that the case was rigged through bribery, ghostwriting and extortion.
Though U.S. District Judge Lewis Kaplan pre-emptively blocked collection of the award anywhere in the world, and set a trial to invalidate the award, the 2nd Circuit dissolved that injunction and stopped the trial in its tracks. It said Kaplan could not appoint himself a "transnational arbiter to dictate to the entire world which judgments are entitled to respect and which countries' courts are to be treated as international pariahs."
Undeterred, Kaplan ruled that the language of the decision still allowed him to set an October trial over whether the award was collectable.
Chevron has made sweeping gains toward their fraud claims in the lead-up to that trial.
In the past few months, the Ecuadoreans have lost Burford Capital, their major financial backer; Stratus Consulting, the scientific firm that supported but now disavows their pollutions claims; and Alberto Guerra, the first judge to hear the case in Ecuador who now claims he was bribed to defeat Chevron.
In signing up as a Chevron witness, Guerra gave the oil giant bank records showing $1,000 monthly cash payments that allegedly came from an employee for the Ecuadoreans.
The Ecuadoreans insisted, in each instance, that Chevron bullied or bribed their witnesses into submission. Guerra, for example, has received hundreds of thousands of dollars, ostensibly to relocate to the United States for his protection.
Chevron has not denied the payments and disclosed a transcript of a July 13, 2012, meeting between Guerra, a Chevron lawyer and a private investigator that reflects an offer of $20,000 cash in a suitcase, the Ecuadoreans noted.
In an ironic twist, the transcript of the conversation shows Guerra complaining that he became ill for two months after drinking well water from the region of Sacha, the site of an oil field where Texaco and other oil companies drilled.
Chevron has contrasted its "transparent" disclosure of "protection" money it offered to Guerra with the "secret" nature of the bribes its opponents allegedly paid.
"If the plaintiffs' lawyers' best defense for their fraud is some kind of contrived equivalence, their case is even weaker than what's been reported," Chevron spokesman Kent Robertson said.
Donziger announced Friday that his lawyers want to withdraw from the case, in a press release stating, "Chevron's goal of denying our due process rights in the United States by sapping our financial resources is working."
Smyser Kaplan & Veselka, the firm that represents two of the 48 Ecuadoreans whom Chevron sued, also moved to withdraw.
Chevron has filed multiple motions to end the case in their favor, arguing that the alleged fraud against it is indisputable.
The lawyers for Donziger and the Ecuadoreans, meanwhile, have not held out hope for a favorable outcome and complain that they cannot afford to keep up litigation.
"Through scorched-earth litigation, executed by its army of hundreds of lawyers, Chevron is using its limitless resources to crush defendants and win this case through might rather than merit," Keker wrote in his withdrawal brief, adding later: "Simply put, Donziger cannot afford to pay what is required to litigate effectively against a hostile wealthy corporation in a hostile court."
Both Keker's firm and Smyser Kaplan estimate that their clients owe them more than $1.77 million, according to their motions.
Donziger, a Harvard-educated lawyer of 20 years, plans to argue his own case, and New York-based solo practitioner Julio Gomez wants to remain as sole counsel for the Ecuadoreans.
Calling the lawyers' exodus "an unsurprising development," Chevron spokesman Robertson said: "No reputable person, organization, or government would want to be associated with this scheme."
The Ecuadoreans paint their maneuver as refocusing their money and energies outside the New York "sideshow." They have sued to collect the judgment in Argentina, where a court has frozen Chevron's assets; Brazil, where a case is pending; and Canada, where a judge recently ruled in favor of Chevron.
The oil company lost an appeal in Argentina, and the Ecuadoreans announced an appeal in Canada.
Meanwhile, the 2nd Circuit plans to hear this month whether the case in New York should be stopped, and Chevron continues to attack the award in international arbitration against the Ecuadorean government in Europe.