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Monday, July 22, 2024 | Back issues
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Chevron Foe Denied Stay Over Ecuador ‘Fraud’

MANHATTAN (CN) - A federal judge showed no patience Friday for the lawyer whom he blasted last month for using fraud to extort a multibillion judgment from Chevron in Ecuador.

Steven Donziger, an American attorney for Ecuadoreans harmed by decades of oil pollution in the Amazonian rainforest, had hoped to stay a decision finding that his "corrupt means" secured the $9.5 billion judgment against Chevron back in 2011.

U.S. District Judge Lewis Kaplan's 497-page ruling, which included another 87 pages of appendices, forbade Donziger, Hugo Gerardo Camacho Naranjo and Javier Piaguaje Payaguaje from profiting off their bribery scheme.

In refusing to stay that ruling Friday, Kaplan said the irreparable-harm claim contradicts arguments Donziger and his cohorts made to the 2nd Circuit last year. Though Donziger and the others would have to show that they face irreparable harm without a stay of Kaplan's judgment pending their appeal, "movants identify no credible threat of irreparable injury should that occur."

"Indeed, their claims of irreparable injury rest on a pastiche of unsupported assertions, contradictions of undisputed evidence, and fertile imagination," Kaplan wrote. "Nor have they shown any likelihood of appellate success on any legal issue that would alter the relief granted here."

Karen Hinton, a spokeswoman for Donziger, said the team is "confident Judge Kaplan's ruling will be reversed once the appeal is heard."

Kaplan's March ruling had also required that Donziger immediately transfer to Chevron his right, title and interest in his shares of Amazonia, a company organized to collect and distribute any proceeds of the verdict against Chevron in Lago Agrio, Ecuador.

The judge modified that requirement Friday "to ensure that Chevron does not succeed to ownership of those shares before the appeal [by Donziger] is decided."

"In the interim, the court orders that those shares - which represent Donziger's right, vis-à-vis his clients, to a 6.3 percent share of any money collected on the fraudulently procured judgment - and any proceeds of those shares will be held pending appeal by the clerk of the court for the benefit of Chevron and Donziger, as their interests ultimately may appear, and be voted, after ten days prior notice and absent a contrary order of this Court, as Donziger may direct," the 33-page opinion states.

Kaplan noted that Donziger can continue working on the Lago Agrio case, and that his ruling "would not prevent Donziger from being paid, just as he has been paid at least $958,000 and likely considerably more over the past nine or ten years."

It is difficult to credit Donziger's argument that he faces irreparable harm in being denied access to collection since "Donziger has been litigating the case, making a living, and conducting his professional and business activities for years without receiving any contingent fees," according to the ruling.

Kaplan noted that the Lago Agrio plaintiffs have not been granted enforcement of their verdict against Chevron in Argentina, Brazil and Canada.

"In all the circumstances, there simply is no cognizable possibility that the effectiveness of paragraph 1 of the NY Judgment during the pendency of the appeal would have any irreparable effect on Donziger, his activities, his representation of his clients, or his law practice," the opinion states.

As for the other representatives of the Lago Agrio plaintiffs, Kaplan said nothing stops them from "financ[ing] any appeal of this action."

"The litigation against Chevron has been funded by investors in exchange for shares of any eventual recovery," Kaplna wrote. "In fact, the LAPs have raised at least $15.99 million and perhaps $21 million or more from such sources. At least $7.5 million of that amount has been paid to U.S. counsel, much of it to firms representing the LAPs. Nothing in the NY Judgment prevents the LAPs (other than the two LAP Representatives who are named inthe NY Judgment) and their allies from continuing to raise money in the same fashion." (Parentheses in original.)

Donziger's spokewoman excluded, no party to the litigation returned requests for comment made Friday afternoon.

The legal vortex between Chevron and the Ecuadoreans has spanned two decades and three continents.

Its roots took shape in 1993 when indigenous Ecuadoreans and farmers brought a federal suit against Chevron's predecessor Texaco in New York, alleging extensive environmental and public health damages in the Amazon. Chevron brought about the next front of litigation eight years later by taking the case to Lago Agrio where the drilling occurred.

A judge there ordered Chevron to pay billions on Feb. 14, 2011.

Days before that verdict, Chevron sued the lawyers, plaintiffs and associates involved in that case back in New York, claiming their adversaries extorted them by bribing a judge and fixing the scientific studies.

The Ecuadoreans repeatedly and unsuccessfully sought to recuse Kaplan for alleged bias and obtained a minor win in early 2012 when the 2nd Circuit invalidated Kaplan's first injunction as "radical."

Chevron's RICO claims finally made it to trial in late 2013, culminating in Kaplan's thunderous verdict.

Donziger has tapped Deepak Gupta for his appeal.

It is uncertain who at Gibson Dunn will represent Chevron on appeal. Though Randy Mastro shined in Kaplan's courtroom, his Washington-based colleague Ted Olson argued before the 2nd Circuit last year to keep the trial on track.

The circuit agreed with Olson's position that any appeal of Kaplan's decision could wait until after the trial.

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