Extortion Holds Up Ecuador Verdict Against Chevron

Chevron's claims finally made it to trial late last year, and the parties recently finished submitting post-trial briefs to supplement the voluminous record.

The oil company hailed the ruling as a "resounding victory."

"This ruling is a resounding victory for Chevron and our stockholders," Chevron said. "It confirms that the Ecuadorian judgment against Chevron is a fraud and the product of a criminal enterprise. Steven Donziger and his associates can now be held accountable and will not be allowed to profit from their illegal acts. Any court that respects the rule of law will find the Lago Agrio judgment to be illegitimate and unenforceable."

Donziger has never been accused of criminal wrongdoing with this or any other case.

In a telephone press conference, Chevron's general counsel Hewitt Pate joined Gibson Dunn's Mastro emphasized plans to use Kaplan's lengthy ruling while having other courts and an arbitration panel reject the Ecuadorean verdict.

"It's the fact-findings here that are critically important," Pate said.

He emphasized that getting such a written record was why Chevron pursued their claims in front a judge alone.

Before November's trial, Kaplan ruled that Donziger and his associates did not have a right to a jury because Chevron only sought an injunction instead of money damages. The Ecuadoreans charged that the oil company made the decision because it thought Kaplan would be a more receptive audience.

Chevron countered that a jury verdict does not include a written opinion, which they wanted to share with other enforcement courts in Canada, Brazil and Argentina, and with an arbitration panel in the Hague.

Neither Mastro nor Pate took a firm stance on whether Chevron ever intended to try the remaining charges before a New York jury.

Kaplan's ruling came as no surprise to the Ecuadoreans, their spokesman said.

"The affected communities long ago gave up hope that a U.S. court would provide them relief from Chevron's contamination, which has taken their loved ones, poisoned their lands, and imperiled their cultures," Shan said in a statement.

Donziger meanwhile said Kaplan let his personal "implacable hostility" toward him cloud his ruling.

"With all due respect to the court, this is an appalling decision resulting from a deeply flawed proceeding that overturns a unanimous ruling by Ecuador's Supreme Court," Donziger said in a statement. "We believe Judge Kaplan is wrong on the law and wrong on the facts and that he repeatedly let his implacable hostility toward me, my Ecuadorian clients, and their country infect his view of the case."

Kaplan did, however, note that Donziger started his work "with a desire to improve conditions in the area in which his Ecuadorian clients live."

"To be sure, [Donziger] sought also to do well for himself while doing good for others, but there was nothing wrong with that," the opinion states. "In the end, however, he and the Ecuadorian lawyers he led corrupted the Lago Agrio case."

The ruling credits Chevron's allegation that the Ecuadoreans bribed the first Lago Agrio judge to hear the case, Alberto Guerra, to ghostwrite the judgment for the last, Nicolas Zambrano.

Guerra testified for Chevron pursuant to a contract including at least $326,000, the services of an immigration attorney and a car.

Acknowledging that "Guerra's credibility is not impeccable," Kaplan added that his account was "corroborated extensively by independent evidence."

"Donziger and Zambrano provided no credible evidence to support their versions of what transpired," the opinion states (emphasis in original).

Reached at New York's LaGuardia Airport for a flight to Washington, Donziger's appellate attorney Deepak Gupta said that he did not have the chance to fully peruse the mammoth ruling, which he nonetheless called a "troubling decision" by a judge to "appoint himself [for] a world-wide fact-finding mission."

Although he said his appeal would include "the facts and the law," Gupta indicated that it would lean more heavily on procedural concerns like jurisdiction and whether the racketeering statute Chevron filed permits the relief Kaplan granted.

"It is already immediately clear that there are serious legal defects in this decision, and it is unlikely to stand up on appeal," Gupta said.

Anticipating today's defeat, Donziger had tapped Gupta for his appeal back in January. Gupta said the timing and length of the ruling shows that Kaplan got started on it before the parties had even concluded briefing.

After trial ended in December, the parties filed the final post-trial briefs on Jan. 22. Donziger also moved to dismiss and for a stay in February.

Mastro did not say whether he or his colleague Ted Olson would handle appellate arguments.

A Washington-based partner at Gibson Dunn, Olson argued before the 2nd Circuit last year to keep the trial on track, with Kaplan at the helm. The circuit agreed with Olson's position that any appeal of Kaplan's decision could wait until after trial.

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