Judge Won’t Recuse Self from Chevron Trial

MANHATTAN (CN) - A federal judge defended his impartiality in a lawsuit that pits Chevron against the group of Ecuadorean natives it says won an $18 billion judgment through fraud.

U.S. District Judge Lewis Kaplan is presiding over Chevron's February lawsuit, which accuses the Ecuadoreans and their advocates of trying to procure an extortionate judgment against, or settlement from, the oil giant.

Two weeks after filing, a judge in Lago Agrio, Ecuador, found Chevron liable to the tune of $18.2 billion for massive oil contamination in the Amazon, allegedly caused by Texaco before Chevron acquired that company in 2001.

Chevron says it will not pay, arguing that the state-owned oil refinery is the true culprit, that Texaco was previously released of liability and that the judgment was achieved through a fraud on the courts.

After staying the Ecuadoreans' collection efforts with an injunction, Kaplan granted Chevron an early November trial on the count of its complaint that seeks a judgment declaring the Ecuadoreans' verdict unenforceable.

Steven Donziger, the American lawyer who allegedly orchestrated the Ecuadoreans' lawsuit with an eye toward his fee, quickly fired back against Chevron. Claiming that Kaplan had "encouraged" Chevron to file racketeering charges, Donziger tried to transfer the case to another judge.

Though the move proved unsuccessful, the Ecuadoreans, also known as the Lago Agrio plaintiffs (LAP), mirrored the attack by initiating recusal proceedings against Kaplan in a memo that called him "Chevron's greatest ally."

Kaplan, who gets a say in whether he should hand the case to another judge, refused to recuse himself in a 41-page decision on Monday that calls the bias allegations "baseless."

In the opinion, Kaplan noted that the 2nd Circuit has praised his handling of the case.

"[I]n light of the complexity of this case and the urgency of its adjudication, we wish to note the exemplary manner in which the able District Judge has discharged his duties," the appellate court stated. "There is no question but that all concerned, not least this Court, are well served by the careful and comprehensive analysis which is evident repeatedly throughout the many memoranda and orders of the District Court, many of which were produced with rapidity in the context of the District Court's daunting schedule in this and other important cases."

Kaplan also denied ever having "urged" Chevron to file racketeering suit.

The Ecuadoreans contend that Kaplan made the suggestion by asking during a hearing: "Now, do the phrases Hobbs Act, extortion, RICO, have any bearing?"

But Kaplan said he posed the question after Chevron made its accusations known.

"Chevron had laid out its RICO, Hobbs Act and extortion claims well before the motion to quash was argued and well before the Court even posed its question," Kaplan wrote. "In short, the chronology is flatly inconsistent with the LAP Representatives' contention."

The often-quotable judge also rejected the "out-of-context" excerpts of transcripts and rulings that the Ecuadoreans cited as evidence of bias.

The Ecuadoreans took offense to Kaplan's description of their actions against Chevron as a "game" financed and sprung "from the imagination of American lawyers," and said that he called their existence into question by calling them the "so-called Lago Agrio plaintiffs."

Defiant, Kaplan started his memo with the words "The so-called Lago Agrio plaintiffs," and he explained later that Merriam-Webster Dictionary defines the phrase as simply meaning "commonly named."

Kaplan insisted that even the Ecuadoreans' lawyers have referred to them by that phrase.

He added that he was quoting Donziger with the word game, and said that even a remark showing hostility toward the Ecuadoreans would not warrant his recusal.

Citing Liteky v. United States, Kaplan wrote, "[J]udicial remarks during the course of a trial that are critical or disapproving of, or even hostile to, counsel, the parties, or their cases, ordinarily do not support a bias or partiality challenge."

A spokeswoman for the Ecuadoreans said that she was "disappointed," but did not anticipate a favorable outcome.

"We are disappointed but not the least bit surprised that Judge Kaplan has refused to recuse himself, even with meticulously documented evidence of his repeated bias against the Ecuadorian communities and their attorneys who have won a historic judgment against Chevron," spokeswoman Karen Hinton said in an e-mail. "The Ecuadorian plaintiffs remain convinced that no reasonable observer could possibly be convinced that Judge Kaplan can preside over the case in a fair and unbiased manner given the record."

Chevron accused the Ecuadoreans of excessively "lawyering" a case that has not convinced multiple American judges.

"The Lago Agrio plaintiffs have argued before almost 40 federal judges at this point and have consistently failed to present a compelling case," Chevron spokesman Kent Robertson said. "The only party they have to blame for their predicament is themselves. The Lago Agrio trial has been irreparably tainted by the plaintiffs' fraud and no amount of lawyering can undo that fact."

An appellate panel of the 2nd Circuit is slated to hear arguments on Tuesday morning over Kaplan's decision to hold the November trial.

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