MANHATTAN (CN) - A New York federal judge will decide whether Patton Boggs lawyers can collect a $21.8 million bond that Chevron posted to thwart multibillion-dollar collection efforts.
Chevron faces a $19 billion verdict in Lago Agrio, Ecuador, to remediate decades of drilling damage to the Amazon allegedly caused by its predecessor, Texaco.
As part of its wide-reaching efforts to fight this liability, Chevron obtained a temporary restraining order (TRO) and an injunction in early 2011 to bar judgment-collection efforts by the Ecuadoreans.
In issuing the injunction, U.S. District Judge Lewis Kaplan in Manhattan ordered Chevron to post a $21.8 million bond.
Though he noted that the Lago Agrio plaintiffs, or LAPs, would have preferred a bond with at least four more digits, Kaplan said bonds are not meant to secure judgment collection.
"It is simply to protect the LAP representatives against any injury they may suffer if they are enjoined for a period from seeking to enforce that judgment and the injunction ultimately proves to have been inappropriate - in other words, to ensure payment of any damages caused by the delay in enforcement," he wrote.
The 2nd Circuit struck this injunction down in September 2011 and called it "radical" in a January 2012 opinion.
About a month later, Patton Boggs filed a federal complaint against Chevron in New Jersey, saying that Kaplan's orders "incapacitated" it from trying to enforce the judgment for their clients in Ecuador, whom the firm names in court papers as "los Afectados," Spanish for the Affected Ones.
The case was transferred Tuesday to the Southern District of New York, home to Judge Kaplan though this case remains unassigned.
Patton Boggs says in the complaint that it is entitled to the $21.8 million bond as redress for the "frivolous injunction."
It also seeks attorneys' fees related to its fight against the TRO and injunction, plus damages for malicious prosecution.
"The TRO and preliminary injunction choked off the Afectados' ability to obtain funding that would allow them to reasonably contend with the upwards of 39 law firms (including 15 of the American Lawyer Magazine's top 100 firms) that Chevron has admitted in court filings to deploying on this matter - at a cost of untold millions of dollars per month - in jurisdictions throughout the world," according to the complaint authored by attorney James Tyrrell (emphasis and parentheses in original).
"The TRO and preliminary injunction forced the Afectados and their counsel to sit on the sidelines and precluded them from taking measures to attach and restrain the movement and disposition of assets, to assure those assets would be available upon enforcement. Meanwhile, Chevron was able to lay the groundwork to resist enforcement in countries where the Afectados were likely to bring the Ecuadorian judgment. The company also sold off otherwise attachable assets in certain of those countries.
"Owing to the TRO and preliminary injunction, the Afectados now find themselves holding a judgment with inadequate resources to enforce it. Their current and former counsel and consultants, including Patton Boggs, find themselves with unpaid bills. Providers of legal services and advice, like Patton Boggs, as well as vendors of legal support services under contract with the Afectados, wrongfully were enjoined from rendering the very services that they are in the business of providing. Would-be contributors to the Afectados' cause were deterred by the lack of capital and the threat of a worldwide injunction that would prevent the Afectados from ever monetizing the Ecuadorian judgment - and Chevron has admitted that the judgment is the Afectados' only real asset."
The latest complaint shows Patton Boggs taking a different tack than one that proved unsuccessful with an earlier suit in Washington, D.C.
Though Patton Boggs initiated the D.C. case to address conflict-of-interest claims, it brought money up after dismissal of the case. The court refused, however, to enter that amended complaint.
This connection was not lost on Chevron's attorney Randy Mastro, of Gibson, Dunn & Crutcher.
"They filed suit in New Jersey with overlapping allegations that have already been dismissed with prejudice in D.C.," Mastro told Courthouse News in a phone interview.
By bringing lawsuits against Chevron in D.C. and in New Jersey, Patton Boggs is deliberately "trying to avoid the jurisdiction of New York," Mastro added.
He noted that New York is the venue for Chevron's RICO suit against Patton Boggs and others associated with the Ecuadoreans.
"These have been frivolous lawsuits all along," Mastro said. "They have been dismissed at every turn. And we have no doubt that this will be dismissed as well."
Tyrrell did not return a request for comment.
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