By Adam Klasfeld, Courthouse News Service
27 April 2011
New York, NY – A group of indigenous Ecuadorean farmers who won an $18 billion environmental lawsuit against Chevron seek to oust the American judge positioned to block the award in an upcoming federal trial.
U.S. District Judge Lewis Kaplan is presiding over Chevron's Feb. 1 lawsuit, which accuses the Ecuadoreans and their former lead attorney, Steven Donziger, of trying to procure an extortionate judgment against, or settlement from, the oil giant.
Shortly after Chevron filed, Donziger's attorneys countered that Kaplan had "encouraged" Chevron to file the racketeering suit.
Attempting to transfer the case from Kaplan's docket because of Kaplan's alleged bias, Donziger's team said the parties' long history in the Southern District of New York dictated that a different member of the Manhattan bench deserved first bite of Chevron's apple. U.S. District Judge Jed Rakoff sat on an earlier incarnation of the Ecuadoreans' environmental suit before Chevron successfully transferred the case to Ecuador in 2002.
Kaplan ultimately denied Donziger's motion to transfer the case to Rakoff. In a separate order the same day, he blocked the Ecuador verdict with a preliminary injunction.
Both parties' contentions today stand in stark contrast to their positions 10 years ago, when Donziger had unsuccessfully pushed to recuse Rakoff in that earlier lawsuit as Chevron argued that Ecuador was the best venue to litigate the relatively nascent environmental claims.
Facing the $18 billion verdict that a court in Lago Agrio, Ecuador, ultimately entered, Chevron is now vilifying Ecuador's judicial system at The Hague.
On Tuesday, the Ecuadoreans went one step further than Donziger, initiating recusal proceedings in a memo that calls Kaplan "Chevron's greatest ally."
This distinction holds legal significance, said Professor Arthur Miller, who teaches complex litigation at New York University School of Law.
"A request to transfer's not an accusation of anything," Miller told Courthouse News. Donziger's motion simply argued that, "as a matter of protocol and procedure, this should have been given back to Rakoff," he explained.
"A recusal is a motion that the judge step down because of bias or the appearance of bias," Miller said. "It's a frontal attack on him sitting on this case."
At the start of their 40-page memo, the Ecuadoreans note: "This application is not undertaken lightly." The Ecuadoreans go on to rehash claims from Donziger's earlier brief, but they paint a more updated and comprehensive picture of their protests against Kaplan.
On April 15, over the Ecuadoreans' objections that such a move would violate their due-process rights, Kaplan granted Chevron a separate trial for the last charge of its nine-count RICO lawsuit. The count, now an impending trial, seeks a judgment that declares the $18 billion award unenforceable.
Kaplan wrote that no constitutional violations applied because a jury would "very likely," but not certainly, decide the case.
The Ecuadoreans say that Kaplan regularly makes these kinds of qualifications to "insulate" his "Draconian and one-sided" rulings from appellate review.
In one ruling cited as an example, Kaplan ordered Donziger last October to turn over his litigation file for Chevron's discovery, despite objections over attorney-client privilege.
After Donziger and the Ecuadoreans appealed to the 2nd Circuit, Kaplan issued a 54-page expansion on the order saying he would revisit his ruling if the Ecuadoreans turned over a privilege log, the Ecuadoreans say.
According to the memo, the 2nd Circuit shot down the appeal on that basis, and Kaplan denied the motion to quash Chevron's subpoena even after they turned over the log.
For Chevron spokesman Kent Robertson, the 2nd Circuit's backing shows why Kaplan is still suited to preside over the case.
"The 2nd Circuit found once before that all parties have been well served by Judge Kaplan's stewardship," Robertson said. "There's no reason to believe that has changed."
Kaplan has final say over the proposed recusal. If he declines, as he did in the transfer motion, Professor Miller said an ensuing appeal would have a greater chance of success but would still be a long shot.
"I doubt the appellate court wants to second-guess a transfer denial," Miller said. "A recusal is different. That is challenging the propriety of the way the district is behaving, and the circuit may want to look at it. But the chances are slim."
Although he declined to personally comment on the substance of the accusations, Miller was familiar with the Ecuadoreans' views.
"Kaplan's a very strong, very intelligent, gifted judge," Miller said. "Some people would say that Kaplan simply has moved too quickly because the proceedings in Ecuador are not concluded. Some people would say that 'it's a bridge too far.'"
Both parties have appealed the Lago Agrio judgment, entered on Feb. 14. Chevron does not want to pay it, and the Ecuadoreans say it's not enough to remediate decades of oil contamination Texaco caused before it pulled up stakes and became a Chevron subsidiary in 2001.
The Ecuadoreans, who do not recognize Kaplan's jurisdiction, say that the judge should have waited for the Lago Agrio appeals to run their course.
"Chevron dragged the underlying case out for 18 years; the fact that this Court has consistently characterized the Ecuadorian case as moving 'rapidly' betrays this Court's unwillingness to acknowledge the larger picture of a case with a history that dwarfs this Court's relatively limited involvement," the April 26 memo states.
Kaplan granted Chevron's request for a speedy trial, setting the date for Nov. 14.