Appeals Court in NYC Puts Chevron on Defensive
By Larry Neumeister, Associated Press
10 May 2011
New York, NY – A lawyer for energy company Chevron found himself on the defensive Tuesday as he argued that it was urgent that the courts protect the company from an $18 billion judgment against it in Ecuador over damage done to the Ecuadorean rain forest decades ago.
Two judges on a three-judge panel of the 2nd U.S. Circuit Court of Appeals reminded attorney Randy Mastro that Chevron once fought hard to have the environmental claims brought on behalf of 30,000 people heard by courts in Ecuador rather than the United States, where lawsuits were first filed in 1993. The lawsuits eventually were moved to Ecuador, where a judge earlier this year issued the judgment against the oil giant. The appeals panel didn't immediately rule.
"Counsel," Judge Rosemary Pooler told Mastro, "you were the one who wanted to try this case in Ecuador."
And Judge Barrington Parker said he remembered presiding over a court hearing when the San Ramon, Calif.-based Chevron Corp. was trying to get the lawsuits moved out of federal court in New York.
Mastro said Ecuador has changed dramatically since then and now has one of the world's worst legal systems.
"Times have changed, your honor," Mastro replied to the judge, saying the Ecuadorean courts were now so bad that they rivaled Iran's.
He repeated arguments he had made successfully in recent months before a lower court judge, saying that the plaintiffs in the lawsuits planned to try to get countries around the world, including Venezuela and Argentina, to seize assets belonging to Chevron so the plaintiffs could "extort" a lucrative settlement.
He urged the court to let stand an order from U.S. District Judge Lewis A. Kaplan in Manhattan. The order blocks the plaintiffs from any efforts to collect the judgment pending a November trial that may determine the legitimacy of the Ecuadorean award.
Mastro said Chevron needed the court's protection because lawyers for the Ecuadorean plaintiffs last year prepared a memorandum on how to seize Chevron's assets around the world once they won a judgment. The judgment is being appealed in Ecuador.
Pooler countered: "Chevron's brought at least 20 actions in this country, and I can't believe there's not a similar mirror image of this memo" at Chevron.
Mastro presented his arguments after attorney James Tyrrell told the appeals panel that Kaplan's order was so strict that it had all but shut down the ability of the Ecuadorean plaintiffs to prepare to collect the billions of dollars they are owed. Tyrrell said lawyers for the plaintiffs were not even being paid anymore.
"Chevron's somehow stood the law on its head," Tyrrell said. "They now have their ultimate relief."
In their lawsuits, the Ecuadorean plaintiffs had blamed oil company Texaco for environmental contamination and illnesses resulting from its operation of an oil consortium from 1972 to 1990 in Ecuador's Amazon. Texaco became a wholly owned subsidiary of Chevron in 2001.
Chevron has long argued that a 1998 agreement Texaco signed with Ecuador after a $40 million cleanup absolves it of any liability in the case. It claims Ecuador's state-run oil company is responsible for much of the pollution in the oil patch that Texaco quit more than two decades ago.