Case Involves Lawyer Who Won $19 Billion Judgment Against the Firm in 2011
By Daniel Gilbert, The Wall Street Journal
30 September 2013
Chevron Corp. moved Monday to avoid a jury trial in its suit against a lawyer it accuses of fraud in a high-stakes legal battle over pollution in Ecuador's jungles.
The firm said that if a federal judge tries the case, it will drop its claims for monetary damages against Steven Donziger, a lawyer who sued Chevron on behalf of Ecuadorian plaintiffs. Mr. Donziger's clients won a $19 billion environmental judgment in Ecuador against Chevron in 2011.
A trial is set for Oct. 15 in federal district court in New York before Judge Lewis Kaplan.
For months, Chevron has weighed whether to stop seeking the monetary damages, which it said were the only grounds for holding a jury trial in its lawsuit charging Mr. Donziger and others with racketeering and fraud.
Trying the case before a jury would be riskier for the company, experts said, in part because jurors might not be sympathetic to its argument that it has been victimized by the lawyers for Ecuadorian villagers.
If the judge tries the case, Chevron said Monday, it would pursue only claims for "equitable relief."
In the past, Chevron said such relief might include measures to protect its assets from Mr. Donziger and the other lawyers who are seeking to collect the $19 billion judgment in countries where the company operates.
If Chevron wins a favorable verdict in New York, it could wield a powerful tool to block Ecuadorians from attempting to seize the oil company's assets, as they have sought to do in Canada, Brazil and Argentina.
But a loss would deal a blow to Chevron's contention that it is the victim of lawyers taking advantage of an Ecuador court the firm has accused of corruption.
Chevron said Monday it reserved its rights to recoup legal fees and court costs from Mr. Donziger if the court awards them.
"Chevron's RICO action has always been about exposing the fact that the judgment against Chevron in Ecuador was procured through fraud and stopping the perpetrators from profiting from it," said Morgan Crinklaw, a Chevron spokesman.
Mr. Donziger and representatives of the Ecuadorians deny Chevron's claims and accuse the company of improper conduct in the 20-year-old legal battle.
On Monday, Mr. Donziger said he would oppose Chevron's request for a nonjury trial. "I think this decision clearly proves that Chevron does not believe in the validity of its own case," he said.
Judge Kaplan has cited evidence of fraud by lawyers for the Ecuadorians in prior rulings. Those lawyers say the judge is biased in favor of Chevron and have unsuccessfully sought his removal from the case, most recently last week.
Theodore Folkman, a lawyer at Boston-based Murphy & King who follows the case, said Chevron's move appeared to be aimed at reducing the risk that a jury might be sympathetic to evidence produced by Mr. Donziger and his associates. "The known quantity is better than the unknown quantity," he said, "and who knows what a jury would do?"
The legal battle stems from claims by Ecuadorians that Texaco Inc. devastated their environment and damaged their health by improperly disposing of waste left over from its drilling decades ago. Chevron, which has never operated in Ecuador, inherited the suit when it bought Texaco in 2001.
As evidence of fraud, Chevron notes that Mr. Donziger and lawyers for the Ecuadorians drafted a report on environmental damages that was submitted to the court in Ecuador as the work of an independent expert. Former researchers who worked for the Ecuadorians to estimate environmental damages disavowed the conclusions based on their work, according to affidavits filed earlier this year.
Representatives of the Ecuadorians acknowledge they submitted materials to a court-appointed expert, arguing this was legal and practiced by both parties in the Ecuador case. They contend that the report at issue is irrelevant because the Ecuadorian judge said he disregarded it in his verdict.