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Chevron Ecuador Lawsuit News

Bloomberg Businessweek – Chevron Rolls Out the Big Gun: Ted Olson

You know a major corporation really cares about an appellate-court argument when they bring out one of the bar’s big guns. No gun is bigger than Theodore Olson.

In federal court in New York today, Chevron (CVX) deployed Olson, a former U.S. solicitor general and noted Supreme Court advocate, to convince a three-judge panel to clear the way for a civil racketeering suit the oil company wants to start next month against plaintiffs’ attorney and environmental activist Steven Donziger. Olson, who at the moment is also representing BP (BP) in that energy giant’s liability battle in New Orleans over the 2010 Gulf of Mexico oil spill, seemed to get the job done for Chevron.

(Before we go further, let the record reflect that the three-judge panel in New York did not issue an immediate ruling, and it’s always a little risky to predict appellate jurists’ thinking based on their murmurings at oral argument. That said, let’s go for it.)

Today’s skirmishing before the U.S. Court of Appeals for the Second Circuit appeared to focus on the most abstruse of legal doctrines, ranging from mandamus to collateral estoppel. But the real question hovering above the packed courtroom on Foley Square was the future of a $19 billion oil-pollution verdict imposed on Chevron by a provincial trial court in the Ecuadorian rainforest in February 2011. Upheld on appeal by the Ecuadorian judiciary, the judgment—the biggest environmental verdict ever—reflects a finding that Texaco egregiously contaminated the Amazonian jungle when it produced oil there decades ago. (Chevron acquired Texaco in 2001.)

Chevron claims that the verdict, engineered by Donziger, a New York solo practitioner, reflected an elaborate sham: an international conspiracy that included bribery, fabrication of evidence, and coercion. Donziger denies these allegations, although a number of lawyers and scientific experts who have supported him over the years have denounced him and disavowed their past work. The oil company, for its part, has sued Donziger in federal court in New York under the federal anti-racketeering statute. That suit is one facet of Chevron’s international campaign to resist ever paying a dime of the Ecuadorian judgment. The company doesn’t have any assets to speak of in Ecuador.

In response to Chevron’s counterattack, Donziger and his allies have repeatedly tried to get the U.S. district judge overseeing the racketeering suit, Lewis Kaplan, removed from the case. Donziger’s team contends that Kaplan has shown favoritism toward Chevron and racist disdain for the Ecuadorian pollution victims. Today’s hearing represented what will likely be Donziger’s last try to have Kaplan yanked before the suit against Donziger and his clients commences on Oct. 15.

Olson today dismissed the attack on Kaplan’s integrity as “despicable” and praised the trial judge, a former corporate law firm partner nominated to the bench by President Bill Clinton, as “extremely able, extremely experienced.” The Chevron attorney, a partner with the law firm Gibson, Dunn & Crutcher, argued that Kaplan “has bent over backwards” to be fair to Donziger and his clients. If Kaplan mishandled the upcoming trial, Olson added, Donziger & Co. can appeal the results. Based on their questions and observations, that last argument appeared to appeal to all three judges on the Second Circuit panel, Debra Ann Livingston, Barrington Parker, and Peter Hall.

Donziger attended the arguments but didn’t address the court. Instead, the Ecuadorian plaintiffs were represented by James Tyrrell, a prominent litigator and partner with the firm Patton Boggs. Tyrrell told the Second Circuit panel that Kaplan had defied an earlier procedural order from the appellate court. Kaplan, according to Tyrrell, has indicated he intends to put the very legitimacy of the Ecuadorian judiciary on trial in New York—something that would exceed the trial judge’s authority.

“All that is correctable on appeal,” Judge Parker told Tyrrell. “If you’re right, you’ll win.” The implication of Parker’s comments was that Kaplan should not be preemptively removed. Taking a trial judge off of a case happens “only in the most extraordinary circumstances,” observed Judge Livingston. She hinted that she did not see such circumstances in this case.

Tyrrell didn’t back down. “It is, respectfully, a setup,” he said of the proceedings before Kaplan. Without endorsing that view, Judge Hall of the Second Circuit responded that if Tyrrell’s fears came true, he could address them after Kaplan rules.

Both sides presented their arguments today with skill. Tyrrell, although not as well known as Olson, held his own as an advocate. So many attorneys wanted to watch the arguments that most had to settle for closed-circuit television coverage outside the filled-to-capacity courtroom. Still, more may have been obscured by the session than clarified.

The litigation over responsibility for addressing oil pollution in the Ecuadorian rainforest began in 1993. In addition to the U.S. and Ecuador, countries hosting offshoots of the legal warfare include Argentina, Brazil, and Canada. Hundreds of millions of dollars—maybe $1 billion—have been consumed by lawyer fees and related expenses. So far, though, the endless hearings, depositions, and cross-examinations haven’t cleaned a single waste-oil pit or contaminated jungle stream.



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