Two Ecuadoreans who won a now-discredited $9.5 billion pollution judgment against Chevron Corp. can’t challenge a settlement between their former law firm, Patton Boggs, and the oil giant in a related case, a New York federal judge ruled on Wednesday.
In one of several lawsuits spawned by the Ecuadorean judgment, Patton Boggs — which is now part of Squire Patton Boggs following its merger with Squire Sanders LLP — reached the settlement with Chevron to resolve allegations the firm acted improperly to help enforce the judgment, which U.S. District Judge Lewis A. Kaplan branded as fraudulent in a separate, long-running Racketeer Influenced and Corrupt Organizations Act case.
The dispute between Chevron and the law firm was initiated by Patton Boggs, which sued the oil company in 2012 to collect a $21.8 million bond Chevron posted when it obtained an injunction blocking enforcement of the Ecuadorean judgment.
In 2014, Chevron hit back with counterclaims that Patton Boggs perpetrated a scheme to shield evidence that the judgment had been obtained illegally.
Chevron and Patton Boggs reached a settlement in 2014 that required the law firm to give Chevron $15 million, make a public statement expressing regret for its involvement in the case and provide Chevron with certain discovery.
The settling parties also stipulated that the court would retain jurisdiction over the matter in the event one side would need to enforce the settlement at some point.
Attorney Steven Dozinger and two representatives of a group known as the Lago Agrio plaintiffs — Ecuadorean villagers who won the award — moved to intervene in the suit to challenge the settlement.
They said the deal was unethical because the law firm failed to keep them properly apprised of its negotiations with Chevron, and that the settlement breached Patton’s professional obligations to the Lago Agrio plaintiffs.
But Judge Kaplan rebuffed those arguments Wednesday, saying that as a private dispute between Patton and Chevron, they were free to settle it however they saw fit. The only action of the court, he wrote, was to agree to keep jurisdiction over the matter.
He also said that to the extent the Lago Agrio plaintiffs were worried about their privilege protections, the settlement took those into account by requiring the law firm to abide by all rules of professional conduct.
The lawsuit in Ecuador alleged Texaco Inc. dumped crude oil into the Amazon rainforest during a decades-long oil-drilling operation, giving the region’s inhabitants cancer and destroying natural resources. Chevron acquired Texaco’s liability when it bought the company in 2001.
In August, the Second Circuit affirmed Judge Kaplan’s opinion in the RICO case that invalidated the judgment. The opinion noted the Ecuadorean judgment was for $8.65 billion, but Chevron and representatives for the Lago Agrio plaintiffs told Law360 at the time that including attorneys’ fees, whistleblower awards and other costs brought the final judgment up to $9.5 billion.
A representative for Chevron called Judge Kaplan’s Wednesday order “yet another well-reasoned opinion from the court.”
“As Steven Donziger and his team continue to promote their fraudulent Ecuadorean judgment, Chevron will continue to expose the truth and defend the company,” the company said in a statement.
Dozinger and counsel for Patton Boggs did not respond Thursday to requests for comment.
Patton Boggs is represented by Elkan Abramowitz and Edward M. Spiro of Morvillo Abramowitz Grand Iason & Anello PC and James K. Leader and Caroline C. Marino of Leader & Berkon LLP.
Chevron is represented by Herbert J. Stern, Joel M. Silverstein and Mark W. Rufalo of Stern & Kilcullen LLC.
The case is Patton Boggs LLP v. Chevron Corp., case number 1:12-cv-09176, in the U.S. District Court for the Southern District of New York.
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