Another significant development in the Chevron Ecuador case:
A federal judge in Washington, D.C. has tossed a lawsuit by the prominent law firm Patton Boggs that accuses lawyers for Chevron of somehow conspiring to keep plaintiffs in a massive pollution case from paying their bills. Patton Boggs joined the lawsuit by Ecuadorean villagers suing Chevron over toxic drilling waste in the Amazonian jungle last year, but has been stymied in efforts to drag the global oil giant to the bargaining table to settle.
Amid a welter of lawsuits, discovery actions and international arbitration proceedings, Patton Boggs sued Chevron’s lawyers, Gibson Dunn, accusing them of tortiously interfering in its relationship with the Ecuadoreans by trying to have Patton Boggs disqualified because a lobbying affiliate of the firm once represented Chevron. After a judge dismissed the case on April 19, Patton Boggs refiled with new allegations that largely mirrored the first.
Judge Henry H. Kennedy Jr. dismissed the second action today, saying Patton Boggs cited incorrect laws and failed to provide any explanation of how Gibson Dunn had conspired to get the Ecuadoreans to stop paying their bills.
In fact, Patton Boggs concedes that it does not know “the exact manner and facts” of defendants’ “efforts,” admitting that it is “privy mainly to the result of Defendants’ misconduct” (although it attributes this ignorance to defendants’ successful efforts to conceal their alleged wrongdoing). …But the fact that Patton Boggs is no longer being paid does not establish that Chevron and Gibson Dunn are responsible for that outcome, let alone that they intentionally caused it. …If Patton Boggs has any factual basis for that conclusion, it does not appear in the complaint.
Based on the facts alone, the lawsuit seems to have the potential for a $500 million to $1 billion settlement. The plaintiffs won an $18 billion judgment in Ecuador in February but has no assets there to seize. Meanwhile Chevron has sued to prevent the plaintiffs from enforcing the judgment in the U.S., alleging fraud, and won an injunction from a federal court in New York halting Patton Boggs’ planned effort to enforce it in other courts around the world. Chevron has vowed never to settle.
The plaintiffs won funding from London-based Burford Group last year, and that firm, which invests in corporate litigation, demanded that Patton Boggs join the case. So it is surprising to read allegations the plaintiffs are no longer paying their bills.
The dismissal isn’t the only bad news for the Ecuadorean plaintiffs hiding in court rulings recently. In an order last week, a federal judge in New York ordered lawyers associated with the plaintiffs, including the Philadelphia firm Kohn Swift & Graf, to turn over documents to Chevron that may support allegations the Ecuador judgment was obtained through fraud. In that ruling was this tidbit: Kohn Swift, which sank more than $6 million into the case over the years before breaking with onetime lead attorney Steven Donziger, has hired outside counsel, possibly to sue Donziger. The outside firm is none other than Susman Godfrey, a Houston boutique with a well-founded reputation for tough litigation tactics.