Federal Judge Extends Order Banning Ecuador's $18 Billion Judgment Against Chevron
NEW YORK -- A federal judge on Monday extended his temporary order banning collection of an $18 billion judgment by the courts in Ecuador against Chevron, saying the oil company could face irreparable harm because it appeared that lawyers for Ecuadoreans who sued over rainforest contamination were going to try to quickly collect the award.
U.S. District Judge Lewis Kaplan said evidence had established that lawyers for 30,000 Ecuadoreans planned to move swiftly to pursue multiple enforcement actions and asset seizures around the globe, including in areas where Chevron would not be immediately able to challenge the actions.
He said that without his order, "Chevron would be forced to defend itself and litigate the enforceability of the Ecuadorean judgment in multiple proceedings. There is a significant risk that assets would be seized or attached, thus disrupting Chevron's supply chain, causing it to miss critical deliveries to business partners."
The judge said such a disruption would also damage a business reputation and relationships the company had developed over the past 130 years. Kaplan ordered Chevron to post a $21.8 million bond to cover the cost of any delay in enforcement of the award should it be determined that the damages are legitimate.
Kaplan's ruling came after Chevron sued lawyers and others involved in the Ecuadorean litigation, saying they violated racketeering laws by manipulating Ecuadorean courts into issuing an unfair judgment against the company.
After the lawsuit was filed, Ecuadorean Judge Nicolas Zambrano issued his award last month.
Karen Hinton, a spokeswoman for the Ecuadoreans, called Kaplan's ruling "a slap in the face to the democratic nation of Ecuador and the thousands of Ecuadorean citizens who have courageously fought for 18 years to hold Chevron accountable for committing the world's worst environmental disaster."
She said Kaplan's failure to consider key evidence or schedule a hearing to learn more facts was a "trampling of due process" and "an inappropriate exercise of judicial power."
She said Kaplan had disregarded Zambrano's "scholarly and comprehensive" 188-page opinion and ignored key evidence that Chevron had committed a series of frauds in Ecuador to "cover up its unlawful conduct."
In a 127-page opinion of his own, Kaplan cited evidence of what he described as possible misconduct by an American lawyer for the Ecuadoreans. Yet, he said, neither the lawyer "nor any of the other key actors has denied Chevron's allegations or attempted here to explain or justify under oath their recorded statements and written admissions."
The judge said there was "a great deal of posturing on both sides" and added that "a good deal of the rhetoric and argument in this case ... must be viewed with a critical eye."
Kaplan said he solicited the views of the U.S. Department of State on Feb. 9 but the department politely declined to express any view.
Chevron, which has never operated in Ecuador, found itself a party in the litigation after acquiring Texaco Inc. in 2001. Lawsuits had accused Texaco of contaminating Ecuadorean land during three decades of oil exploration and extraction.
San Ramon, Calif.-based Chevron has maintained that a 1998 agreement Texaco signed with Ecuador after a $40 million cleanup absolves it of liability. The Ecuadorean plaintiffs say the cleanup was a sham and didn't exempt third-party claims.
Chevron has vowed to appeal in Ecuador. Kaplan said his order prevents the plaintiffs from trying to collect the award or seize Chevron assets prior to his issuance of a final order in the case.
Hinton said the Ecuadorean plaintiffs believe Kaplan cannot bar them from enforcing the judgment in any country, except the United States.
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By LARRY NEUMEISTER 03/ 7/11 10:53 PM ET Associated Press