Chevron scores court win in $9B Ecuador rainforest case

Judge: Lawyer used ‘corrupt means’ to win judgment

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The U.S. District Court in Manhattan on Tuesday handed Chevron Corp. a major victory in its decades-long battle over pollution in the Amazon rain forest, declaring an Ecuadorean court ruling unenforceable in the U.S.

The court declared that the attorney who made pursuing the Amazon case his life’s work, Steven Donziger of New York, used “corrupt means” to obtain a record $18 billion judgment against Chevron in an Ecuadorean court in 2011.

In light of the “clear and convincing evidence” that Mr. Donziger bribed an Ecuadorean judge and used other illicit tactics in the case, U.S. Judge Lawrence Kaplan barred Mr. Donziger and the Amazon villagers he represented from seeking to enforce the Ecuadorean verdict in the United States, and he froze all proceeds from the judgment.

Citing “repeated acts of fraud, bribery [and] money laundering,” Judge Kaplan said in deciding the unusual civil racketeering case that “the defendants here may not be allowed to benefit from that in any way.”

Mr. Donziger vowed to immediately appeal what he called an “appalling” decision and repeated charges that the judge was biased against him.

“This decision is full of vitriol … and ignores the overwhelming evidence that Chevron committed environmental crimes and fraud in Ecuador,” he said.

The case involves arguably the biggest instance of environmental contamination in history and began decades ago after Texaco, which was later acquired by Chevron, ceased drilling operations in the Amazon’s Lago Agrio region. The monumental verdict was slashed to $9.5 billion last November by the Ecuadorean high court while the New York judge was hearing the Manhattan case.

Mr. Donziger and 47 Amazon villagers claimed that Texaco dumped billions of gallons of untreated, toxic drilling waste into unlined pits and Amazon streams, killing rainforest wildlife and sickening Amazon natives who lived nearby.

Chevron said it did no wrong, having followed all the procedures laid out in Ecuadorean law for cleaning up the waste. While the New York court did not rule directly on the merits of the Amazon case, it found “voluminous” evidence that the Ecuadorean verdict was based on fraudulent evidence and manipulation of the courts.

“Justice is not served by inflicting injustice,” Judge Kaplan wrote. “The ends do not justify the means. There is no ‘Robin Hood’ defense to illegal and wrongful conduct.”

While the decision bars enforcement of the Ecuadorean judgment in the U.S., it does not prevent the Amazon plaintiffs from seeking to seize Chevron assets in other countries. They currently are seeking enforcement in Canada, Argentina and Brazil, and an Ontario court already has ruled that the villagers have the right to pursue Chevron’s assets in Canada.

But Chevron hopes to use the U.S. judgment to fend off efforts to enforce the judgment in those countries.

“This ruling will be very helpful,” John Watson, Chevron’s chief executive officer, told reporters at the IHS CERAWeek energy conference in Houston Tuesday. “Having a judgment like this from a reputable court in the United States will certainly be helpful in preventing enforcement actions elsewhere.”

“This ruling is a resounding victory for Chevron and our stockholders,” said Morgan Crinklaw, a Chevron spokesman, as Chevron’s stock rose 85 cents to $115.69 in New York trading Tuesday. “Any court that respects the rule of law will find the Lago Agrio judgment to be illegitimate and unenforceable.”

Despite Chevron’s hopes that the sweeping decision in its favor in Manhattan will help snuff out litigation elsewhere, the Amazon plaintiffs said they would not let up for a minute in their attempts to pursue justice in other countries.

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