In a stunning retreat, high-powered Washington, D.C. firm Patton Boggs agreed Wednesday to pay $15 million to energy giant Chevron and withdraw from its central role in trying to enforce an Ecuadorean court judgment against the oil company that was found to have been obtained through fraud.
In an unambiguous victory for Chevron, Patton Boggs issued a statement of regret and said it would turn over its documents and evidence in the case to the oil company. In return, Chevron has agreed to drop its lawsuit against the firm.
The decision by Patton Boggs, a longtime blue-chip law and lobbying firm, to cut its losses comes a month after a New York federal judge ruled that attorney Steven Donziger had bribed judges, paid for ghostwritten expert opinions, and submitted fraudulent evidence to the Ecuadorean court that handed down a $19 billion judgment against Chevron in February 2011 for alleged pollution damage in the rain forest.
Patton Boggs had signed on as Mr. Donziger’s co-counsel in an effort to enforce the judgment, which Chevron had challenged in U.S. courts. Chevron filed a lawsuit April 3 against Patton Boggs alleging that the law firm knew about the wrongdoing and had covered it up.
“The recent opinion of the United States District Court for the Southern District of New York in the Chevron v. Donziger case includes a number of factual findings about matters which would have materially affected our firm’s decision to become involved and stay involved as counsel here,” said Patton Boggs in a statement as part of the settlement agreement. “Based on the court’s findings, Patton Boggs regrets its involvement in this matter.”
“We are pleased that Patton Boggs is ending its association with the fraudulent and extortionate Ecuador litigation scheme,” said Mr. Pate. “Chevron detailed its objections to Patton Boggs‘ conduct in its counterclaim, and today’s agreement brings that litigation to an end. Chevron encourages others to disassociate themselves from this fraud.”
Mr. Donziger, who has appealed the March 6 verdict handed down by U.S. District Court Judge Lewis Kaplan, issued a statement Wednesday along with Ecuadorean villagers calling Patton Boggs‘ deal with Chevron “a sad and unethical betrayal of their clients.”
Under the federal court decision in March, the Ecuadorean award cannot be enforced in the United States.
The $19 billion award against Chevron, which was reduced in November by another Ecuadorean court to $9.5 billion, stemmed from claims that Texaco had contaminated the Lago Agrio jungle over 23 years of oil-drilling ending in 1992.
Chevron, which bought Texaco in 2001, has maintained that Texaco met its legal obligations by spending $40 million and three years on cleanup efforts. In 1998, the government of Ecuador “declared the remediation met international standards and released Texaco from future obligations or liabilities,” said Chevron in an earlier statement.
“Everyone is breathing a sigh of relief because [the settlement] paves the way for the merger to go forward,” a former Patton Boggs lawyer told Reuters.