Ecuador’s case against California’s Chevron Corp. has boomeranged against the plaintiffs’ lawyers. Today in Manhattan, federal District Judge Lewis A. Kaplan is considering a RICO (Racketeering Influenced and Corrupt Organizations) complaint Chevron filed Feb. 1 against attorneys and consultants targeting the oil giant.
Nineteen U.S. judges made preliminary rulings in Chevron’s favor and at least four used the word “fraud” to describe the plaintiffs’ legal actions, but the Justice Department has yet to investigate. RICO, best known for nailing Mafia bosses, also is used (sometimes abusively) to bring down alleged corporate scofflaws when a pattern of fraud or corruption is broad enough to qualify as a “criminal enterprise.” Chevron is using part of the statute allowing private individuals to file civil RICO suits claiming they’ve been harmed by such an operation.
The original suit alleged that Texaco (later merged into Chevron) left environmental damage when its 20-year drilling lease in Ecuador expired in 1992. Quito’s previous government - before being replaced by radical, anti-American leftists - officially absolved Texaco of responsibility in 1998. The suit, however, persisted, driven mostly by U.S. plaintiff lawyer Steven R. Donziger and egged on by Ecuadorian President Rafael Correa. The latest claims against Chevron total $113 billion.
Over the past two years, numerous embarrassing revelations about the plaintiffs have come to light, including video of an Ecuadorian judge seeming to join a bribery scheme, a scientific expert alleging the Donziger team falsely signed his name on a report, and film out-takes showing Mr. Donziger bragging about how he curried favor with Ecuadorian officials and supposedly independent experts. A New Jersey federal judge wrote Mr. Donziger’s conduct likely amounted to “a fraud on the judicial proceeding.” A North Carolina federal judge wrote, “What has blatantly occurred in this matter would in fact be considered fraud by any court.” Judge Kaplan earlier stated, “Donziger’s own words raise substantial questions as to his possible criminal liability and amenability to professional discipline.”
Philadelphia lawyer Joseph Kohn, who financed much of Mr. Donziger’s case, admitted, “Increasingly, I have come to realize that my firm and I were deceived, in part apparently driven by a combination of Donziger’s conceit and naivete, a dangerous combination which is leading the case rapidly toward disaster.” Mr. Kohn added that Mr. Donziger’s actions “may have been outrageously improper conduct.” It’s past time for the Justice Department to look into this mess.