LITIGATION:

Chevron wins restraining order in $113B pollution case

Chevron Corp.'s fight against plaintiffs seeking damages for crude oil pollution in Ecuador continued yesterday when the oil giant won a temporary restraining order against its opponents.

The order, entered by U.S. District Judge Lewis Kaplan of the Southern District of New York, would, in theory, prevent the plaintiffs from immediately enforcing any judgment against Chevron in the case pending in Ecuador.

No such judgment has been issued yet, but Chevron is keen to close off opportunities for the plaintiffs to collect damages in the United States and elsewhere. Chevron has no assets in Ecuador.

The plaintiffs are seeking up to $113 billion in damages for alleged pollution in the Lago Agrio area of Ecuador.

Chevron has claimed that the allegations are part of an extortion scheme. Last week it filed a federal racketeering suit against the plaintiffs' legal team and other supporters (Greenwire, Feb. 2).

Kaplan wrote in yesterday's order, which was prompted by the racketeering complaint, that he was convinced that Chevron faces "a series threat of immediate and irreparable injury."

That would be the case even if there were no allegations of "corruption or undue influence," Kaplan said. That is because the plaintiffs are understood to have a plan to file multiple enforcement actions around the world as soon as the Ecuador judge issues a judgment.

That strategy "may be to create so much disruption to Chevron's operations as to coerce a settlement without regard to the merits of the case," he added.

Kaplan's order prevents attorneys for the plaintiffs from being involved in "any action or proceeding" relating to enforcement of a judgment entered in Ecuador.

Kaplan has for some months indicated that he believes the plaintiffs' lead attorney, Steve Donziger, has engaged in questionable activities.

His concerns were raised in large part by outtakes from a documentary about the Ecuador case, called "Crude," in which Donziger was seen talking about the tactics his team was using to influence the trial.

In the outtakes, Donziger said that the Ecuadorean court system was corrupt and that the only way to succeed was by "pressuring and intimidating" the Ecuadorean courts.

"Donziger's own words raise substantial questions as to his possible criminal liability and amenability to professional discipline," Kaplan wrote in a ruling last November in which he allowed Chevron to depose Donziger (E&ENews PM, Nov. 5, 2010).

Yesterday's order, which relates to the racketeering allegations, expires on Feb. 22. At a hearing currently scheduled for Feb. 18, Kaplan will consider whether to impose a more concrete injunction.

Kent Robertson, a Chevron spokesman, welcomed the order but noted that "only the government of Ecuador ... can take the necessary steps to bring an end to the fraud that is being perpetrated in its court system."

The hearing marked the first appearance in the case of Sheldon Elsen of New York law firm Orans, Elsen, Lupert & Brown, the latest in a long line of lawyers to have become involved in the litigation.

In an interview, Elsen said he is representing the interests of the Ecuadorean plaintiffs and was brought in in response to the racketeering suit because the law firms already involved in the case, including Washington law firm Patton Boggs, were all named in the complaint.

"I'm independent," he said.

Elsen said he was not unduly concerned by the order, in part because -- as he mentioned to Kaplan at the hearing -- U.S. courts cannot dictate what happens in overseas courts.

The plaintiffs will, Elsen added, nevertheless take the order seriously.

"When a federal judge issues a restraining order," he said, "you don't thumb your nose at it."

Click here to read the order.

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