Chevron Wins Patton Boggs Countersuit Dismissal Over Ecuador

Apr 29, 2014 8:24 pm ET

(Updates with judge’s ruling in fourth paragraph.)

April 29 (Bloomberg) -- Chevron Corp. won dismissal of Patton Boggs LLP’s lawsuit accusing the energy company of “malicious prosecution” for suing to bar lawyers from trying to collect on a $9.5 billion judgment a New York judge ruled was a fraud.

Patton Boggs had sued Chevron over a court order imposed in the oil company’s case, in which it was blamed for pollution in Ecuador’s rain forest, saying the ruling had “choked off” the Ecuadoreans’ ability to finance their suit.

Patton Boggs helped represent Ecuadorean farmers and villagers for a portion of their decades-long legal battle against Chevron, the second-largest U.S. oil company, and provided as much as $15 million in financing. Patton Boggs had also sought access to $21.8 million Chevron had posted as a bond.

U.S. District Judge Lewis Kaplan cited a magistrate judge’s report rejecting Patton Boggs’s claim of malicious prosecution in his decision. He also said the law firm had no legal right to make a claim on the bond money.

Charles Talisman, Patton Boggs’s general counsel, said the decision “was expected and does not materially impact the posture of the case.”

Kaplan earlier this year concluded that Steven Donziger, a New York lawyer representing Ecuadorean citizens, used bribery and fraud to obtain the award against the oil company.

No Impact

In a separate ruling today, Kaplan denied Chevron’s request for $32 million from Donziger and his associates. He said Chevron can’t collect until after Donziger’s challenge of Kaplan’s ruling is heard by the federal appeals court in Manhattan.

“There is a case for deciding the fee motion now so that the entire controversy will be before the court of appeals at one time,” Kaplan said. “On the other hand, awaiting the outcome of the now-pending appeal in the Court of Appeals might alter the result or eliminate the need for a determination of the fee motion,” he said, ruling to defer the motion.

Toxic Waste

In the underlying 20-year-old environmental case, Donziger and other lawyers for people in Ecuador’s Lago Agrio area sought damages for Texaco Inc.’s alleged dumping of toxic drilling wastes from 1964 until about 1992 that polluted about 1,500 square miles (3,885 square kilometers). The lawsuit continued against Chevron after it acquired Texaco in 2001.

Chevron, based in San Ramon, California, was ordered to pay $19 billion to a group of farmers and fishermen by the Ecuadorean court. The award was reduced to $9.5 billion on Nov. 12 by the Ecuadorean National Court of Justice, the nation’s highest tribunal.

The law firm’s case is Patton Boggs LLP v. Chevron Corp., 12-cv-09176, U.S. District Court, Southern District of New York (Manhattan). The racketeering case is Chevron Corp. v. Donziger, 11-cv-00691 in the same court.