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Chevron Shielded From 9 Billion Verdict as Court Rejects Appeal

Chevron Shielded From $9 Billion Verdict as Court Rejects Appeal

June 19, 2017
Chevron will not have to pay the $8.9 billion judgment that was a result of a decades-long battle over oil pollution in Ecuador

The U.S. Supreme Court left intact a ruling that protects Chevron Corp. from having to pay $8.6 billion in a decades-long battle over oil pollution in Ecuador, rebuffing an American lawyer who was found to have committed fraud in the Central American country’s court.

The attorney, Steven Donziger, said a federal appeals court had exceeded its authority by letting Chevron use a U.S. racketeering law to block enforcement of the Ecuadorian award. The appeals court said Donziger and his team of lawyers engaged in "a parade of corrupt actions," culminating with a promise to pay a judge $500,000 to release a ghostwritten opinion as his own.

The rejection leaves Donziger and Ecuadorian plaintiffs in the case with fewer options for collecting the award, which the company has refused to pay. Chevron doesn’t have any assets in Ecuador.

It’s the latest development in a legal saga that started in 1993, when Donziger and other lawyers sued Texaco Inc. in New York, claiming the oil company contaminated a large swath of the Ecuadorian rainforest by filling hundreds of unlined waste pits with toxic, cancer-causing drilling materials. Chevron later acquired Texaco and its potential liabilities.

The U.S. case was dismissed, forcing Donziger to refile it in Ecuador. A court there eventually concluded Chevron was liable, ordering it to pay $8.6 billion.

Chevron says the judgment was the product of fabricated evidence, coercion and bribery. The oil company said Donziger and his team blackmailed the judge into appointing their hand-picked expert to assess damages, then arranged to have the report written by an American consultant.

At the Supreme Court, the case tested the bounds of the Racketeer Influenced and Corrupt Organizations Act, a federal law Chevron invoked to try to block Donziger from collecting the judgment in the U.S.

Donziger’s attorney, Deepak Gupta, said in court papers that the case marked the first time a federal appeals court had authorized that type of pre-emptive attack on a foreign damage award.

"The decision sets federal courts down a path that they have never gone," Gupta wrote.

Chevron said there was nothing unprecedented about the lawsuit.

"Chevron pleaded and proved a pattern of racketeering and fraud that reached well beyond the misconduct in the Ecuadorian proceedings, to include extensive activities in the United States and its courts and other federal agencies," the company argued.

By Greg Stohr

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Licensed content from Bloomberg, copyright 2016.

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