Legal Issues

'Down the Rabbit Hole' in the Chevron Pollution Case


An employee of state-owned Petroecuador working on the environmental cleaning of 30-year old oil spillage in Ecuador's Rumipamba commune in 2011

Photograph by Rodrigo Buendia/AFP via Getty Images

An employee of state-owned Petroecuador working on the environmental cleaning of 30-year old oil spillage in Ecuador's Rumipamba commune in 2011

What does it mean to be a lawyer? What if it turns out your client has committed fraud? Does that make you, the lawyer, liable for fraud?

These are some of the questions spinning out of the epic 20-year legal battle over whether Chevron (CVX) is responsible for oil pollution in the rain forest in northeastern Ecuador. An Ecuadorian court has held the U.S. energy company liable—to the tune of $19 billion. Chevron refuses to pay because it says the Ecuadorian judiciary and American plaintiffs’ lawyers conspired in a vast racketeering plot to extort from the multinational. The plaintiffs’ lawyers deny that.

The inquiry into the nature and norms of legal advocacy arise from a June 18 filing by Patton Boggs in federal court in New York. The eminent Washington law firm protests that for its trouble in representing farmers and Indians in the Amazon it has become enmeshed in ancillary fraud litigation brought by Chevron’s eminent Los Angeles-based law firm, Gibson, Dunn & Crutcher. Here’s a taste from the Patton Boggs broadside:

If Chevron is correct that the Ecuadorian judgment is illegitimate, the solution is simple: courts will find it unenforceable. The proper solution is not, however, to sue any lawyer who dares even argue that the judgment is entitled to respect. Chevron’s proposed counterclaims would take us straight down the rabbit hole: litigation (the proposed counterclaims) about lawyers’ conduct vis a vis a litigation (the RICO Action and appeals and 28 U.S.C. Section 1782 proceedings) that is itself about lawyers’ conduct vis a vis yet another litigation (the Lago Agrio litigation). This cycle must end.

Follow that? Didn’t think so. Here’s what’s going on: Rather than pay what it asserts is a fraudulent Ecuadorian judgment (the culmination of “the Lago Agrio litigation” referred to above), Chevron has sued the Ecuadorian plaintiffs and their lawyers in New York for civil racketeering under a federal statute known as RICO. While Patton Boggs, a corporate firm known for its trade regulation and lobbying practices, was not originally part of the plaintiffs’ legal team, it leapt into the fray three years ago to plan a strategy to enforce the Ecuadorian judgment in third countries because Chevron does not have any assets to speak of in Ecuador. Based on Patton Boggs’s planning, the plaintiffs are seeking to persuade the judiciaries of Canada, Argentina, and Brazil to allow them to seize Chevron assets in those nations.

Meanwhile, Patton Boggs complains that Chevron and Gibson Dunn are improperly branding it part of a racketeering enterprise simply because Patton Boggs had the temerity to do its job as an aggressive advocate. Not so, says Chevron: Patton Boggs, according to the company, became a part of the conspiracy when it knowingly concealed and facilitated patent wrongdoing, including the ghostwriting of the Ecuadorian judgment. Gibson Dunn is pressing ahead with the RICO trial, now scheduled for October.

Patton Boggs hasn’t been immune from the temptation to sue opposing lawyers. It has filed two suits against Gibson Dunn as part of the Chevron hostilities—to no discernible effect. And Patton Boggs separately has been accused of fraud in a court filing by the former financier of the plaintiffs’ case, Burford Capital. “If Patton Boggs thinks this is business as usual, it’s got a lot of explaining to do,” says Gibson Dunn partner Randy Mastro, in an interview.

Notice how the legal knife fight doesn’t have much—anything?—to do with cleaning up oil in the rain forest? Wonder why the U.S. courts are chewing up taxpayer resources to provide these powerful law firms with a venue to bash each other’s brains out? Surprised to hear that all of this started with a lawsuit originally filed in 1993, concerning activity in Ecuador in the 1970s and 1980s?

No wonder. That’s the down-the-rabbit-hole aspect of the Chevron-Ecuador case. As Alice could attest, it’s more than a little bewildering.

Barrett_190
Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, which tells the story of the Chevron oil pollution case in Ecuador, will be published by Crown in September 2014. His most recent book is GLOCK: The Rise of America’s Gun.

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