New York – A federal judge on Tuesday blocked U.S. courts from being used to collect a $9 billion Ecuadorean judgment against Chevron for rainforest damage, saying lawyers poisoned an honourable quest with their illegal and wrongful conduct.
“Justice is not served by inflicting injustice. The ends do not justify the means,” U.S. District Judge Lewis A. Kaplan wrote. The judge said it was a sad outcome to have to rule that the Ecuadorean court judgment “was obtained by corrupt means,” because it will likely never be known whether there was a case to be made against the San Ramon-based oil company.
“It is distressing that the course of justice was perverted,” Kaplan wrote in a nearly 500-page ruling that followed a trial last year.
He said a New York City lawyer, Steven Donziger, and Ecuadorean lawyers corrupted the case in Ecuador by submitting fraudulent evidence, coercing a judge and arranging to write the multibillion-dollar judgment themselves by promising $500,000 to the Ecuadorean judge to rule in their favor.
Donziger, criticized heavily in the ruling, said he will seek an expedited appeal of “an appalling decision resulting from a deeply flawed proceeding.”
He said Kaplan was “wrong on the law and wrong on the facts.” He accused Kaplan of letting “his implacable hostility toward me, my Ecuadorean clients and their country infect his view of the case.”
In a statement, Chevron called the decision “a resounding victory for Chevron and our stockholders” and said any court that respects the rule of law will find the Ecuadorean judgment “illegitimate and unenforceable.”
The case resulted from a long-running court battle between Amazon rainforest residents and oil companies.
In February 2011, a judge in Ecuador issued an $18 billion judgment against Chevron in a lawsuit brought on behalf of 30,000 residents. The judgment was for environmental damage caused by Texaco during its operation of an oil consortium in the rainforest from 1972 to 1990. Chevron later bought Texaco.
Ecuador’s highest court last year upheld the verdict but reduced the judgment to about $9.5 billion.
Chevron has long argued that a 1998 agreement Texaco signed with Ecuador after a $40 million cleanup absolves it of liability. It claims Ecuador’s state-run oil company is responsible for much of the pollution in the oil patch that Texaco quit more than two decades ago.
The Ecuadorean plaintiffs said the cleanup was a sham and didn’t exempt third-party claims.
The decision came in a lawsuit Chevron brought in Manhattan against Donziger and two of his Ecuadorian clients to prevent any of them from profiting from what the oil company characterized as a fraud.
Kaplan on Tuesday barred Donziger and the other defendants from trying to collect the judgment through U.S. courts and said they may not take any actions to profit from the judgment.
A lawyer for Donziger — Richard Friedman — said the ruling was disappointing but not unexpected. He predicted it will be reversed on appeal.
Donziger’s appeals lawyer, Deepak Gupta, said Kaplan’s ruling amounted to “what is in effect a global anti-collection injunction that would preclude enforcement of a judgment from another country in every jurisdiction.” He said it was indistinguishable from a ruling by Kaplan in early 2011 banning collection of the judgment anywhere in the world. That was decision was struck down on appeal.
During the trial, Donziger acknowledged that he stood to make about $600 million if the $9 billion judgment was approved.
Donziger said in his statement Tuesday that his clients will try to collect the judgment in other countries.
“The villagers deserve justice, and I am confident they will get it despite Chevron’s effort to flout the rule of law,” he said.
Kaplan said in his decision that it did not matter if the efforts by the villagers came in a just pursuit.
“There is no ‘Robin Hood’ defence to illegal and wrongful conduct. And the defendants’ ‘this-is-the-way-it-is-done-in-Ecuador’ excuses — actually a remarkable insult to the people of Ecuador — do not help them,” he wrote. “The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador — and they knew it.”