Chevron Vs. Ecuador: $19 Billion Environmental Contamination Case Takes More Bizarre Turns in New York Court

on October 18 2013 11:27 AM
Ecuador Chevron
Humberto Piaguaje, a tribal leader of the indigenous Secoya people of Ecuador, holds up a letter to the American people, in Washington in May 2011. The letter denounces environmental damage caused by Texaco, now owned by Chevron. Reuters

The trial over a lawsuit commenced by American oil company Chevron (NYSE:CVX) against a group of Ecuadorian plaintiffs took off on Tuesday -- to a very rocky start.

This was just the latest chapter of a huge complex legal saga involving a $19 billion environmental contamination case, which has now spanned for over two decades and centers on the Lago Agrio region of Ecuador’s Amazon rainforest where Chevron’s predecessor operated from 1964 to 1990. Ecuador has long accused the oil company of destroying the local environment while damaging the health of local indigenous peoples and filed suit against Chevron.

A court in Ecuador had earlier ordered Chevron to pay out $18 billion in damages (subsequently increased to $19 billion), but Chevron has since been fighting against the decision.

Chevron, which inherited the 1993 lawsuit when it bought Texaco in 2001, had filed a RICO (Racketeer Influenced and Corrupt Organizations Act) suit in 2011 against the Ecuadorian plaintiffs and their American lawyer, Steven Dozinger. By invoking the statute that the U.S. government frequently uses in prosecutions of organized crime figures, Chevron argued that the Amazon Defense Front, as the plaintiff group is known, had entered into its lawsuit fraudulently, through extortion, mail fraud, wire fraud, and witness tampering.

In a surprising turn of events, Chevron asked Federal Judge Lewis A. Kaplan, who had been overseeing the case in New York, to block a jury from deciding its fraud claims, in exchange for promising to drop the multi-billion-dollar damage claim. The company also requested the barring of all evidence of environmental damage from the case, and to conduct secret hearings with certain witnesses.

Ecuador’s legal team took this move as a sign that Chevron did not even believe its own claims. “Chevron has shown over and over that its only legal strategy is to outspend everyone and continue to run from the law for another twenty years,” attorney Chris Gowen, who is advising the Ecuadorians, told CSRwire.

“When a litigant tries to avoid a jury, you can be certain that [the] litigant knows it has no case,” he added.

Judge Kaplan, who has largely sided with Chevron all along, was subject of a recusal request from the Ecuadorian plaintiffs, and appeared before a three-judge panel on September 25. The request to remove him was unsuccessful, and Kaplan is still overseeing the case, though he directed U.S. Magistrate Judge James C. Francis to decide this issue, the Ecuadorian Embassy in Washington DC told International Business Times.

That hearing took place on October 15, and as reported by the Wall Street Journal, it got off to an acrimonious start. Witnesses on both sides kept referring to the environmental case and to previous trials, which are not the subject of the current legal process, which significantly slowed down the hearings.

"We are not trying the Ecuadorean environmental case, nor the criminal case," said Judge Kaplan. "They are [just] background."

Several witnesses testified against Dozinger and the Ecuadorians -- including Christopher Bogart, chief executive of litigation financing firm Burford Capital, which helped Dozinger finance the case. Bogart said he ended his participation in the case after concerns of misconduct he learned from private emails. 

The Ecuadorian Embassy's statement reveals, however, that part of the evidence provided to Judge Francis did not show any wrongdoing on the part of the Ecuadorians. Judge Francis found no validity to Chevron’s claims that confidential Ecuadorian emails revealed wrongdoing by the Quito government. Such emails, which were provided to Chevron anonymously, the judge decreed, did not constitute evidence against the plaintiffs, and have since been removed from the case.

The Ecuadorian government, which has backed the plaintiffs, released a statement through its embassy in Washington, declaring that this “latest attempt by Chevron is part of a massive lobbying and [public relations] campaign to hinder the judicial process and distract from the company’s failure to accept responsibility for destroying the health and habitat of the poor, indigenous peoples of the Ecuadorian Amazon.”

Ecuador’s ambassador to the U.S., Nathalie Cely-Suárez, also blasted Chevron for “using every trick up its sleeve to distract from the real issue that they caused enormous environmental damage… Chevron apparently believes that by saying something loudly enough and constantly repeating it, it somehow becomes fact. Fortunately, the law does not work that way.”

The president of Ecuador President Rafael Correa has even called for a global boycott of Chevron.

The trial continues, with a new hearing scheduled next week.

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