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U.S. Appellate Court Again Rejects Chevron Allegations Over $18 Billion Ecuador Lawsuit

Written by aaa   
Friday, 15 June 2012 00:19
The D.C. Circuit Court of Appeals today dealt another setback to Chevron over its $18 billion Ecuador liability, reversing a lower court decision that allowed the oil giant access to documents from a prominent consulting group for the Amazon rainforest communities that sued the company.

The decision, which came down Tuesday, represents a continuing trend in U.S. courts rejecting Chevron's attempt to characterize the treatment of expert testimony in the Ecuador trial as "fraudulent" as part of a campaign to evade paying the judgment.
"This is a highly significant decision against Chevron that signals yet again that its legal prospects in the Ecuador case are trending downward," said Karen Hinton, the U.S. spokesperson for the rainforest communities. "Simply put, Chevron has fabricated allegations of 'fraud' against lawyers for the plaintiffs as part of its own scheme to evade the Ecuador judgment."

"Whenever courts look carefully at the evidence, they seem to understand that Chevron is playing a game a smoke and mirrors with the facts and the law," said Hinton.

As of now, three-judge panels in all three federal circuits to hear Chevron's "fraud" claims against the Ecuador plaintiffs and their counsel have rejected them outright or sent them back to trial courts for further consideration. In addition, 15 federal trial courts have refused the oil giant's attempts to obtain a finding that a "fraud" occurred in the Ecuador trial and in fact no U.S. court has made any final determination in Chevron's favor with respect to the allegations.

One United States federal district court in Vermont, after reviewing Chevron's evidence, specifically held that there existed "no evidence of fraud, false pretenses or undue influence" in the preparation of the expert testimony. Another U.S. federal court in Tennessee found that Chevron was "making a mountain out of a molehill" when alleging fraud and emphasized that Chevron's discovery requests in the U.S. were "quickly spiraling out of control."

The Third Circuit Court of Appeals, based in Philadelphia, also ruled against Chevron on the "fraud" issue in a decision in February 2011 related to the oil giant's attempts to obtain the case file of Kohn Swift & Graf, which earlier represented the Ecuadorian plaintiffs.

The opinion by the D.C. Circuit follows the Second Circuit Court of Appeal's decision in January vacating "in its entirety" an injunction blocking the Ecuadorians from enforcing their judgment entered by Judge Lewis A. Kaplan in New York. In the latest decision, the D.C. Circuit ruled that the trial court erred in relying on Judge Kaplan's now vacated factual findings that a "fraud" occurred (made without an evidentiary hearing) to decide whether the privileged documents should be produced.

The D.C. Circuit found that the trial court "did not independently explain what facts would support" its conclusion that Chevron was entitled to the documents, which are in the possession of the Weinberg Group, a well-known consulting business that helped to coordinate the preparation of six expert reports for the plaintiffs. The court also said "it is not clear" that the trial court applied the proper legal test in its decision based on established law in the Circuit.

The D.C. Circuit ruling is yet another setback for Chevron's lead outside law firm in the case, Gibson Dunn & Crutcher. Gibson Dunn in 2010 announced that it was launching a new practice group to defend corporations against "fraudulent" judgments in foreign courts, heavily marketing its supposed success on behalf of Chevron in the Ecuador case.
Since then, the law firm has been hit with findings it committed multiple ethical violations on behalf of Chevron and has suffered a string of devastating defeats over the environmental litigation in courts around the world – including a loss at the trial and appellate levels in Ecuador that led to the largest civil judgment ever against an oil company.

Just last week, the rainforest communities filed an enforcement action against Chevron in Canada to seize assets that would be used to satisfy the Ecuador judgment, which Chevron has refused to pay. At the Chevron annual meeting in May, shareholders dealt a stunning rebuke to Chevron management over its mishandling of the Ecuador litigation, with 40 institutional shareholders urging the company to settle the matter before inflicting "further damage" to Chevron's reputation around the world.

And last week, Rep. Jan Schakowsky (D-IL), called on the Securities and Exchange Commission to determine whether Chevron is violating securities laws by misleading shareholders about the Ecuador litigation. The Congresswoman cited a report by securities lawyer Graham Erion detailing Chevron's misleading information.

The Gibson Dunn lawyer who argued the D.C. Circuit case, Theodore Boutrous, is a well-known appellate advocate who recently represented Wal-Mart before the Supreme Court. James Tyrell of Patton Boggs argued for the Ecuadorian plaintiffs.

Last year an Ecuador trial court, after eight years of proceedings, found that Chevron deliberately dumped billions of gallons of toxic waste into Amazon waterways when it operated in Ecuador from 1964 to 1992. The dumping decimated indigenous groups and caused a dramatic spike in cancer rates, killing numerous people, according to evidence before the court.

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