Supreme Court Declines Appeal Of Order Dismissing $18 Billion Injunction Suit

by Tara Arick on October 12, 2012 · 0 comments

in Civil Procedure

- From LexisNexis® Mealey’s™ Daily Legal News.

The U.S. Supreme Court on Oct. 9 declined to grant a petition by Chevron Corp. to review the January opinion of a Second Circuit U.S. Court of Appeals panel instructing the dismissal of a lawsuit by the company for an injunction to prevent the enforcement of the $ 18 billion judgment entered in a Lago Agrio, Ecuador, court because the New York Uniform Foreign Country Money-Judgments Recognition Act does not create an affirmative cause of action (Chevron Corp. v. Hugo Gerardo Camacho Naranjo, et al., No. 11-1428 [consolidated], U.S. Sup.).

Ecuador

Chevron is involved in an international dispute over the operations of an oil consortium that allegedly caused environmental contamination and personal injuries in the Oriente region of Ecuador, according to the record.

Chevron inherited the dispute in 2001 when it merged with Texaco Inc.

Texaco was sued in the Southern District of New York in the case fashioned Maria Aguinda, et al. v. Texaco Inc. (No. 93-7527, S.D. N.Y.). Texaco was granted a motion to dismiss based on forum non conveniens in 2001. A Second Circuit U.S. Court of Appeals panel affirmed the order after concluding that the court in Ecuador provided an adequate alternative forum (303 F.3d 470).

Chevron filed a civil RICO complaint in February 2011 in the Southern District of New York against Steven R. Donziger, his New York law firm, environmental watchdog Frente de Defensa de La Amazonia, its co-founder Luis Francisco Yanza, Lago Agrio plaintiff (LAP) representatives Hugo Gerardo Camacho Naranjo and Javier Piaguaje Payaguaje and others in litigation pending in Lago Agrio (Chevron Corp. v. Steven R. Donziger, et al., No. 11-691, S.D. N.Y.).

Donziger was one of the attorneys representing the plaintiffs in Maria Aguinda, et al. v. Texaco Inc. Some 48 of the Aguinda plaintiffs sued Chevron in 2003 in Lago Agrio.

In addition to damages, Chevron seeks a temporary restraining order, a preliminary injunction and a permanent injunction against Donziger; Joseph Kohn of Kohn, Swift & Graf in Philadelphia; Emery, Celli, Brinckerhoff & Abady in New York; Motley Rice in Mount Pleasant, S.C.; and Patton Boggs in New York to prevent the enforcement in the United States or abroad of a judgment in the Lago Agrio litigation. Chevron also seeks damages as allowed in the RICO Act and a declarative judgment that any judgment against it in the Lago Agrio litigation is unenforceable anywhere in the world.

The Lago Agrio court entered findings of fact and damages on Feb. 14, 2011, against Chevron. The judgment against Chevron is $ 8.6 billion in compensatory damages, according to the record. In addition, the Lago Agrio court found evidence to grant punitive damages equal to 100 percent of the compensatory damages. An appellate court in Ecuador issued an opinion in January 2012 affirming the judgment.

Injunction Appeal

Naranjo and Payaguaje appealed a preliminary injunction granted in March 2011 by U.S. Judge Lewis A. Kaplan of the Southern District of New York prohibiting the LAP from attempting to enforce the Ecuadorian judgment (Chevron Corp. v. Hugo Gerardo Camacho Naranjo, et al., No. 11-1150 [consolidated], 2d Cir.).

A Second Circuit panel issued a summary order on Sept. 19, 2011, vacating the preliminary injunction.

Chevron filed an emergency motion on Jan. 5, 2012, in the Second Circuit U.S. Court of Appeals for relief from the order and for reargument. The LAP filed a response in opposition to the emergency motion on Jan. 13. Donziger filed notice of joinder in the LAP response on Jan. 13.

Judges Rosemary S. Pooler, Richard C. Wesley and Gerard E. Lynch issued a motion order on Jan. 19 denying the emergency motion. Chevron’s theory of the New York Recognition Act does not support Chevron’s theory for an enforcement injunction, according to the panel.

“The Recognition Act and the common-law principles it encapsulates are motivated by an interest to provide for the enforcement of foreign judgments, not to prevent them,” according to the panel.

“Chevron would turn that framework on its head and render a law designed to facilitate ‘generous’ judgment enforcement into a regime by which such enforcement could be preemptively avoided.”

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