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U.S. Judge Slaps Down Chevron Request for $32 Million in Attorney Fees for RICO Case

Submitted by: The Law Offices of Steven Donziger

Categories: Business Ethics, Human Rights

Posted: Apr 29, 2014 – 05:15 PM EST


NEW YORK, Apr. 29 /CSRwire/ - Chevron has lost an important battle in its effort to hurt Steven Donziger’s ability to continue representing indigenous groups in Ecuador who won a historic $9.5 billion judgment against the company for deliberately polluting the Ecuador rainforest.

In a short order issued today, federal judge Lewis A. Kaplan terminated Chevron’s motion for $32 million in fees, which was headlined by an hourly billing rate of $1,140 for the company’s lead outside litigator at Gibson Dunn & Crutcher, Randy Mastro. Chevron had said the $32 million amount accounted for only a small portion of the cost of bringing the suit.

Judge Kaplan said Chevron could renew the motion if its RICO decision survives what is expected to be a heavily scrutinized review by the Second Circuit Court of Appeals in New York. Donziger’s legal team believes the decision in favor of the oil giant is void for lack of standing and numerous other factual and legal flaws including Chevron’s bribing of a key trial witness, as summarized in this motion and this published document, Chevron's Mockery of Justice.

The order is the second retreat by Kaplan since he issued his 487-page factual findings in favor of Chevron in early March. Donziger said he is disputing “each and every finding” of Kaplan and that his lawyers are preparing a detailed rebuttal to the decision, which is expected to be released publicly in June.

Just last week, Judge Kaplan modified his original order such that Donziger does not have to turn over his equity interest in the contingency-fee case to Chevron if he prevails on appeal.

“This is a nice victory for Steven Donziger on the eve of what we expect will be a very searching appellate review of a highly flawed and controversial decision,” said Karen Hinton, a spokesman for Donziger, who has represented indigenous and farmer communities in Ecuador since 1993.

“For many reasons, the trial that produced Chevron’s absurd request for fees was a truly Kafkaesque proceeding where the defendants were not allowed to put in evidence of Chevron’s contamination to prove their judgment was legitimate,” said Hinton.

In his motion opposing Chevron’s request for fees, Donziger pointed out that Chevron dropped its demand for $60 billion in damages on the eve of trial to avoid a jury of impartial fact finders, and then tried to hit him with a $32 million bill anyway – a clear violation of the Seventh Amendment right to a jury trial, according to his legal papers. Donziger also argued that there is clear and unambiguous legal authority in the Second Circuit that bars any award of legal fees in RICO cases that do not also involve a request for money damages by the prevailing party.

“Faced with the prospect of having a jury evaluate its evidence, Chevron balked and dropped its claim for damages in its entirety,” Donziger’s counsel, Deepak Gupta, had argued. “Having made that decision, Chevron sought to destroy Mr. Donziger on the back end… But when Chevron dropped its damages claim, it also dropped any possibility of a fee award.”

Donziger, who works from a small Manhattan apartment where he lives with his wife and son, made it clear that the Chevron fee request threatened to drive him into bankruptcy such that he would no longer be able to represent his clients, who are pursuing Chevron assets in Canada, Brazil and Argentina to pay for a clean-up of their ancestral lands. The fact Judge Kaplan did not clearly rule against Chevron’s fee request will continue to have a chilling effect on the ability of the rainforest communities and Donziger to finance the case, which is Chevron’s main purpose, Hinton said.

Renowned trial lawyer John Keker had previously accused Kaplan of showing "implacable bias" toward Donziger, whom Keker formerly represented. Keker said Chevron was using Kaplan’s courtroom to try to “win on might what it cannot win on the merits.”

Hinton said Kaplan’s decision against Chevron was a way to try to cast himself as “reasonable” even though his underlying RICO decision represents “a judicial philosophy that would allow a U.S. trial judge to overrule the Supreme Court of another country.

“Such a decision, if allowed to stand, would wreak havoc with our international legal system and is something no U.S. court would ever accept if the situation was reversed,” said Hinton.

Appellate briefs for Donziger and two of his Ecuadorian clients are due in early July before the Second Circuit Court of Appeals. Argument could take place as early as the Fall of this year.

The New York federal appellate court already reversed Kaplan once in the case when he tried to impose an unprecedented global injunction purporting to bar the Ecuadorians from enforcing their judgment in other countries. Kaplan did not even hold an evidentiary hearing before issuing that injunction.

Kaplan also made disparaging comments about the Ecuadorians, calling them the “so-called” plaintiffs and referring to Donziger as a “field general” rather than a lawyer. The Second Circuit twice granted very rare hearings to have him recused from the case, but ultimately declined to act.

For background on Judge Kaplan's bias as explained in various legal petitions, see here and here.

For background on the evidence against Chevron, see this summary and this video overview. For a taped interview of Donziger, see here.

The decision comes at a time that Chevron CEO John Watson appears to be nervous about the company’s Ecuador liability. Watson and Chevron General Counsel R. Hewitt Pate recently moved the Chevron annual shareholder’s meeting to a remote town in Texas in an apparent effort to avoid shareholder critics, many of whom are pushing resolutions related to the Ecuador liability that challenge management.

Chevron also faces a hearing in November before Canada’s Supreme Court to determine whether a trial can take place in that country to enforce the Ecuador judgment. Chevron owns approximately $15 billion in assets in Canada, which is more than enough to pay for the entirety of the Ecuador judgment, said Hinton.

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