Chevron Corp. v Steven Donziger, et al., 11 Civ. 0691 (LAK) (S.D.N.Y. 2012), is the District Court’s most recent order in the array of cases concerning the multibillion judgment entered against Chevron in Ecuador. We have posted on the matter, including with respect to the District Court’s original preliminary injunction, the Second Circuit’s reversal, and on the reaction of other courts to the District Court’s approach to the Ecuadorian judgment.
The current opinion grants in part but denies in largest part a motion to dismiss Chevron’s claims against attorney Steven Donziger. Chevron’s claims include, as the District Court summarized,
that Steven Donziger, a New York lawyer, and others based in the United States, here conceived, substantially executed, largely funded, and significantly directed a scheme to extort and defraud Chevron, a U.S. company, by, among other things, (1) bringing a baseless lawsuit in Ecuador; (2) fabricating (principally in the United States) evidence for use in that lawsuit in order to obtain an unwarranted judgment there; (3) exerting pressure on Chevron to coerce it to pay money not only by means of the Ecuadorian litigation and Judgment, but also by subjecting Chevron to public attacks in the United States and elsewhere based on false and misleading statements, (4) inducing U.S. public officials to investigate Chevron on the basis of false claims, and (5) making false statements to U.S. courts and intimidating and tampering with witnesses in U.S. court proceedings to prevent Chevron from obtaining evidence of the fraud.
The District Court worked through each of the claims made on the basis of these factual assertions and found, among other things:
That Chevron’s pleading satisfied the Second Circuit’s extremely demanding standard for pleading claims under the Racketeer Influenced and Corrupt Organization Act (RICO). To arrive at that conclusion, the District Court needed to analyze the aspect of the claim that is of most current interest to practitioners of international litigation: whether RICO applied extraterritorially. The Second Circuit ruled that it did not, in the Norex case –Norex Petroleum Ltd. v Access Indus., Inc., 631 F.3d 29 (2d Cir. 2010), which applied to RICO the extraterritorial analysis of the Supreme Court’s decision in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010). (Here is our post on Norex; for posts on Morrison, search our blog for “Morrison”.) The District Court here determined that Norex did not determine that RICO claims could never apply to cases where some of the conduct occurred outside the U.S.; that indeed the matters giving rise to the initial and significant RICO prosecutions included matters with substantial non-U.S. contacts; and that the key issues here that led to the conclusion that RICO did cover the allegations included that Donziger is a U.S. citizen, that Chevron is a U.S. company, that much of the alleged misconduct occurred here, and that much of the alleged harm occurred here.
That the pleading of several of the state law claims, including unjust enrichment, were fatally deficient, since Chevron has not lost money as a result of the alleged misconduct.
What is also noteworthy in the District Court’s decision is the limited discussion of the fact that the allegedly improper Ecuadorian judgment has thus far not been overturned. Ecuadorian courts have preliminarily spoken to the validity of that judgment and have not rushed to condemn it as having been fraudulently or unlawfully procured. The District Court here did not address whether the analysis of RICO should change given the comity to non-U.S. judicial regimes that other courts have commented on in connection with this case.