Supreme Court Refuses to Hear Chevron's Appeal re $18 Billion Ecuador Contamination Case

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[author: Matt Bingham]

On Tuesday, the U.S. Supreme Court denied Chevron's petition for certiorari from a decision of the Second Circuit Court of Appeals. Chevron had asked the federal courts for an injunction barring the enforcement of a $18 billion Ecuadorian judgment anywhere in the world. The District Court for the Southern District of New York agreed with Chevron's accusations of fraud and manipulation of evidence against the plaintiffs and their attorneys and granted the injunction in March 2011. The Second Circuit vacated the injunction in January of this year and Chevron appealed to the Supreme Court. This U.S. case stems from a case in Ecuador, in which an Ecuadorian judge awarded over $18 billion to local farmers and indigenous groups in February 2011.  (I blogged about the Ecuadorian court's decision here.)

The allegations in the Ecuador case are based on extensive contamination of surface waters in the Lago Agrio area of the Amazon rainforest from Texaco's drilling operations in the 1970's and 80's. (Texaco was acquired by Chevron in 2001.) The judgment handed down in 2011 is being appealed in Ecuador by both sides. Since Chevron has no assets in Ecuador, the plaintiffs are expected to enforce the judgment by convincing courts in countries where Chevron does have assets to seize those assets. The U.S. case was a pro-active attempt by Chevron to prevent these efforts.

Interestingly, the plaintiffs originally filed the case in the Manhattan District Court. From 1993 to 2001, Texaco litigated the contamination claims against 30,000 affectados and eventually convinced the court that the case could and should be tried in Ecuador. Chevron will apparently now be arguing the exact opposite all around the world -- that the judgment of the Ecuadorian court should not be enforced because it is the product of fraud and corruption.

For more on the dramatic background of this case and the lawyers involved, here is an excellent article from The New Yorker (Jan. 2012). And here is a March 2011 Businessweek article, focused on the conflicting narratives about the plaintiffs' lead lawyer, Steven Donziger.