Washington lobbying firm Patton Boggs is facing a legal battle against oil giant Chevron following a US court ruling that the New York court had jurisdiction to hear fraud claims being pursued against the firm.
On Monday US District Judge lewis Kaplan has said he had “difficulties” with Patton Boggs’ argument that the New York court did not have jurisdiction to hear the case.
The mammoth battle has been building since 2010 after partner James Tyrrell was drafted in by a group of Ecuadorian villagers to help enforce a $18bn judgment – later reduced to $9bn- against Chevron for polluting the rainforest. The villagers had originally turned to plaintiff lawyer Steven Donziger to fight the case.
But the oil giant refused to pay and instead filed a racketeering claim against Donziger, alleging that he had used bribery and corruption to secure the judgment. On Monday (31 March) Kaplan allowed the oil giant to bring related claims that Patton Boggs had concealed Donziger’s fraudulent tactics and taken the case despite ethical concerns.
In a statement yesterday the US firm said Chevron’s case was “baseless and unlikely ever to proceed to litigation on the merits”. The firm added: “If this case advances beyond these jurisdictional arguments, we look forward to showing the lack of merit in Chevron’s allegations regarding our law firm. High-stakes litigation requires the ability to take a punch even when it is below the belt.”
On 4 March 2014 the US District Court for the Southern District of New York upheld arguments from Chevron concluding that the original ruling against Chevron was the produce of fraud and racketeering and found it unenforceable.
The 500-page decision handed down by Kaplan on 4 March found Donziger guilty of extortion, money laundering and fraud. He concluded that Donziger and his team “wrote the [Ecuadorian] court’s judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment”.
It continued: “The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador – and they knew it.
“Indeed, one Ecuadorian legal team member, in a moment of panicky candor, admitted that if documents exposing just part of what they had done were to come to light, ‘apart from destroying the proceeding, all of us, your attorneys, might go to jail’. It is time to face the facts.”
Patton Boggs had claimed the court lacked jurisdiction to hear Chevron’s claims against it because its partners consisted of “stateless” persons stationed in Dubai, Doha, Abu Dhabi and other foreign locations and could not be tried in New York.
However Kaplan said that the Patton Boggs partners in question were domicilaries of the US and could face trial for their own role in the fraudulent case.
The ongoing litigation has already landed it in hot water with litigation funder Burford. The funder had agreed to finance the firm’s case in 2010 but pulled out a year later, accusing Tyrrell and Donziger of making “false and misleading representations” about the original dispute.
In a furioius September 2011 letter, the funder said: “It is clear from the evidence that has come to light subsequent to our discussions with you…that claimants, the FDA, their affiliates and their attorneys have engaged in conduct and activity that gives rise to numerous material breaches of the Funding Agreement.”
Burford accused Donziger of being “willing to do or say anything to secure new funding” and criticised Patton Boggs for not telling it of Ecuadorian lawyers’ fears over the case.
It finished: ”You have breached the Funding Agreement …by withholding vital information and, indeed, working to convince us that Chevron’s allegations of wrongdoing by your attorneys were false.”
The funder has renounced any connection to the litigation and in April Burford’s chief executive officer Christopher Bogart said: “Burford stands by its clients in the face of aggressive litigation tactics by their opponents, but Burford does not sit still for being deceived or defrauded and has no interest in profiting from such conduct.”
The litigation could prove a fly in the ointment for Patton Boggs’ potential tie ups with both Squire Sanders (4 March 2014) and Dentons (2 April 2014). The case is thought to have put off potential partner Locke Lord at the end of last year (20 December 2013).