Chevron’s Bid to Block Ecuadorean Asset Collection Denied

Chevron Corp. (CVX)’s bid to protect assets that could be seized as part of an $18 billion environmental damages verdict against it in Ecuador was denied by a U.S. judge, who said the request could be renewed at a later date.

Chevron, the second-largest U.S. oil company, asked U.S. District Judge Lewis Kaplan in New York to block the collection of the judgment and the “dissipating” of any proceeds pending resolution of a lawsuit alleging that the plaintiffs engaged in fraud to win the Ecuadorean judgment. The company sought to “temporarily ensure the availability” of all assets while the U.S. case proceeds.

“Chevron has made no effort to quantify the damages it alleged has been sustained to date, let alone to support any damage claim with evidence,” Kaplan said in his ruling today.

Chevron was ordered on Feb. 14 to pay as much as $18 billion in compensatory and punitive damages for Texaco Inc.’s alleged dumping of toxic drilling wastes in the Ecuadorean jungle from 1964 to about 1992. The ruling came in an 18-year-old lawsuit decided by a judge in Lago Agrio, a provincial capital near the Colombian border.

Full Opinion

On Jan. 3, an Ecuadorean appeals court upheld the February ruling “in all of its parts, including the conviction for moral reparation or its alternative and costs,” according to the decision. Chevron can appeal the decision to the next level of Ecuador’s judiciary, a company spokesman said at the time.

A U.S. appeals panel in September rejected Kaplan’s March decision blocking collection of the Ecuadorean judgment. The appeals court hasn’t issued a full opinion in the matter.

Chevron denies wrongdoing in the Lago Agrio lawsuit. The company says Texaco cleaned up its share of the pollution at its former oil fields, which were taken over by PetroEcuador, Ecuador’s state-owned oil company. Chevron says it was released from any future liability by an agreement between Texaco and Ecuador. Chevron acquired Texaco in 2001.

The San Ramon, California-based company alleged in a U.S. suit before Kaplan that lawyers for the Ecuadoreans conspired to fabricate evidence. Attorneys for the Latin American plaintiffs said the lawsuit is an unjustified attempt to derail the pollution lawsuit damages.

‘Narrow Grounds’

Kent Robertson, a spokesman for Chevron, said in an e-mail that “we appreciate the court’s prompt response to our motion. The court decided the motion on very narrow grounds and did not question the strength of Chevron’s fraud evidence. Clearly the court has left the door open to a future attachment filing. We look forward to the balance of our racketeering case proceeding and remain committed to holding the plaintiffs’ lawyers accountable for their misconduct.”

Karen Hinton, a U.S. spokeswoman for the Ecuadorean plaintiffs, said in an e-mail that “it is clear that Chevron’s motion had no legal basis and was designed yet again to distract attention from the company’s fraudulent misconduct in Ecuador as well as its obligation to clean up its toxic waste in Ecuador’s Amazon that threatens the lives of thousands of people.”

The racketeering case is Chevron v. Donziger, 11-00691, U.S. District Court, District of New York (Manhattan). The case in Ecuador is Maria Aquinda v. Chevron, 002-2003, Superior Court of Nueva Loja, Lago Agrio, Ecuador.

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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