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Chevron Allowed to Pursue Patton Boggs Fraud Claims

Chevron Corp. (CVX) may sue law firm Patton Boggs LLP over its involvement in obtaining a $9.5 billion judgment in Ecuador ruled to be a product of fraud, a federal judge said.

U.S. District Judge Lewis Kaplan granted Chevron’s request today about a month after issuing findings that a lawyer representing the Ecuadoreans, Steven Donziger, and his associates used bribery and fraud to get the award, even ghostwriting much of the judgment issued by the Ecuadorean court. Donziger has appealed those findings.

In Kaplan’s ruling today in Manhattan, he granted Chevron’s request to counter sue in a case Patton Boggs brought to lift a court order barring the firm from collecting on the Ecuador judgment. The firm also sought in the case to obtain $21.8 million posted by the company as a bond.

In court papers in June, Patton Boggs said Chevron’s effort to file those claims was “a bad-faith, legally-futile, and vexatious stratagem designed to divert the resources” of the firm and pressure it to “abandon its clients as a result of unfavorable press.”

Chevron is seeking an unspecified amount of money, including punitive and triple damages and attorneys fees, according to its counter suit.

The Washington-based law firm helped represent Ecuadorean farmers and villagers for a portion of their decades-long legal battle against Chevron over its alleged pollution of their lands.

‘Defraud’ Allegations

The firm has “sought to defraud and mislead numerous courts, as well as federal and state governmental agencies and officials, Chevron’s shareholders, investors, analysts and the media,” the San Ramon, California-based energy company said in a court filing in May.

Natalie V. Gewargis, spokeswoman for Patton Boggs, said she couldn’t immediately comment on the ruling.

Patton Boggs, a a 400-lawyer law firm known for its Washington lobbying practice, has been struggling financially and is in merger talks with Squire Sanders LLP. The firm had two rounds of layoffs last year that included at least 32 lawyers. Managing partner Edward Newberry has described the moves as part of a structural overhaul designed to make the firm more profitable.

Patton Boggs said this month that it would lose close to two dozen partners through firings and lateral departures. Last month, it said it would shut its Newark, New Jersey, office.

The case is Patton Boggs v. Chevron Corp., 1:12-cv-09176, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Christie Smythe in Brooklyn at csmythe1@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Fred Strasser, Peter Blumberg

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