U.S. Second Circuit - The FindLaw 2nd Circuit Court of Appeals Opinion Summaries Blog

Chevron Escapes $9.5 Billion 'Amazon Chernobyl' Judgment

Energy giant Chevron can breathe a little easier after the Second Circuit overruled a lower court award of $9.5 billion, finding that the judgment was "procured by corrupt means" and attorney fraud. It's a gigantic win for a gigantic company that has the potential to set the tone for international business litigation strategies.

The attorney who is at the center of this reversal-slash-scandal is Steven Donzinger whom Chevron accused of conducting a "shake-down" of the company. Donzinger's lawyer called the circuit's decision "unprecedented."

"Amazon Chernobyl"

The case is the culmination of efforts by residents within the Amazon Rain Forest seeking relief and monetary damages for the activities conducted in the rain forest from 1972-1990 by Chevron's predecessor, Texaco. Residents successfully filed a complaint in New York alleging the company left the area a public health disaster which would later be dubbed "Amazon Chernobyl."

Motion practice saw the case move to Ecuador where the judge there ruled in favor of the plaintiffs to the tune of $18 billion. On appeal, that number was later reduced to $9.5 billion by Ecuador's highest court. Chevron negotiated the case back to the U.S.

Fraud?

Once back in the States, Chevron attacked the $9.5 billion award by arguing that human rights lawyer Steven Donzinger engaged in illicit conduct ranging the gamut from bribery and fraud to "shake downs." In 2014, a lower federal district court ruled that the judgment in Ecuador was "procured by corrupt means." And since fraud was at issue, the judge of that court, Hon. Lewis Kaplan, penned his findings with particularly-particular particularity. The whole opinion was 500 pages long. Court papers chronicled how civil rights lawyers pushed for sanctioning of opposing counsel and launched a negative-smear campaign against Chevron and associated parties.

The Second Circuit's review of the case appeared to be consistent with the lower court's findings. The court reviewed the findings and described the record as a "parade of corrupt actions" by the Amazon residents' lawyers, including a quid-pro-quo arrangement of $500,000 in exchange for a favorable ruling in the Ecuadorian court.

Not Over Yet

Spokespeople for the petitioners are not licked yet and have promised litigation in other countries where Chevron's capital is located.

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