U.S. Supreme Court Refuses to Hear Chevron Appeal Over $19B Damages in Ecuador

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WASHINGTON, D.C.--The U.S. Supreme Court rejected an appeal by Chevron Corp. Oct. 9 seeking to block enforcement of a $19 billion damages award for citizens in Ecuador over oil pollution (Chevron v. Naranjo, U.S., No. 11-1428, cert. denied 10/9/12).

The court declined to hear Chevron's appeal, letting stand a January ruling by the U.S. Court of Appeals for the Second Circuit. The Second Circuit denied Chevron's attempt to block a group of Ecuadorian citizens from the Lago Agrio region from collecting damages awarded by an Ecuadorian court (35 INER 111, 2/1/12).

A federal district judge in New York had granted Chevron a worldwide injunction in March 2011 that would prevent Ecuadorians from collecting damages, but the Second Circuit overturned the injunction as premature. The judge could not challenge a foreign judgment before the Ecuadorians attempted to enforce the judgment in the state, the Second Circuit ruled.

Chevron was seeking a review of the appeals court's decision to overturn the injunction.

The U.S. Chamber of Commerce, the National Association of Manufacturers, and Halliburton filed amicus briefs in support of Chevron's appeal to the Supreme Court.

Attorney Theodore Olson filed the petition for a writ of certiorari. Justice Samuel Alito did not participate in the Supreme Court's decision to deny the petition for a writ of certiorari. The court did not explain its reasons for denying cert.

Seen as Legal Setback for Chevron.

The Supreme Court's denial of the appeal is another setback in Chevron's attempt to block the damages awarded by the court in Ecuador.

The legal battle over oil production activities in the Ecuadorian Amazon has gone on for nearly two decades. In 1993, Ecuadorian residents claimed that Texaco, which Chevron acquired in 2001, destroyed their local environment and caused health problems by contaminating soil and water sources in the Lago Agrio region with oil and toxic by-products. The claims stemmed from Texaco's oil production operations in the Ecuadorian Amazon from 1964 to 1992.

Ecuadorian Judge Nicolas Zambrano ruled against Chevron in February 2011, ordering the company to pay $18.1 billion in damages (35 INER 111, 2/1/12).

Chevron appealed, and an appeals court in Ecuador upheld the $18.1 billion verdict against the company in January. A judge in Ecuador in August raised the damages amount to $19 billion.

Moves Indigenous Groups One More Step.

Karen Hinton, a U.S. spokeswoman for the Ecuadorian plaintiffs, said in an Oct. 9 statement that the Supreme Court's decision moved the indigenous groups one step closer to seizing billions of dollars of Chevron assets around the world.

“Chevron's latest loss before the Supreme Court is an example of the company's increasingly futile battle to avoid paying its legal obligations in Ecuador,” Aaron Marr Page, an attorney at Forum Nobis and an advocate for the Ecuadorians, said in a statement.

Chevron has said it has no intention of paying the fines and that the judgment is fraudulent and the process in Ecuador has been marred by misconduct between the Ecuadorians' lawyers and the court (35 INER 781, 8/15/12).

“While Chevron is disappointed that the Court denied our petition, we will continue to defend against the plaintiffs' lawyers' attempts to enforce the fraudulent Ecuadorian judgment, and to further expose their misconduct in our pending [Racketeer Influenced and Corrupt Organizations Act] case in New York, and in other proceedings,” Chevron said in an emailed statement.

Chevron Says Decision 'Limited in Scope.'

Justin Higgs, a spokesman for Chevron, told BNA Oct. 9 that while the company would have liked the Supreme Court to take up the case, its decision is not a major setback. “This ruling is limited in scope and is a narrow procedural ruling,” he said.

Chevron is continuing to pursue a racketeering case in New York, which is expected to go to trial next summer, Higgs said. The company also is pursuing international arbitration at the Permanent Court of Arbitration at The Hague, and a hearing on the merits in that case is scheduled for later this year, he said. Chevron also has an appeal before the International Court of Justice, he said.

By Avery Fellow