More Dueling in the Lago Agrio Case

The Case of the Day is Chevron Corp. v. Donziger (S.D.N.Y. 2011). This is the action before Judge Kaplan, on which I’ve previously reported. All of my Lago Agrio coverage can be found here. As did Judge Kaplan, I’m assuming basic familiarity with the case.

One of Chevron’s counts, Count 9, was for a declaration against all defendants, including Donziger, that the Ecuadoran judgment was void for fraud, lack of due process, etc. Chevron successfully moved to bifurcate the trial of Count 9 from the trial of the other counts. (The court, in today’s case, clarified that its order severed Count 9 from the action altogether, rather than merely bifurcated the action for purposes of trial). Chevron then amended the complaint, dropping Donziger and others as defendants on Count 9. After the amendment, the only defendants on the Count 9 action were the judgment creditors themselves.

Donziger then moved to intervene as a defendant to the Count 9 action. He asserted that he had a contingent fee agreement with the Lago Agrio plaintiffs and thus an interest in whether the Ecuadoran judgment is enforceable in the United States. Judge Kaplan held that Donziger could not intervene as of right, because his contingent fee interest, precisely because it was contingent rather than “direct, substantial, and legally protectable,” was not within the scope of the interests protected by Rule 24(a). Nor did New York law give Donziger a lien on the Ecuadoran judgment, as he never appeared as counsel in Ecuador (he is not admitted to practice there), and it was unclear (though the judge did not decide it) whether a New York lien can exist with respect to a foreign judgment. Donziger also failed to show that the Ecuadoran plaintiffs would not adequately represent his interests. No doubt the Ecuadoran plaintiffs will the defend the Ecuadoran as vigorously as would Donziger, given that their interests are essentially aligned. The court discounted the possibility that the Ecuadoran plaintiffs would not dispute that Donziger was guilty of fraud but would instead focus their energy on proving the fraud immaterial: “It seems quite likely that the LAP Representatives will seek to defend the multibillion dollar Judgment on every ground arguably open to them, as they have done so far.”

The court also refused, with a minor  exception, to allow permissive intervention. It probably would have been within the judge’s discretion to allow the permissive intervention. But here Judge Kaplan focused on Donziger’s “previous delaying tactics in the Section 1782 proceedings and his failure to adhere to a schedule fixed by the Court on the preliminary injunction motion” as grounds for concluding that Donziger’s entry into the Count 9 action would delay a just resolution of the case. Ouch!

The court did allow intervention to a limited extent in order to avoid duplication with the RICO and fraud claims pending against Donziger. In particular, the court permitted Donziger to intervene for the purpose of:

(1) cross-examining witnesses or parties whose depositions are conducted by others solely on the questions whether the Judgment is not enforceable or recognizable because it was procured by fraud by Donziger, either individually or in concert with others, and (2) objecting to interrogatories, document requests, subpoenas for documents served on non-parties, and deposition questions, solely on the ground that the requested discovery would violate an evidentiary privilege personal to Donziger.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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