Cert. Watch: Naranjo

I’m sorry I let this one slip through the cracks: Chevron, which had sought and received an extension of time to file a petition for a writ of certiorari in the Naranjo case, filed its petition on May 25.

The petition focuses on the point I made in my 1/26/12 post: as a general matter, the Second Circuit was likely wrong to say that a judgment debtor can never preemptively seek a declaratory judgment of nonenforceability. The decision seems contrary to the well-established practice under the Declaratory Judgment Act, which permits prospective defendants to bring preemptive actions for a declaration that they are not liable to prospective plaintiffs. 1

The petition doesn’t discuss what seems to me to be a strong reason for the Supreme Court to deny review, namely the question whether a true case or controversy exists. I have opined that on the facts of Naranjo, where the Lago Agrio plaintiffs have pretty clearly disclaimed any intention to seek enforcement in New York, and maybe in the United States, the Second Circuit probably reached the right outcome, since if it were perfectly clear that the plaintiffs would not seek recognition and enforcement in the United States I take it that everyone would agree that there was no true case or controversy, at least as to the enforceability of the Ecuadoran judgment under New York law or other US law.

I suspect that Chevron is more interested in the preliminary injunction enjoining the Lago Agrio plaintiffs from seeking recognition and enforcement of the judgment anywhere in the world than they are in obtaining a declaration that the judgment is not entitled to recognition and enforcement in New York, especially now that the plaintiffs have sought recognition and enforcement of the judgment in Ontario. But a win in the Supreme Court would be unlikely, in my view, to lead to the revival of the injunction. On remand, I suspect it is unlikely that the Second Circuit would reinstate the injunction in light of its comity concerns:

[T]he court risks disrespecting the legal system not only of the country in which the judgment was issued, but also those of other countries, who are inherently assumed insufficiently trustworthy to recognize what is asserted to be the extreme incapacity of the legal system from which the judgment emanates. The court presuming to issue such an injunction sets itself up as the definitive international arbiter of the fairness and integrity of the world’s legal systems.

This concern is now stronger than it was before, since if the court were to reinstate the injunction and the Lago Agrio plaintiffs (who assert that they are not within the New York court’s personal jurisdiction) are bound by it, then the injunction would interfere with the Ontario action. But as I’ve argued before, if the fraud is as egregious as Chevron says, then surely the courts of Ontario are capable of detecting it and responding appropriately? Nor is it really credible, in light of the long delay between the vacation of the injunction and the beginning of the Canadian proceedings, to assert that there is an imminent risk of multiple vexatious proceedings around the world, and in any event, I don’t see why a judgment debtor that hasn’t paid up shouldn’t be subject to multiple proceedings wherever it has assets.

In short—don’t count Ted Olson and team out, but I don’t see this as a likely winner for Chevron.

Notes:

  1. Question: if the panel’s decision is as obviously wrong as Chevron says it is, why didn’t Chevron seek en banc review? (I don’t see a petition for en banc review on the docket, but maybe I am missing something).

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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