Case of the Day: Patton Boggs v. Chevron
Posted on June 25, 2012
In today’s case of the day, Patton Boggs LLP v. Chevron Corp. (D.C. Cir. 2012), the D.C. Circuit finally drove a stake through the heart of one of the satellite cases in the Lago Agrio litigation. Patton Boggs had sued Chevron and Gibson, Dunn & Crutcher for a declaration that it was not conflicted out of its representation of the Lago Agrio plaintiffs and for damages on account of tortious interference with its contract with the Lago Agrio plaintiffs. I wrote about a portion of the case in August 2011.
The Facts and the Procedural Posture
After Patton Boggs first appeared for the Lago Agrio plaintiffs in one of the § 1782 actions Chevron brought around the country, Gibson Dunn sent Patton Boggs a letter expressing concern about a disqualifying conflict of interest arising out of Patton Boggs’s acquisition of the Breaux Lott Leadership Group, a lobbying firm that had previously done work for Chevron on issues relating to the Lago Agrio litigation. Patton Boggs sued Chevron seeking a declaration that it was not disqualified from representing the Lago Agrio plaintiffs in any present or future case based on the Breaux Lott acquisition. After Chevron moved to dismiss, Patton Boggs sought leave to amend its complaint to assert a claim against Chevron and Gibson Dunn for tortious interference with its contract with the Lago Agrio plaintiffs. The judge dismissed the declaratory judgment case on the grounds that it was premature and that the court would decline to exercise jurisdiction even if the case were ripe. The judge also denied leave to add the tortious interference claim against Chevron and Gibson Dunn on the grounds the claim was futile: in the judge’s view, there was no allegation that the defendants had actually caused a breach of the contract, merely that they had tried to do so.
Patton Boggs sought reconsideration, arguing that the judge had mistaken the law of tortious interference, which required only an act that makes performance of the contract more expensive or burdensome, not an actual breach of contract. But the judge rejected the argument on the grounds that Patton Boggs was asserting a new claim that it had not pleaded in its complaint. Patton Boggs then sought leave to amend its complaint to add the new claim, but the judge rejected the motion.
Patton Boggs then filed a new action asserting the same claims it had asserted in the first lawsuit, including the new tortious interference theory. As I reported in my prior post, the judge dismissed the action, though without awarding Chevron fees and costs under the vexatious litigation statute.
Patton Boggs appealed from all of the decisions, but the D.C. Circuit affirmed. On the declaratory judgment claim, Patton Boggs focused on the burden of having to defend against multiple disqualification motions in actions across the country, but the court agreed with the trial judge that the issues that the disqualification motions would raise were really issues of each state’s law of professional responsibility best decided by courts in each state.
Let’s pause and consider the irony of Patton Boggs’s argument. The Lago Agrio plaintiffs complained mightily when Judge Kaplan preliminarily enjoined them from seeking to enforce the Ecuadoran judgment anywhere in the world, and I think they were right to complain. Without trying to make the analogy too precise, I basically agree with the court that it was not in a good position to try to apply the law of each jurisdiction on such a question.1
On the tortious interference issue, the court held that the judge had been right to hold that the new “expense of performance” theory was new, and that the judge had therefore acted within his discretion in denying the motion for reconsideration. The court also held that the judge correctly dismissed the second complaint, because District of Columbia law requires a breach of contract as an element of a claim of tortious interference. The allegation in the complaint was that “Defendants have engaged in further misconduct by undertaking efforts to cut off the Ecuadorian Plaintiffs’ source of funds, causing the Ecuadorian Plaintiffs to breach their contract with Patton Boggs by non-payment of Patton Boggs’s legal fees and expenses.” But the court held this plainly insufficient:
This is much too vague. It is unclear who Patton Boggs asserts breached what obligation. The claim that the Ecuadorian Plaintiffs breached their contract by “non-payment” is contradicted by the admission that Patton Boggs “never alleged that the Ecuadorian Plaintiffs were responsible for paying their litigation costs directly out of their own pockets.” Furthermore, we do not know what Patton Boggs is alleging the defendants did to cut off the supposed “source of funds.” And as the district court explained, “[T]he fact that Patton Boggs is no longer being paid does not establish that Chevron and Gibson Dunn are responsible for that outcome, let alone that they intentionally caused it.” We are left in the the dark as to who breached what obligations and how, and the manner in which the defendants intentionally caused that breach.