BREAKING: The Lago Agrio Plaintiffs Petition The Second Circuit for a Writ of Mandamus

An occasional Letters Blogatory correspondent who wishes to remain anonymous, Hal Holbrook to my Robert Redford, has pointed me to a new petition by the Lago Agrio plaintiffs for a writ of mandamus. 1 The gist of the petition is that Judge Kaplan has, in various ways, violated the spirit of the Second Circuit’s mandate in the Naranjo case, which held that Chevron could not seek a declaration that the Lago Agrio judgment was not entitled to recognition and enforcement in New York before the Lago Agrio plaintiffs sought recognition and enforcement.

In particular, they point to the judge’s treatment of the Lago Agrio Plaintiffs’ affirmative defense of res judicata and collateral estoppel, which I have covered fairly extensively. The LAPs had argued that Chevron’s claims were barred by those doctrines, which could only be true, in my view, if the court were to recognize the Ecuadoran judgment. I noted the defense in March 2012, opined that Chevron had the better argument in June 2012, and reported on Judge Kaplan’s decision denying Chevron’s motion for summary judgment. On this front, the LAPs are seeking an order requiring Judge Kaplan to vacate his July 31, 2012, order—the order that denied Chevron’s motion for summary judgment—as well as the order of November 27, 2012, which I discussed in a post on December 5, 2012, and an order of February 20, 2013, which I don’t think I previously discussed, and which granted Chevron’s motion to strike amended answers that omitted the collateral estoppel defense on procedural grounds. 2 On this point, I think Chevron has the better of the argument, because if the LAPs weren’t asking the judge to recognize the Ecuadoran judgment when they asserted res judicata and collateral estoppel as a defense, then I don’t know what they were doing, and the decision not to allow them to withdraw the defense is hardly a violation of the kind of non-discretionary duty for which mandamus lies—or so it seems to me, without having the benefit of the LAPs opposition to the petition.

The LAPs also sought an order requiring Judge Kaplan to vacate his January 7, 2013 order, which denied the LAP’s motion for leave to appeal from his earlier order denying their motion for judgment on the pleadings. The key question the LAPs wanted to appeal was whether “a foreign judgment debtor may bring an affirmative common-law fraud claim in New York against a judgment creditor based on alleged fraud in obtaining the foreign judgment.” The judge’s overall conclusion—that an appeal should not be allowed because it would not advance the ultimate termination of the litigation—is probably defensible, but his handling of the LAPs’ more particular point was, in my view, less than satisfactory. The judge’s point was that the LAPs had asked the wrong question. It’s not whether a judgment debtor can bring an action at common law to obtain damages, but rather whether a judgment debtor can bring such an action in equity. The judge said, rightly, that equity provides relief from a judgment obtained by fraud and that a judgment debtor can obtain damages as an incidental remedy in such an equitable suit. I am not sure why the judge was so particularly focused on the question whether the claim arose at law or in equity, but in any event, his discussion has caused the LAPs to assert that the judge was writing into Chevron’s complaint a new claim—an equitable claim to set aside the Lago Agrio judgment—that Chevron itself had not asserted. I don’t know what to make of this or how the Second Circuit will react to it, but insofar as the judge’s observations on judicial economy were probably sufficient to justify his denial of leave to appeal, it’s not clear that the LAPs will be able to make much of this point.

The big-picture question is whether Judge Kaplan, with the orders the LAPs are challenging, has violated the spirit if not the letter of the Second Circuit’s mandate. This seems like a long shot to me. The main question is how to construe the LAPs’ own affirmative defense of res judicata and collateral estoppel. I understand it as an attempt to give the Ecuadoran judgment some preclusive effect. I don’t see that the LAPs can really complain about Chevron’s motion for summary judgment on that defense, since it is, after all, their defense. As my earlier posts indicate, it doesn’t seem to me that later claims that the defense doesn’t mean what it seems to mean are not very convincing. On the other hand, Chevron is clearly engaged in some clever procedural maneuvering here, and it’s possible, I suppose, that the Second Circuit will regard Chevron’s summary judgment motion as too clever.

Last, the LAPs sought to have the case reassigned to a different judge. Anyone who has been following along will understand the motivation for this request. Given Judge Kaplan’s hostility to their case, I suppose the LAPs felt they had nothing to lose.

Notes:

  1. I’m not sure whether the writ will be familiar to civil law readers, so just in case: a writ of mandamus is a command to a lower court or to a government officer to perform a non-discretionary duty. They are relatively rare in federal practice. When the petitioner seeks to compel a district court judge to take some particular action, the petition is addressed to the relevant court of appeals under FRAP 21.
  2. The LAPs had filed their amended answers without leave of court contrary to FRCP 15.

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 2012), 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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