Lago Agrio: Chevron Seeks Leave To Sue Patton Boggs

Chevron has moved for leave to assert counterclaims against the Lago Agrio plaintiffs’ US law firm, Patton Boggs.

I have to say I think Chevron may have jumped the shark with this latest claim. I don’t want to go through the details of the counterclaim’s allegations, but let’s just take a look at the three counts.

Count one is a count for fraud. This is yet another example of a fraud claim that lacks any allegation that the party making the claim relied on the supposed truth of a misstatement of fact made by the party it’s suing. As I noted in the earlier post, Judge Kaplan has held that New York law permits such claims, and maybe it does. I don’t think much of this theory. If this is what New York law provides, then it’s clearly an outlier, and I see no real policy behind permitting a recovery for fraud in the absence of reliance.

Count two is a count for deceit under §487 of the New York Judiciary Law. This seems to me to be potentially the strongest of Chevron’s three claims, because unlike the fraud claim, § 487 seems squarely aimed at the kind of misconduct of which Chevron is accusing Patton Boggs. (I qualify that remark by reminding readers that I’m not a New York lawyer and am not really familiar with the precedents under § 487). Some of the factual allegations are difficult to understand. For example, in ¶ 75, Chevron accused Patton Boggs of “actively conceal[ing] its representation of the LAPs before the Southern District of New York.” Aside from the question of damages—how did this harm Chevron?—the very same paragraph alleges that another lawyer “revealed to the court” at the outset of the case that Patton Boggs was involved. Similarly, Chevron accuses Patton Boggs of arranging for litigation funding and taking a contingent interest in the outcome of the case, but so what? That’s how every big contingent fee case works. Chevron accuses Patton Boggs of seeking a continuance of the trial date for Chevron’s injunction claim on untrue grounds, but again, so what? Chevron, as we now know, wasn’t entitled to the injunction in the first place. And Chevron accuses Patton Boggs of misstating the evidence in oral argument at the Second Circuit; again, couldn’t Chevron have brought the misrepresentation to the Court’s attention? I’m not condoning misstatements to the courts, ever. I’m simply suggesting that maybe a complaint to the New York equivalent of the Board of Bar Overseers rather than a lawsuit is the appropriate remedy.

The only really serious allegations in count two, it seems to me, 1 are that Patton Boggs misstated to the court the truth about the Cabrera report. But Chevron doesn’t seem to be saying that Patton Boggs itself was involved in the ghostwriting of the Cabrera report. Take a look at ¶¶ 88 and 89, which seem to distinguish very carefully between “the LAPs’ attorneys”—a general term—and Patton Boggs specifically. In short, this is the closest Chevron comes—it may be enough, though we will need to wait for the evidence.

Count three is a count for malicious prosecution. Patton Boggs has sued Chevron three times—twice seeking a declaration that its acquisition of the Breaux Lott Group, a lobbying firm that had previously represented Chevron, did not create an impermissible conflict of interest that would bar it from representing the LAPs, and once seeking a remedy under the bond Chevron had posted when it obtained the worldwide anti-suit injunction from Judge Kaplan that the Second Circuit later struck down. It seems to me that the second suit seeking a declaratory judgment pretty plainly lacked merit from the outset for the reasons I gave in a prior post (I also covered the DC Circuit’s decision affirming dismissal of the two declaratory judgment actions). But the first declaratory judgment suit and the claim on the bond, while ultimately lacking merit, hardly seem so beyond the pale as to justify a malicious prosecution claim. Frankly, I would say the same of the second declaratory judgment suit. Patton Boggs’s argument against giving the first decision preclusive effect was weak, but at least it had an argument. If lawyers went around suing their adversaries every time they made meritless claims, then I suppose Chevron might well be on the hook for seeking to attach Steven Donziger’s assets without any proof of damages, twice.

In short, I am not a fan of these claims.

Notes:

  1. I’m looking now only at paragraphs 72 to 91 of the counterclaim, which are the paragraphs that Chevron itself says (in ¶ 119) support this claim.

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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