Lago Agrio: More on the New Default Judgment

Oil barrels in Ecuador

I didn’t set out to have so much Lago Agrio coverage this week, but there is something new to report. As I reported on April 11, long after Judge Kaplan entered his final judgment against Donziger and the two LAP representatives and long after the Second Circuit decided the appeal, Chevron asked the court to enter a default judgment against the many LAPs who had defaulted early in the RICO case. Judge Kaplan has now done just that.

In the prior post, I raised some possible procedural issues arising from the timing of the appeal relative to this new motion for a default judgment, and I also suggested that the reason for Chevron’s move might be to set up an argument that all of the LAPs are collaterally estopped to relitigate the facts of the fraud issues in Canada.

I still think that’s much if not all of what’s going on here. The LAPs have suggested that the new default judgment, which of course includes the same kind of injunction as in the earlier judgment, is meant to shut down the enforcement efforts in Canada more directly. But if that is Chevron’s plan, it seems unlikely to succeed in the short term.

The LAPs against whom a judgment have just mentioned did not, as far as I know, appear in the New York case. So they have a potential defense of lack of personal jurisdiction, and thus a potential argument that as to them, the New York judgment is void. I recall that Judge Kaplan denied a motion to dismiss on such grounds by the two LAP representatives back in 2012, but he denied it with leave to renew the motion after discovery. I am not sure whether the issue popped up again, without checking the docket in more detail. But in any event, the LAPs could raise the issue before the Canadian court, it seems to me. But even leaving that aside, I don’t see that the Canadian court could or would enforce the new US judgment, with its injunctions, without first recognizing the RICO judgment. And Judge Kaplan has no practical power to enforce his injunction against the LAPs in Ecuador as far as I can tell. So I don’t think that the new development is likely to have bad short-term consequences for the LAPs, as their press release seems to suggest they fear.

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