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Lago Agrio: Judge Kaplan Denies Chevron’s Motion to Bifurcate

On September 8, Chevron purported to waive all claims for money damages against the Lago Agrio Plaintiffs in the impending New York trial. Chevron said it intended to seek only equitable relief from the LAPs. If you’re not an American lawyer, you may wonder why Chevron would do this. The answer is that under the Seventh Amendment to the US Constitution, there is a right to a jury trial in civil cases—but only “in suits at common law.” But historically there was no jury trial in equity, and the distinction between law and equity persists for constitutional purposes even after the merger of law and equity with the adoption of the Federal Rules of Civil Procedure. So in short, Chevron’s attempt to withdraw its claims at law against the LAPs is an attempt to have Judge Kaplan rather than a jury decide the facts of the claims against the LAPs. Under FRCP 39(b), “[i]ssues on which a jury trial is not properly demanded are to be tried by the court,” though under FRCP 39(c)(1), the court may try such issues with an advisory jury.

Now, you might think that the reason Chevron wanted to do this was to have the case decided by Judge Kaplan and to get written findings of fact from him (as FRCP 52(a)(1) requires in cases tried to the court). But note that Chevron has not sought to drop its claims for money damages against Donziger. Later on September 8, Chevron made a motion under FRCP 42(b) for bifurcation of the trial. Chevron wanted to try the question of Donziger’s liability first, then (assuming he is found liable) the question of damages against Donziger, and only then—and only “to the extent the Court deems necessary based on the outcome of the jury proceedings”—the equitable claims against the LAPs. The issues of Donziger’s liability and damages would be tried to the jury; the issues of the LAPs liability and the equitable remedies to be applied would be tried to Judge Kaplan.

The reason for Chevron’s complicated proposal was apparently to prevent the LAPs from arguing their equitable defenses, in particular the defense of unclean hands, to the jury. The gist of this defense is a claim that even if Donziger acted corruptly in Ecuador, so did Chevron, and “he who comes into equity must come with clean hands.” In other words, if Chevron acted inequitably it is not entitled to equitable relief. The reasons why Chevron would prefer the jury not to hear evidence on this issue should be obvious.

Judge Kaplan denied Chevron’s motion to bifurcate the trial of Donziger’s liability from the trial of the LAPs’ liability without waiting for a response from the defendants. He had essentially no interest in trying the liability case twice, nor did he want to interject into the case the possibility that the a jury verdict on liability as to Donziger might have issue-preclusive effects as to the LAPs one way or the other.

A footnote: I noted that Chevron has not dropped its jury claims against Donziger. But in its brief, it says that it will make a decision whether or not to drop the jury claims by the end of this month. The defendants are clearly frustrated by this uncertainty, and it may be that Judge Kaplan will require Chevron to make its intentions clear sooner rather than later.