US court would stop Ecuador award against Chevron

NEW YORK Tue Feb 8, 2011 7:02pm EST

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NEW YORK Feb 8 (Reuters) - Ecuadoreans suing Chevron Corp (CVX.N) were hit with a temporary restraining order on Tuesday by a U.S. judge that would keep them from enforcing any ruling outside the United States against the oil company in their high stakes lawsuit over environmental pollution.

Chevron argued on Tuesday that a memo titled Invictus, which it attributed to prominent U.S. law firm Patton Boggs, showed that the Ecuadoreans planned to disrupt the company's business around the world in an effort to collect any money awarded them by a judge in Ecuador.

"Helter skelter disruption for the sake of disruption ... is not in the public interest," Judge Lewis A. Kaplan said in Manhattan federal court.

"The worst that can happen is that the plaintiffs are delayed in enforcing that judgment for 28 days."

Patton Boggs was not immediately available to comment on the court's action.

The Ecuadoreans began their litigation in 1993 against Texaco, which was bought by Chevron in 2001. They have accused the company of dumping oil-drilling waste in unlined pits, contaminating the forest and causing illnesses and deaths among local people. They want $27 billion in damages.

There are more than 15 court proceedings in different locations. [ID:nN01133100]

A judge in Ecuador is expected to make a final ruling in the case in the coming months. [ID:nN31241727]

Judge Kaplan ordered the parties to return to court on Feb. 17.

On Monday, Patton Boggs accused Chevron of mounting a "smear campaign" against the law firm to keep it out of the case. It also claims that Chevron is trying to disrupt its relationship with the Ecuadoreans.

Patton Boggs said in a filing in a Washington, D.C. federal court on Monday that Chevron and its outside lawyers, Gibson, Dunn & Crutcher, had "repeated and embellished a fabricated storyline attempting to implicate Patton Boggs in a variety of fraudulent activities." Patton Boggs is based in Washington.

Chevron is trying to disqualify Patton Boggs from a related proceeding, arguing that the law firm never obtained proper permission from the Ecuadoreans to enter the case. [ID:nN28238709]

On Feb. 1, Chevron filed a civil racketeering lawsuit in Manhattan federal court against the Ecuadoreans and their representatives and supporters, accusing them of trying to extort money from Chevron to end the litigation against the company.

The RICO complaint hinges on evidence of what Chevron calls collusion between the plaintiffs and an expert appointed by the Ecuador court to assess damages in the case.

Chevron has already filed for arbitration against Ecuador under a U.S.-Ecuador treaty, citing unfair judicial treatment.

The racketeering case is Chevron Corp v. Steven Donziger et al, U.S. District Court for the Southern District of New York, No. 11-CV-0691. (Editing by Toni Reinhold)

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