UPDATE 2-US judge in Chevron-Ecuador case won't recuse self

Mon May 9, 2011 4:57pm EDT

Related Topics

* Judge says his rulings grounded in law, evidence

* Judge had blocked $18 billion judgment

* Chevron shares close 1.2 percent higher (Adds details from ruling, byline)

By Jonathan Stempel

NEW YORK, May 9 (Reuters) - The U.S. judge who has temporarily blocked enforcement of an $18 billion judgment in Ecuador against Chevron Corp (CVX.N) has rejected calls by plaintiffs in that case to recuse himself for bias.

U.S. District Judge Lewis Kaplan in Manhattan rejected claims by two of the plaintiffs that he had prejudged the case, which concerns pollution of the Amazon rain forest and has spawned an 18-year worldwide legal battle.

The judge said there was no objective reason to believe he had been "anything less than entirely impartial," according to his written ruling issued on Monday. He called his remarks and rulings in the litigation "perfectly banal."

Kaplan on March 7 issued a preliminary injunction to stop the Ecuadorean plaintiffs from enforcing the judgment [ID:nN07237039], and set a Nov. 14 trial date to decide whether to make the injunction permanent. [ID:nN25225194]

An Ecuadorean court had on Feb. 14 imposed the $18 billion judgment as a result of environmental contamination from 1964 to 1992 by Texaco, which Chevron bought in 2001.

Julio Gomez, a lawyer for the plaintiffs, declined to comment.

"This was a meritless motion," said Randy Mastro, a partner at Gibson, Dunn & Crutcher LLP in New York representing Chevron. "Now we can get on with the important litigation ahead to determine the enforceability or lack of enforceability of the Ecuadorean judgment."

KAPLAN SAYS RULINGS WELL-GROUNDED

Plaintiffs in the Ecuador case, known as the Lago Agrio plaintiffs, said Texaco sickened residents, ruined their land, and damaged forestry and rivers through the discharge of some 18 billion gallons of toxic water into the rain forest.

Chevron had argued that Ecuador should handle further cleanup, saying Texaco was released in 1998. The litigation is the subject of a 2009 documentary, "Crude."

Meanwhile, San Ramon, California-based Chevron filed a racketeering lawsuit in February against the two Lago Agrio plaintiffs and dozens of other individuals. Among these was a lead lawyer for the Lago Agrio plaintiffs, Steven Donziger.

In seeking Kaplan's recusal, lawyers said Kaplan showed bias including through such statements as "I know the game here" in discussing one motion. They said Kaplan viewed the litigation as "a scheme fabricated by the Ecuadorean plaintiffs' counsel to hit Chevron as big as they can."

Kaplan said there was no basis for the contentions.

"Informed persons, knowing and understanding all of the myriad and complex facts of these extensive proceedings, and putting aside the rhetoric and other devices employed here by the Lago Agrio plaintiffs' representatives, readily would see that the court's rulings have been firmly grounded in the law and the evidence," Kaplan wrote.

Chevron shares closed Monday up $1.21, or 1.2 percent, at $104.09 on the New York Stock Exchange.

The case is Chevron Corp v. Donziger et al, U.S. District Court, Southern District of New York, No. 11-00691. (Reporting by Jonathan Stempel in New York, editing by Bernard Orr)

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