February 1, 2011 / 11:16 PM / 6 years ago

Chevron accuses Ecuadorean plaintiffs of extortion

4 Min Read

* New legal front in 17-year dispute over pollution claims

* Comes soon after plaintiffs' final arguments in Ecuador

* Plaintiffs say new case is attempt to derail their suit

By Braden Reddall and Dan Levine

SAN FRANCISCO, Feb 1 (Reuters) - Chevron Corp (CVX.N) filed a civil racketeering lawsuit against Ecuadorean plaintiffs in U.S. court on Tuesday, opening up another legal front in its 17-year-old battle over pollution claims in the South American country.

A week after plaintiffs submitted final arguments in the Ecuadorean court, Chevron filed a U.S. lawsuit against them, their lawyers and various supporters in both countries under the Racketeer Influenced and Corrupt Organizations (RICO) Act.

"The enterprise's ultimate aim is to create enough pressure on Chevron in the United States to extort it into paying to stop the campaign against it," Chevron lawyers wrote in a federal lawsuit in the Southern District of New York.

The Ecuadorean plaintiffs, who started their litigation in New York in 1993 before the case moved to Ecuador a decade later, charge Texaco -- bought by Chevron in 2001 -- with dumping oil-drilling waste in unlined pits, contaminating the forest and causing illnesses and deaths among local people.

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

Plaintiffs spokeswoman Karen Hinton said the RICO action was "its latest, desperate attempt to derail their lawsuit."

"Chevron fought for ten years to move this case from the United States to Ecuador," Hinton wrote in an emailed statement. "Now that the evidence is in, Chevron is running fast and furious away from the court of its own choosing with desperate attempts, such as this, to discredit the case."

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, which came in at $27 billion in late 2008.

U.S.-based securities analysts believe it is likely Chevron would ultimately settle for a few-billion dollars, at most.

Much of the evidence provided by Chevron in the RICO filing, which runs more than 200 pages, was gathered from raw footage of the 2009 documentary "Crude" that a U.S. appeals court found last year could be used as evidence. [ID:nN23169226]

Other evidence emerged after a U.S. court forced Steven Donziger, who until recently was the plaintiffs' lead lawyer, to reveal a trove of plaintiffs' documents. [ID:nN28147776]

Anti-Mafia Law

Criminal RICO laws have been used by U.S. prosecutors to target the likes of the Mafia. A civil RICO case between private parties is one of the most serious kinds of claims Chevron can bring against its opponents, said G. Robert Blakey, a professor at Notre Dame Law School.

"They want the plaintiff lawyers to feel it," Blakey said.

The U.S. Supreme Court has authorized judges to apply civil RICO laws broadly, Blakey said. But he added that if some of the RICO case duplicates legal activity Chevron brought against Donziger's team, a judge could exclude it from the RICO case.

Gerald Lefcourt, Donziger's attorney, described the Chevron lawsuit as "a cynical bid to buy cover."

"Chevron just wants to tell its shareholders, its partners, its bankers and Wall Street that it has a way to avoid paying the billions of dollars it will take to address the harm it caused," Lefcourt said in an emailed statement.

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. (Reporting by Braden Reddall and Dan Levine; Editing by Tim Dobbyn)

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