(Corrects to remove statement in paragraph 10 regarding a Hague decision ordering Ecuador to pay $96 million, which is unrelated to the current Chevron litigation. Also removes statement that Gibson Dunn was long-running counsel for Chevron because Gibson Dunn was hired in 2009)
* Gibson Dunn and Patton Boggs trade accusations
* Conflict of interest, intimidation among allegations
* Patton Boggs appeals federal court rulings
By Leigh Jones
NEW YORK, Oct 6 In the 18-year battle between Chevron Corp (CVX.N) and Ecuadorean residents over pollution in the Amazon rainforest, two high-powered law firms on opposite sides of the case are embroiled in an escalating feud involving charges of political favoritism, intimidation and greed.
Chevron's counsel in the fight is Los Angeles-based Gibson Dunn & Crutcher, a 1,000-attorney firm recognized for its hard-charging litigators, including Ted Olson, former U.S. Solicitor General under President George W. Bush.
The Ecuadoreans have retained Patton Boggs, a 600-attorney, Washington-based law firm known for its inside-the-beltway legal advice and lobbying work. Patton Boggs, new to the case, first appeared in court for the plaintiffs in November.
But before Patton Boggs lawyers even set foot in the courtroom, Gibson Dunn had fired off a letter to Patton Boggs' chairman, James Tyrrell, stating that it had "grave concerns" about the Washington-based firm's representation of the Ecuadoreans.
Gibson Dunn pointed to Patton Boggs' 2010 acquisition of Breaux Lott Leadership, a lobbying group, and the fact that the group had previously worked for Chevron on the pollution case. That relationship should disqualify Patton Boggs as counsel for the Ecuadoreans, Gibson Dunn asserted.
"It's really obvious that they have a conflict of interest, and they cavalierly reject" the conflict argument, Gibson Dunn attorney, Theodore Boutrous told Reuters. He alleged that the plaintiffs' case is rife with fraud and corruption. "They should look at the evidence of fraud and do what a reasonable law firm should do under those circumstances," Boutrous said.
The Ecuadorians have denied the fraud charges.
For its part, Patton Boggs says that Gibson Dunn has maneuvered to cut off the Ecuadorean's money supply to continue the litigation and to keep Patton Boggs from receiving a paycheck. Gibson Dunn attorneys are pursuing a "scorched earth" strategy, Tyrrell told Reuters.
The firm, at Chevron's direction, is doing everything in its power to keep Chevron from having to pay an $18 billion judgment that an Ecuadorean court granted to the plaintiffs in February, and is keeping Patton Boggs from doing its job, Tyrrell added. "We would think that a law firm of the caliber of Gibson Dunn would not be the pliant instrument of its client," he said.
While firms on opposite sides of cases often trade courtroom barbs, typically it's just posturing for the judge and jury. With Patton Boggs and Gibson Dunn, that doesn't appear to be the situation. It's a "donnybrook," says Robert Percival, a law professor at the University of Maryland School of Law who has closely followed the Chevron litigation. "Both sides hate each other," he said.
The litigation between Chevron and the Ecuadoreans has jumped from court to court in Ecuador, the United States and international tribunals for nearly two decades. The case was originally filed in federal district court in New York and was built around the plaintiffs' claims that Texaco Inc dumped oil drilling waste into the Amazon rainforest in the 1970s and '80s. Chevron is involved because it bought Texaco in 2001.
Chevron had the case moved to Ecuador, hoping for a more favorable resolution there. But in a major turn, an Ecuadorean court in February ordered the company to pay $18 billion to the residents.
Patton Boggs' Tyrrell became lead counsel for the plaintiffs in the case after New York solo practitioner Steven Donziger stepped aside last year. Donziger is defending a racketeering lawsuit brought by Chevron charging that he and the plaintiffs manufactured evidence and sought to influence the Ecuadorean court that issued the $18 billion judgment.
Patton Boggs, which took the mammoth case on contingency, joined the fray with about $4 million financing from Burford Capital, a third-party litigation funder. Just a day after Patton Boggs notified the court in November 2010 that it was new counsel for the plaintiffs, Gibson Dunn attorney Randy Mastro sent the "grave concern" letter to Patton Boggs' Tyrell.
In the letter, Mastro spelled out the conflict he felt was posed by Breaux Lott lobbying firm. In work for Chevron on the contamination matter, Breaux Lott acquired information about the oil company, which created a conflict of interest that Chevron had not waived, Mastro said.
More recently, when Patton Boggs and Gibson Dunn appeared at a hearing before a New York federal appeals court panel in September, Mastro told the court that Patton Boggs and the plaintiffs were using unscrupulous means to get the $18 billion judgment enforced."(It) is not about an enforcement strategy," Mastro said. "It is about (in the plaintiffs') words, using the political connections of the Patton Boggs law firm."
So far, Gibson Dunn has not formally asserted any ethics claims against Patton Boggs in court. However, in a preemptive strike of sorts, Patton Boggs filed two lawsuits in federal court in Washington seeking a declaration that the lobbying work did not create a conflict.
In the suits, Patton Boggs also asserted that Gibson Dunn has interfered with the financing deal between Patton Boggs and Burford Capital, and has convinced the funder to discontinue paying for the litigation on the plaintiffs' behalf. Burford Capital declined to comment for this story.
In April, the federal court in Washington threw out Patton Boggs' first lawsuit, and in August it dismissed the other. In the first case, the court found that the claims of tortious interference with Patton Boggs' funding contract were too speculative. It also ruled that it would be "intrusive" for the federal court to determine for other courts whether a conflict existed because of the lobbying work. In the second case, the court said Patton Boggs couldn't get a "second bite at the apple."
Patton Boggs has appealed both of those decisions, and on Sept. 30 moved to consolidate the cases.
Patton Boggs' decision to proceed with its own case against Gibson Dunn is intended demonstrate it will fight any roadblocks to Gibson Dunn may put in its path, said Michael Downey, a partner with Armstrong Teasdale whose practice focuses on attorney ethics. "The message they're trying to send is that they believe they can withstand the challenges," Downey said. (Reporting by Leigh Jones; Editing by Eileen Daspin and Gerald E. McCormick)