* U.S. lawyer Donziger defends ties with Ecuador lawyer
* Oil company seeking sanctions in environmental case
* NY federal judge holding hearing on racketeering claims
By Jonathan Stempel
NEW YORK, April 16 (Reuters) - Chevron Corp on Tuesday sought to persuade a New York federal judge to punish a U.S. lawyer representing Ecuadorean villagers who won a $19 billion environmental damages award, saying the lawyer is withholding documents from the oil company.
In an unusual court proceeding, a Chevron lawyer sharply questioned Steven Donziger, who represents residents of the Lago Agrio region who claim the company is responsible for contamination that sickened people in the Ecuadorean Amazon area.
At issue is the extent to which Donziger and others acted in bad faith by failing to turn over files and documents that Chevron claimed it needed for its case.
U.S. District Judge Lewis Kaplan in Manhattan is holding the hearing as part of a 2011 lawsuit in which Chevron accused Donziger and other defendants of racketeering and extortion. That case is scheduled to go to trial in October.
The two-decade fight between Chevron and Lago Agrio residents has included aggressive litigation tactics and accusations of coercion and bribery that each side has denied.
Under questioning from Chevron lawyer Randy Mastro, Donziger denied having directed his Ecuadorean counterpart Pablo Fajardo to keep documents from Chevron, the second-largest U.S. oil company.
“Mr. Fajardo’s view is that responding to your document request would violate Ecuador law,” Donziger told Mastro.
Donziger admitted that he lacks access to many documents, including documents stored on Fajardo’s computers, and thus could not speak to their importance.
Mastro, meanwhile, sought to discredit Donziger’s contention that he worked for Fajardo, not the other way around.
Donziger stands to earn more than $1 billion if the $19 billion judgment were upheld, while Fajardo would make just under one-third that amount, Mastro said.
“So you make more than three times as much as Mr. Fajardo does for working on this case, but you testify that you work for him?” Mastro said.
Chevron’s lawyer also introduced other evidence suggesting that Donziger was in fact calling the shots, noting that Fajardo has sometimes called Donziger “Commander.”
Donziger said that moniker should be seen “as a term of affection, not as a term of hierarchy.”
In 2011, the Lago Agrio plaintiffs won an $18.2 billion judgment in Ecuador, which has since grown to the $19 billion, on claims that San Ramon, California-based Chevron is responsible for contamination of their water and soil.
The environmental damage was supposedly caused by Texaco, which operated in Ecuador from 1964 to 1992. Chevron took on Texaco’s liabilities when it bought the company in 2001.
Chevron says the Ecuador ruling is unenforceable. The Ecuadorean residents have yet to collect on the award and are trying to enforce the judgment in countries where Chevron operates.
Donziger has led that charge in the United States. Under questioning from his lawyer, John Keker, he said his authority has been reduced in recent months, furthering his argument that he lacked control to get the documents Chevron wants.
The Lago Agrio plaintiffs “wanted an adviser, not a person in control or in command of their decisions,” Donziger said. “It’s preposterous to think I can order Pablo Fajardo to turn over his case files to me.”
Kaplan regularly chastised lawyers at the hearing for interrupting one another.
“Look Mr. Keker, I‘m going to run this courtroom, and you’re not going to tell me how,” he told Keker, who had objected to what he thought was Mastro’s interrupting an answer by Donziger.
Last month, in challenging other rulings by Kaplan, the Lago Agrio plaintiffs urged a federal appeals court to replace him with a different judge, citing his alleged “contempt” for Ecuador and its courts and “ill will” for Donziger.
Chevron won a victory on Monday when U.S. Magistrate Judge James Francis recommended the dismissal of counterclaims by Donziger accusing the company of harassment and trying to block enforcement of the judgment.
Kaplan will review the recommendation. The hearing that began on Tuesday is expected to last several days.
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; Editing by Martha Graybow and Andrew Hay)