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4/15/11 SDNY Memorandum and Order- Bifurcation of RICO Claim

4/15/11 SDNY Memorandum and Order- Bifurcation of RICO Claim

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Published by TexacoEcuador

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Published by: TexacoEcuador on Apr 19, 2011
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10/08/2011

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - xCHEVRON CORPORATION,Plaintiff,-against-11 Civ. 0691 (LAK)STEVEN DONZIGER, et al.,Defendants.- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
MEMORANDUM OPINION
Appearances:Randy M. MastroAndrea E. NeumanScott A. EdelmanKristen L. HendricksWilliam E. ThomsonG
IBSON
,
 
D
UNN
&
 
C
RUTCHER 
,
 
LLP
 Attorneys for Plaintiff 
Steven R. Donziger 
 Defendant 
Pro SeJohn W. Keker Jan Nielsen LittleElliot R. Peters
EKER 
&
 
V
AN
 N
EST
,
 
LLP
 Attorneys for Defendant Donziger 
Julio C. GomezJ
ULIO
C.
 
G
OMEZ
,
 
A
TTORNEY AT
L
AW
LLCCarlos A. Zalaya, IIF.
 
G
ERALD
M
APLES
,
 
PA
 Attorneys for Defendants Hugo GerardoCamacho Naranjo and Javier Piaguaje Payaguaje
Gordon Mehler Joyce YoungL
AW
O
FFICES OF
G
ORDON
M
EHLER 
,
 
P.L.L.C.
 Attorneys for Defendants Stratus Consulting, Inc., Douglas Beltman, and Ann Maest 
L
EWIS
A.
 
APLAN
,
 
 District Judge.
A court in Lago Agrio, Ecuador, has entered a judgment of more than $18 billion (the
Case 1:11-cv-00691-LAK Document 278 Filed 04/15/11 Page 1 of 22
 
2“Judgment”) against Chevron Corporation (“Chevron”) in an action alleging environmental harms by Texaco, Inc. (“Texaco”), the shares of which were acquired by Chevron in 2001, years after Texaco ceased operations in Ecuador. Chevron brought this action against the Lago Agrio Plaintiffs(“LAPs”), certain of their attorneys, and others on a variety of theories. The centerpiece of thecomplaint, however, is its claim for a declaration that the Judgment may not be recognized or enforced anywhere outside of Ecuador and for a corresponding injunction. It seeks that relief on avariety of grounds, including that the Judgment was rendered under a system that does not provideimpartial tribunals or procedures compatible with the requirements of due process of law and thatit was procured by fraud.On March 7, 2011, this Court granted Chevron’s motion for a preliminary injunction barring the LAPs and others from, among other things, commencing, prosecuting, advancing in anyway, or receiving benefit from any action or proceeding, outside the Republic of Ecuador, for recognition or enforcement of the Judgment. Appeals from that ruling have been taken. Defendant
1
Steven Donziger subsequently moved to dismiss the complaint for failure to state a claim. The
2
matter now is before the Court on Chevron’s motion to bifurcate for expedited discovery and trialof its declaratory judgment claim (the ninth claim for relief).I.Chevron argues that this Court should promptly determine its claim for a declaration
1
Chevron Corp. v. Donziger 
,
 
 ___ F.Supp.2d ____, No. 11 Civ. 0691 (LAK), 2011 WL778052 (S.D.N.Y. Mar. 7, 2011) (hereinafter “
 Donziger 
”).
2
DI 242.
Case 1:11-cv-00691-LAK Document 278 Filed 04/15/11 Page 2 of 22
 
3that the Judgment is not recognizable or enforceable so that it may have certainty with respect to alarge claimed liability and, should it prevail, protection against a multiplicity of vexatious effortsto enforce the Judgment around the world. It would leave its various other claims for later resolution. At a minimum, it wishes to proceed promptly on its contention that the Judgment is notrecognizable or enforceable on all of the grounds it alleges save that it was procured by fraud.Those defendants who have appeared in this action resist this application on a hostof grounds. They contend that the proposed bifurcation of the declaratory judgment claim wouldviolate their Seventh Amendment right to a jury trial, that there is no need for an expeditedresolution of the declaratory judgment claim, and that bifurcation would prejudice them. They arguealso that this Court can or should not pass judgment on the fairness and impartiality of theEcuadorian judicial system, on whether enforcement of the Judgment would be contrary to public policy, or on the question whether the Lago Agrio court had personal jurisdiction over Chevron.Many of these arguments go to the merits of Chevron’s claim that the Judgment isnot recognizable or enforceable, which is quite a different matter from whether that claim should be bifurcated and decided first. Others rest on assumptions about whether the declaratory judgmentclaim could be resolved first without prejudicing any legitimate interests of the defendants. Theremainder ignore the Court’s ability to deal with defendants’ claims in a manner consistent with therights of all concerned even if bifurcation were granted. Before proceeding to those matters,however, it is important to keep one’s eye on the forest rather than the trees.First, as the Court explained in
 Donziger,
the LAPs have a judgment for more than$18 billion and intend to institute a multiplicity of enforcement actions around the world. The purpose of this multiplicity of litigation would be not merely to enforce the judgment, but to seek 
Case 1:11-cv-00691-LAK Document 278 Filed 04/15/11 Page 3 of 22

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