Chevron Corp. v. Donziger
| Decision Date | 02 April 2012 |
| Docket Number | 11 Civ. 0691 (LAK) |
| Parties | CHEVRON CORPORATION, Plaintiff, v. STEVEN DONZIGER, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
(Corrected)
Appearances:
Randy M. Mastro
Andrea E. Neuman
Kristen L. Hendricks
Scott A. Edelman
William E. Thompson
GIBSON, DUNN & CRUTCHER, LLP
John W. Keker
Elliot R. Peters
Christopher J. Young
Jan Nielsen Little
Matthew M. Werdeger
Nikki H. Vo
Paula L. Blizzard
William S. Hicks
KEKER & VAN NEST, LLP
Julio C. Gomez
GOMEZ, ATTORNEY AT LAW LLC
Tyler G. Doyle
Craig Smyser
Larry R. Veselka
Christina A. Bryan
Garlard D. Murphy, IV
SMYSER KAPLAN & VESELKA, L.L.P.
Attorneys for Defendants Hugo Gerardo,
Camacho Naranjo and Javier Piaguaje
This matter, which has a lengthy history, is before the Court on the motion of plaintiff Chevron Corporation ("Chevron"), to exonerate the preliminary injunction bond filed last March in connection with a preliminary injunction that eventually was reversed by the Court of Appeals.
This case relates to a lawsuit brought in Ecuador against Chevron for alleged environmental damage that has resulted in the entry in that nation on February 14, 2011 of a judgment for more than $18 billion (the "Judgment").1 The validity and enforceability of the Judgment beyond the borders of Ecuador are hotly contested.
In early 2011, Chevron commenced this action seeking a declaration that the Judgment was neither recognizable nor enforceable outside Ecuador and an injunction restraining its enforcement.2 On March 7, 2011, the Court granted Chevron's motion for a preliminary injunction and restrained enforcement of the Judgment pending the resolution of this action.3 In so doing, it notedthat the bond requirement of Rule 65 "serves only to guarantee payment of any damages sustained 'during the period [the enjoined party] is prohibited in engaging in certain activities.'"4 Noting that the LAP Representatives had "not shown any basis for supposing that they would be harmed in any quantifiable amount by a delay in the enforceability of the [Ecuadorian] judgment for the period necessary to resolve this case on the merits," the Court fixed the amount of the bond at $21.8 million, a figure reflecting the only sort of potential injury that was claimed, the time value of money.5 The bond, consistent with the Court's order, was conditioned to:
"pay to the Defendants, so enjoined, such damages and costs not exceeding the sum of TWENTY-ONE MILION [sic] EIGHT HUNDRED THOUSAND AND 00/100 ($21,800,000.00) DOLLARS as they may sustain by reason of the Preliminary Injunction, if the Court shall finally decide that the Plaintiff was not entitled thereto."6
As this Court found in March 2011,7 and as counsel for the defendants repeatedly represented to the Court of Appeals, the Judgment was not enforceable under Ecuadorian law "at least until the intermediate Ecuadorian appeals court renders its decision."8 Indeed, at oral argument before the Circuit, counsel for the LAP Representatives stated that "[t]he [Ecuadorian] judgment cannot be enforced until the final disposition of the Ecuadorian intermediate court and a decision by Chevron notto appeal further or, if a bond is required, not to post the bond."9
On September 19, 2011, the Second Circuit entered an order vacating the preliminary injunction.10 In the event, the intermediate appellate court in Ecuador did not render its decision until January 3, 201211 and did not declare the Judgment final and enforceable under Ecuadorian law until March 1, 2012.12 In consequence, the Judgment was not enforceable from the date it first was entered in the trial court in February 2011 until March 1, 2012. But the preliminary injunction of this Court was entered on March 7, 2011, and it was vacated on September 19, 2011. Thus, throughout the entire period during which the preliminary injunction was in effect, the Judgment was not enforceable under Ecuadorian law.
The purpose of a preliminary injunction bond 13
In this case, none of the defendants nor, for that matter, anyone else has submitted to this Court any claim for damages against the bond. Nor could any properly have done so.
First, the preliminary injunction barred the defendants from enforcing or attempting to enforce the Judgment. As the defendants have asserted, however, it was not enforceable throughout the entire period during which the injunction was in effect.14 The preliminary injunction therefore could not have delayed any enforcement actions or caused any injury to the defendants for which they are able to recover.15
Second, any claim for attorneys' fees incurred in connection with appealing the preliminary injunction would have been without merit. As noted above, attorneys' fees are not recoverable on a preliminary injunction bond even when the injunction is overturned on appeal.16
The LAP Representatives argue that this Court should not exonerate the bond becausecertain attorneys who claim to represent some or all of the LAPs have brought an action on behalf of their law firm in the District of New Jersey in an attempt to collect on the bond on behalf of the law firm.17 Those attorneys were served with the motion in this case. They have an office in New York. Their lead counsel is a member of the Bar of this Court. They even claim, in papers in their New Jersey action, that their "rights purportedly may be impaired [by a decision on this motion] as early as March 27, 2011 [sic], the due-date for any responses to Chevron's" motion.18 Yet they have not interposed any claim here.
The defendants in this case, both those who have appeared and those who have defaulted, had a perfect right to respond to this motion by submitting claims for damages. The law firm that sued in New Jersey could have done so as well, at least subject to the availability of a right or leave to intervene. But for reasons sufficient unto themselves, they elected not to do so. They must live with the consequences of their tactical decision to forego that opportunity.
In any event, the LAP Representatives' suggestion that exonerating a preliminary injunction bond (1) following an appellate ruling on the preliminary injunction and (2) after all secured parties have been afforded notice and an opportunity to make claims is premature19 is unsupported by any authority20 and is contrary to common sense. There is no independent reason to encourage the sortof forum shopping in which the defendants' lawyers so patently are engaged.21 But there is a still more important consideration - if any of them had made such a claim, it would have been entirely without merit.
As noted, the defendants do not claim any injury flowing from the fact that they were enjoined from seeking to enforce the Judgment because, by their own admission, they were not free to have done so at any time during which the injunction was in effect.22 Moreover, the plaintiff law firm in the New Jersey action has no legally sufficient claim on the bond - either there or here -because the bond runs in favor only of the defendants in this action.23 As the Ninth Circuit hasobserved, "[i]f a bond is posted, liability is limited by the terms of the bond or the order of the court that required the posting."24 In any event, attorneys' fees may not be recovered against an injunction bond.25
Chevron's motion to exonerate the preliminary injunction bond issued by this Court [DI 423] is granted in all respects. The bond is exonerated and discharged.
SO ORDERED.
__________________
Lewis A. Kaplan
(The manuscript signature above is not an image of the signature on the original document in the Court file.)
1.The background of the litigation is amply set forth in prior decisions of this Court including: In re Chevron Corp., 709 F. Supp. 2d 283 (S.D.N.Y. 2010), aff'd sub nom., Chevron Corp. v. Berlinger, 629 F.3d 297 (2d Cir. 2010); In re Chevron Corp., 736 F. Supp. 2d 773 (S.D.N.Y. 2010); In re Chevron Corp., 749 F. Supp. 2d 135 (S.D.N.Y. 2010), fuller opinion, In re Chevron Corp., 749 F. Supp. 2d 141 (S.D.N.Y. 2010), on reconsideration, 749 F. Supp. 2d 170 (S.D.N.Y. 2010), aff'd sub nom., Lago Agrio Plaintiffs v. Chevron Corp., Nos. 10-4341-cv, 10-4405-cv (CON), 2010 WL 5151325 (2d Cir. Dec. 15, 2010); Chevron Corp. v. Donziger, 768 F. Supp. 2d 581 (S.D.N.Y. 2011) ("Donziger I") (granting preliminary injunction), rev'd, 667 F.3d 232 (2d Cir. 2012); Chevron Corp. v. Donziger, 800 F. Supp. 2d 484 (S.D.N.Y. 2011) () ("Donziger II").
4.Id. at 657 (quoting 11A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE: CIVIL 2D § 2954, at 292 (1995)).
6.DI 198.
8.Chevron Corp. v. Naranjo, No. 11-1150, DI 159, at 54; see also Chevron Corp. v. Naranjo, No. 11-1150, DI 163, at 54 ().
10.DI 351.
11.DI 417, Exh. A.
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