Patton Boggs, Washington, D.C. (Photo: Diego M. Radzinschi/ NLJ)
Patton Boggs received some unwelcome but hardly surprising news on Monday, when a judge allowed Chevron Corporation to pursue claims that lawyers at the firm made misrepresentations to judges and engaged in other misconduct while enforcing a $9.5 billion environmental judgment against the oil giant.
In a two-page order, U.S. District Judge Lewis Kaplan in Manhattan gave Chevron permission to bring claims against Patton Boggs for fraud, malicious prosecutio, and deceit under New York Judiciary Law §487. (Chevron made its allegations in the form of counterclaims in an abuse of process case brought by Patton Boggs, so it needed judicial approval to proceed.) Kaplan rejected arguments by Patton Boggs that Kaplan doesn’t have jurisdiction over the firm.
After a decade of litigation, a group of Ecuadoreans represented by Manhattan attorney Steven Donziger won the $9.5 billion judgment from an Ecuadorean court in 2011. Long before the verdict came down, Chevron’s lawyers at Gibson, Dunn & Crutcher argued that Donziger and other representatives of the plaintiffs ghostwrote a supposedly neutral expert report, known as the Cabrera report. Chevron later sued Donziger, alleging a wider range of bribery and extortion, and on March 4 Judge Kaplan ruled that the judgment was indeed a product of fraud.
Rewind to 2010, when Patton Boggs agreed to help the Ecuadorean plaintiffs enforce their judgment abroad (Chevron no longer has assets in Ecuador). In a now-public client memo, Patton Boggs laid out a strategy of using supplemental expert reports to bolster the conclusions of the Cabrera report. The litigation funder Burford Capital initially covered the cost of Patton Boggs’s work. To this day, Patton Boggs stands to collect a large success fee if a foreign court orders Chevron to satisfy the judgment or if the company settles.
Chevron raised its counterclaims against Patton Boggs in May 2013, on the eve of a deadline set by Kaplan. According to Chevron’s court filing, a Patton Boggs team led by James Tyrrell Jr. and Eric Westenberger tried to enforce a judgment that they knew or should have known was tainted by ghostwriting. Chevron also alleged that the lawyers duped Burford into providing funding and misled judges about when they joined the case.
Burford has proven to be one of Chevron’s best allies in its effort to discredit Patton Boggs. Burford’s CEO denounced Patton Boggs in an April 2013 declaration, stating under oath that the law firm “engaged in a multimonth scheme to deceive and defraud in order to secure desperately needed funding from [Burford], all the while concealing material information and misrepresenting critical facts in the fear that we would have walked away had we known the true state of affairs.”
Patton Boggs, which is represented by Leader & Berkon, says that it acted ethically at all times. Patton Boggs has also accused Burford of betrayal, writing in a June 2013 court filing that the funder made a calculated decision to throw Tyrrell and Westenberger under the bus and take Chevron’s side once its investment drew unwanted attention.
“High-stakes litigation requires the ability to take a punch even when it is below the belt,” Patton Boggs general counsel Charles “Rick” Talisman said in a statement issued on Monday. “We have no doubt that we acted ethically and properly.”
In Monday’s order, Kaplan rejected an argument by Patton Boggs that Chevron’s claims should be tossed because of a lack of diversity jurisdiction. The judge noted that Patton Boggs took the opposite stance on that jurisdictional issue two years earlier.
The ruling wasn’t all bad for Patton Boggs. Kaplan briefly noted that in making its fraud claim, Chevron didn’t sufficiently allege that it relied on misrepresentations by the firm. The judge didn’t dismiss the fraud claim, however, and Chevron will surely seek to cure that pleading deficiency.
Chevron outside counsel Randy Mastro of Gibson Dunn praised the development in an interview. “From day one, Chevron has had one objective: to seek justice and to hold those responsible for trying to enforce this travesty of justice in Ecuador accountable for their actions,” he said. “Now Chevron will be able to hold Patton Boggs accountable for its role here.”