A federal appeals court reversed Southern District Judge Lewis A. Kaplan’s preliminary injunction blocking worldwide enforcement of an $18 billion environmental judgment in Ecuador.

Just three days after oral arguments at the U.S. Court of Appeals for the Second Circuit where counsel for Chevron urged that Judge Kaplan’s March injunction remain in place claiming the judgment was procured by a fraud, a three-judge panel vacated the injunction and derailed a November trial on whether to make it permanent.

Judges Rosemary Pooler, Richard Wesley and Gerard Lynch issued a summary order after expressing skepticism at oral arguments last Friday on Judge Kaplan’s authority to issue the worldwide injunction (NYLJ, Sept. 19). The judges said they would follow with a full opinion.

The panel however, refused a request by James Tyrrell of Patton Boggs, who represents the victorious Lago Agrio plaintiffs who secured the judgment in February, to order Judge Kaplan removed from the case.

The Lago Agrio plaintiffs and lead plaintiffs’ lawyer Steven Donziger have accused Judge Kaplan of bias for several rulings and comments, including the judge’s statement that the litigation was a drummed up “sham by American class action lawyers to hit Chevron big” by extorting a settlement from the oil giant for alleged damage done by its predecessor company in Ecuador, Texaco.

“We are absolutely delighted that the rule of law had prevailed and the sensationalism that Chevron has created through their unlimited public relations resources did not distract the court,” Mr. Tyrrell said.

Randy Mastro of Gibson Dunn & Crutcher, who represents Chevron, could not be reached for comment at deadline.

Mr. Mastro had launched a wave of discovery actions in 16 different U.S. federal courts seeking to undermine the anticipated judgment well before it was issued in February in Ecuador.

Mr. Mastro filed a racketeering action before Judge Kaplan that accused Mr. Donziger and the Lago Agrio plaintiffs of corrupting the Ecuadorean judicial system to wring a settlement out of Chevron. The November trial was to be on a single count in that lawsuit, the claim to make the injunction permanent, with the racketeering counts to follow at a later date.

Mr. Mastro persuaded Judge Kaplan, and argued before the Second Circuit Friday, that absent an injunction, the Lago Agrio plaintiffs would enforce the tainted judgment by filing a series of actions in sympathetic countries throughout the world seeking prejudgment attachment of Chevron assets.

Mr. Tyrrell said last night that he had promised the Second Circuit Friday that his clients would not, in fact, seek to enforce the judgment until an intermediate appellate court in Ecuador has reviewed the judgment.

“We are in the process of stopping in the works the ongoing subpoenas, depositions and other proceedings that are derivative of [this] action,” Mr. Tyrrell said.

@|Mark Hamblett can be contacted at mhamblett@alm.com.