Patton Boggs’s Washington, D.C. office (NLJ/Diego M. Radzinschi)
Patton Boggs has ended its role in long-running, multibillion environmental litigation against Chevron involving Ecuador with the announcement that it agreed to pay the oil giant $15 million and admitted regret for its role in the case.
In a settlement made public Wednesday, Patton Boggs said it would withdraw as counsel in any litigation against Chevron related to the Ecuadorian case, and Chevron agreed to release any claims against the firm.
Patton Boggs assigned to Chevron any money to which it would be entitled from representing Ecuadorians, and the firm agreed to help Chevron with discovery in litigation.
Patton Boggs and Chevron have also agreed to a dismissal of litigation between them in the Southern District.
In a statement Wednesday, Patton Boggs said, “Today’s resolution of our firm’s disputes with Chevron ends our involvement” in the litigation. It added that a recent opinion from Southern District Judge Lewis Kaplan “includes a number of factual findings about matters which would have materially affected our firm’s decision to become involved and stay involved as counsel here. Based on the court’s findings, Patton Boggs regrets its involvement in this matter.”
Bettina Plevan, a Proskauer Rose partner who frequently represents law firms and who is not involved in this case, said there are circumstances where private statements are made, but “it quite unusual, extremely unusual, for a law firm to make a public statement of regret.”
Hewitt Pate, Chevron’s vice president and general counsel, said in a statement that Chevron was pleased Patton Boggs was “ending its association with the fraudulent and extortionate Ecuador litigation scheme” and “Chevron encourages others to disassociate themselves from this fraud.”
Chevron was represented by a team from Gibson, Dunn & Crutcher led by partner Randy Mastro.
New York lawyer Steven Donziger, who spearheaded the case on behalf of Ecuadorians from the country’s Lago Agrio region, said in a joint statement with Ecuadorian communities that Patton Boggs was a victim of Chevron’s intimidation. They thanked some Patton Boggs lawyers who “internally opposed” the settlement, called the firm’s decision a violation of its attorney-client duties and vowed to explore its legal options and find ways to nullify the settlement agreement.
The controversy arises from a $9.5 billion verdict from an Ecuadorean court in 2011, won by Ecuadorian citizens represented by Donziger who claim they were affected by toxic oil sludge in the Lago Agrio Amazon region. They claimed Chevron was liable for environmental damages.
In 2010, Patton Boggs signed on to represent the plaintiffs alongside Donziger, their lead U.S. counsel. The Patton Boggs team, led by partner James Tyrrell Jr., helped the plaintiffs draft a post-trial brief, which concerned the effects of toxic sludge. That brief included testimony from experts, who vouched for the findings in a supposedly independent environmental report that Chevron claims was ghostwritten by the plaintiffs’ team.
Patton Boggs has also advised the plaintiffs on their efforts to enforce the judgment across the world. According to Wednesday’s settlement agreement, Patton Boggs was entitled to up to 5 percent of any proceeds from the judgment.
Chevron sued Donziger in 2011, claiming he obtained the judgment through bribery and collusion in Ecuador.
In that case, Kaplan on March 4 held that Donziger corrupted and defrauded the judiciary in Ecuador to secure the judgment, and issued an injunction against Donziger’s efforts to enforce it.
“The decision in the Lago Agrio case was obtained by corrupt means,” the judge said.
Kaplan documented the global litigation strategy employed by Donziger and the entry of Patton Boggs into the case both as Donziger’s counterweight to Gibson Dunn and as a means for Donziger to obtain litigation funding.
Patton Boggs, led by Tyrrell, authored the so-called “Invictus” memo, which laid out a strategy of maximum pressure on Chevron by filing attachment actions in amenable jurisdictions, including those countries where the powerhouse lobbying firm could use its extensive contacts to work its influence.
In a separate lawsuit in 2012, Patton Boggs sued Chevron for execution of a $21.8 million bond, attorney fees, malicious prosecution and unjust enrichment for claims Chevron made against the firm.
In that lawsuit, Kaplan allowed Chevron in late March 2014 to pursue counterclaims against the firm that its lawyers made misrepresentations to Ecuadorian judges and engaged in other misconduct while attempting to enforce the $9.5 billion environmental judgment.
Shortly afterward, Patton Boggs retained Elkan Abramowitz, a partner at Morvillo Abramowitz Grand Iason & Anello. In late April, Kaplan dismissed all of Patton Boggs’ claims against Chevron.
Meanwhile, actions seeking to enforce the Lago Agrio judgment are pending in Argentina, Brazil and Canada.
Patton Boggs’ settlement agreement said it and Chevron desire to settle the litigation and any other disputes between them without any admission of liability.
The agreement provides that Tyrrell and Patton partner Eric Westenberger will be available for a one-day deposition by Chevron.
Patton Boggs, which in recent years has laid off partners and seen its revenue drop, has been searching for a merger partner. It reportedly has been in merger talks with Squire Sanders, among others.
The 22-page agreement said Patton Boggs will require “any respective merger partner or successor firm” refrain from making any other public statement about the settlement. The agreement says it will be binding on “any successor law firm with which the Patton Boggs partnership, in whole or in substantial part, mergers, joins or otherwise becomes affiliated.”
Law firm consultant Peter Zeughauser of the Zeughauser Group said, “It’s important to resolve an outstanding claim like this with an unknown liability, no matter how remote the liability might be, in order to consummate a merger.”
The agreement is signed by Chevron’s outside counsel, Herbert Stern of Stern & Kilcullen, Mastro and Edward Newberry, Patton’s managing partner.
Litigation funder Burford Capital, which initially funded Patton Boggs’ work on the Lago Agrio litigation, renounced its involvement in April 2013.
Mastro and Abramowitz declined to comment to the Law Journal Wednesday.