Caso Chevron

Litigators of the Week: Steven Kobre of Kobre & Kim and Herbert Stern of Stern & Kilcullen

The Litigation Daily - David Bario 20/02/2015

There have been plenty of losers in the tragic, sprawling litigation stemming from Texaco's oil operations in the Amazon. To start, there are the Ecuadorean villagers still coping with widespread pollution in the region. Then there's Steven Donziger, the U.S. lawyer who championed the villagers' cause and won a $9.5 billion environmental judgment against Texaco successor Chevron Corp. in Ecuador—only to have a New York judge rule last year that Donziger's case was riddled with fraud.

If Donziger manages to reverse his fortunes someday—by convincing the U.S. Court of Appeals for the Second Circuit to toss the fraud verdict, or by collecting his megabillions judgment abroad—he could still claim victory over Chevron. (He'll also be our easiest pick ever for Litigator of the Week.) But for now the Chevron case has produced yet another loser—and another big win for the oil company and its lawyers.

This time the credit goes to Steven Kobre of Kobre & Kim and Herbert Stern of Stern & Kilcullen, who spearheaded Chevron's lawsuit in Gibraltar against online gaming magnate Russell DeLeon. DeLeon was the largest single financial backer of Donziger's case, pumping $23 million into the litigation beginning in 2007. On Monday, in the latest capitulation by a onetime Donziger ally, DeLeon agreed to relinquish his 7 percent stake in the $9.5 billion judgment and turn it over to Chevron.

"I have concluded that representatives of the [Amazon] plaintiffs, including Steven Donziger, misled me about important facts," DeLeon said in a statement. "If I had known these facts, I would not have funded the litigation."

The settlement comes almost a year after Chevron persuaded U.S. District Judge Lewis Kaplan in Manhattan that the Ecuadorean plaintiffs secured their environmental judgment through myriad frauds. (We named Gibson, Dunn & Crutcher's Randy Mastro Litigator of the Week for that win.) The same month, in March 2014, a court in the British territory of Gibraltar refused to dismiss Chevron's case against DeLeon.

Stern, a former federal judge in New Jersey who was co-counsel with Gibson Dunn in Chevron's related case against Patton Boggs, says he recommended Kobre and his global litigation boutique to Chevron's general counsel, who was intent on pursuing Donziger's backers abroad. The Gibraltar court's ruling last year helped set the stage for Monday's settlement, Stern said, by showing that a litigation funder can't escape liability under English common law if he knowingly financed fraud or willingly turned a blind eye.

"When [Kobre & Kim] established that principle, there was nowhere for them to go," said Stern. "That was a crucial victory." (Kobre & Kim's James Corbett and Andrew Stafford served as Queen's Counsel in the case, with local Gibraltar counsel from Attias & Levy.)

Kobre, who's still pursuing claims against a Donziger-related entity and others in Gibraltar, said the cross-border elements of the litigation made the case a perfect fit for his firm. And he praised Chevron for its willingness to pursue the litigation on DeLeon's home turf.

"This was an example where you had a client that was prepared to go anywhere on earth to fight for the principle that no one should be allowed to profit from the fraudulent conduct of others," Kobre said.

The Donziger camp, not surprisingly, sees things differently. Donziger's spokeswoman, Karen Hinton, called Monday's settlement a "gift" from DeLeon, insisting in a statement that it would allow the Ecuadorean plaintiffs to keep more of the (still hypothetical) judgment proceeds for themselves. And, she said, "Chevron’s willingness to drop all of its claims against Mr. DeLeon for no financial consideration also reflects the company’s increasingly weak position in the overall litigation."

In response, Kobre and Stern pointed out that DeLeon explicitly agreed to assign his interest in the environmental case to Chevron, if Chevron requests, and not to the plaintiffs. More importantly, they said, DeLeon's statement shows that he looked at the evidence against Donziger and opted to fold his cards.

"This is a situation where DeLeon invested $23 million and decided to walk away," Kobre said.

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