Breaking: Judge Kaplan Exonerates Chevron’s Bond

On April 2, Judge Kaplan granted Chevron’s motion to exonerate the bond Chevron posted as a condition of obtaining a preliminary injunction against the Lago Agro plaintiffs and their agents—the injunction, later vacated by the Second Circuit, that forbade the plaintiffs to seek to enforce the Ecuadoran judgment anywhere in the world.

Before I briefly review the decision, may I call your attention to one line from the opinion? Judge Kaplan writes: “There is no independent reason to encourage the sort of forum shopping in which the defendants’ lawyers so patently are engaged” (the defendants here are the Lago Agrio plaintiffs). I think it’s true that the defendants were eager to keep the Patton Boggs claim out of Judge Kaplan’s courtroom, for obvious reasons. But really, it’s tough to get worked up about the LAPs choosing New Jersey over New York when everything important in the overall litigation stems from the fact that Chevron or Texaco chose Ecuador over the United States.

Anyway, the decision seems right, since the purpose of the bond is to guarantee payment of damages that the party wrongly enjoined suffers during the period of the injunction. Since the injunction was vacated before, according to the plaintiffs themselves, the Ecuadoran judgment could have been enforced, there could have been no damages. The judge noted that Patton Boggs was seeking damages in its separate action in New Jersey arising out of the wrongful injunction, but Patton Boggs, despite having notice of Chevron’s motion for exoneration, did not seek to show in Judge Kaplan’s court that it had suffered any damages.

The judge did make some remarks about the merit or lack of merit of Patton Boggs’s claim on the bond. I don’t think this will have preclusive effect in New Jersey, nor do I think that Patton Boggs’s claim is mooted. The bond merely provides security—Patton Boggs still has its claims under state law. I do think, though, that Patton Boggs’s claim against the bond now must fail, and that its request to enjoin Chevron from seeking exoneration is now moot.

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Learn more about Ted Folkman and our practice areas. Read Ted’s award-winning blog on international judicial assistance, Letters Blogatory.
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