Chevron RICO Verdict Sets Dangerous Precedent For Activists

Read time: 3 mins

Last week, Chevron's RICO suit against the lawyers representing 30,000 Ecuadoreans impacted by the company's oil pollution in the Amazon came to its inevitable conclusion when the judge presiding over the case, Lewis Kaplan of the Southern District of New York, ruled in Chevron's favor.

Yes, that's RICO as in the Racketeer Influenced and Corrupt Organizations Act, the law written so that mob bosses could be prosecuted for running their criminal empires.

Faced with a $9.5 billion judgement in Ecuador's courts, Chevron came back to the US and counter-sued under RICO statutes, essentially saying the organized opposition to its attempts to evade responsibility in Ecuador amounted to a criminal conspiracy.

Let that sink in for a minute: The lawyers who were trying to help 30,000 Indigenous villagers, farmers, and other poor, rural Ecuadoreans demand accountability from a multinational corporation with a $221.3 billion market cap were charged with corruption by that very same multinational corporation, and a US judge went along with it.

What this means is that the Ecuadoreans are barred from seeking Chevron assets in the US to force the company to pay the $9.5 billion. Chevron has refused to comply with the Ecuador court's ruling, even though Chevron itself argued that Ecuador was the proper jurisdiction for the lawsuit over its 18 billion gallons of oil pollution in the Ecuadorean Amazon. Since the Ecuadoreans had no plans of pursuing Chevron on its own turf, this ruling doesn't have much practical impact on the matter.

What Kaplan's ruling does do, however, is set a terrifying precedent for any company looking to evade responsibility for the consequences of its business operations.

“Federal Court: Plaintiffs' Lawyers Can Be Prosecuted Using Racketeering Laws Originally Intended For Mobsters,” a Forbes headline triumphantly blared. “Every business owner or executive, especially if the business makes a tangible product, should know this case,” the Forbes writer, John Shu, adds.

Bloomberg Businessweek also sees this as a learning moment for all of the corporations out there who find themselves at the receiving end of calls for accountability:

“For several years, corporate defense lawyers and lobbyists have watched Chevron’s experiment with using the federal anti-racketeering statute as an aggressive response to mass-liability lawsuits. Now the results are in—a major victory for the oil company in federal court in New York—and business advocates predict other corporations will follow suit.”

One legal observer, Karen Hinton, who has also done PR work for the Ecuadorean plaintiffs, had this warning for anyone else who has ever dared to work with activists:

Chevron’s theory is hard-hitting press releases and lobbying before Congress and government agencies to draw attention to its actions in Ecuador equal economic extortion and are part of a grand conspiracy to pressure them to pay. Insert your client’s name, your client’s competitors and your client’s issue and you, too, could be facing a RICO lawsuit.

One of the lawyers involved in the case, Deepak Choptra, goes further, saying Kaplan's decision is at odds with the Constitutional rights of the lawyers representing the Ecuadoreans. Choptra released a statement alleging the ruling by Kaplan “effectively outlaws core activity protected by the First Amendment such as bringing lawsuits, holding protests, issuing press releases, and engaging public officials.”

For its part, the Ecuadorean Embassy in the US released a statement saying the ruling “does not exonerate Chevron from its own legal and moral responsibilities resulting from its decades of contamination of the rainforest that has endangered the lives, culture, and environment of countless poor, indigenous people.”

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Whether an impacted site is a corner gas station in Anytown USA or an oil field in South America, it will only get cleaned up through well written and meaningful regulation. Without this, a site will languish in an impacted state for decades, if not centuries. In the mean time, court cases will be won or lost and pulitzer prizes in environmental journalism will be awarded.  

Environmental activists (and maybe journalists and attorneys) should focus more on the chemical/physical conditions of a site - instead of the emotional. And should work directly with the assigned regulatory agency of the country of interest.

Nonetheless, this issue is far from done. From Corporate Social Responsibility News Wire: