By Megan R. Wilson - 03/31/14 05:10 PM EDT
A federal judge on Monday gave Chevron the green light to pursue litigation against Patton Boggs, adding to the troubles facing the powerhouse law and lobby firm.
U.S. District Judge Lewis Kaplan on Monday dismissed Patton’s claim that Chevron “delayed unreasonably” in bringing the charges and said the firm’s other arguments against the complaint were “without merit.”
Chevron is seeking rewards for “compensatory damages” and “punitive damages” for an “amount to be proven in trial,” plus attorney fees, according to court documents.
Rick Talisman, the general counsel for Patton Boggs, said Chevron's claims are "baseless."
“If this case advances beyond these jurisdictional arguments, we look forward to showing the lack of merit in Chevron’s allegations regarding our law firm. High-stakes litigation requires the ability to take a punch even when it is below the belt,” Talisman wrote to The Hill in a statement.
“We have no doubt that we acted ethically and properly in assisting these communities, and that we will be able to demonstrate this to the court if that becomes necessary," he said.
The ruling could add to the strain on Patton, which is discussing a merger with Squire Sanders after revenue declines forced the firm to make layoffs and undergo a massive restructuring.
While the firm's all-star lobby shop in Washington remains relatively unscathed, Patton closed its Newark, N.J., office, and many partners have left. The Hill previously reported that distributions due to some partners at the end of February were briefly delayed, which the firm attributed to “an administrative decision."
Patton Boggs has also hired restructuring advisory firm Zolfo Cooper to help it get back on track.
Nevertheless, Patton Boggs is attracting business, having signed more than 40 new lobbying clients since the beginning of 2013, and the firm’s leaders have said they expect to weather the storm.
Meanwhile, the merger talks with Squire Sanders have escalated, according to multiple reports.
Patton Boggs signed a “letter of intent” to merge with the larger law firm, which boasts 1,300 attorneys, Reuters reported last week. The letter does not mean that a deal is close to final, only that the discussions are quickly moving forward.
"They have been going quite well, and they are at a fairly advanced stage," Ed Newberry, Patton Boggs's managing partner, told The Hill two weeks ago regarding talks with Squire. "It's important in the long-term to expand our platform, and the only way to sufficiently expand our platform is a combination."
It remains to be seen whether Chevron’s litigation will have any impact on the merger talks.
The legal fight centers on a 2011 case in Ecuador, where the Amazon Defense Front was awarded a $19 billion judgment against Chevron. The damages were later reduced to $9.5 billion by the National Court of Justice, Ecuador’s highest court.
Since the ruling, indigenous farmers from a region in the Amazon called Lago Agrio and their lawyer, Steven Donziger, have been attempting to collect money from Chevron in other countries, because the oil company has little or no assets in Ecuador.
Patton Boggs joined in the lawsuit, which is part of a decadeslong land dispute between the villagers and Chevron, in 2010.
Chevron alleged in court documents last year that there was “a fraudulent scheme perpetrated by Patton Boggs and other American plaintiffs’ attorneys by means of, among other things, a U.S. public pressure campaign related to a corrupt litigation in Ecuador.”
“Patton Boggs has persisted in its efforts to direct, fund, and expand the campaign, and to obstruct justice to prevent discovery of its role in the fraud,” the company said in the court documents.
When Chevron first filed the legal complaint, Patton Boggs called it a “scare tactic.”
"Chevron’s proposed complaint against Patton Boggs is perhaps the starkest example yet of how Chevron will use its limitless resources to intimidate and harass anyone that dares to help the Ecuadorian plaintiffs in their 20-year battle for justice. This cynical strategy will not work,” the firm wrote, according to an archived document.
“We are proud that we have helped the indigenous and farming communities that have been so adversely impacted by Chevron’s actions. Patton Boggs has acted conscientiously, ethically and in good faith at all times since becoming involved in this case in 2010, and will not be intimidated by Chevron’s scare tactics,” the statement said.
In a separate case, Chevron alleged that Donziger engaged in fraud and racketeering. Patton Boggs did not participate in that lawsuit.
Earlier this March, Kaplan issued a nearly 500-page ruling against Donziger and declared that the trial in Educador was rife with criminal conduct and corruption.
That ruling prevents the villagers and their legal counsel from collecting any damages in the United States and could preclude them from seeking legal redress anywhere else. Donziger has vowed to appeal.
Patton Boggs was not the subject of the ruling against Donziger, but the firm was mentioned more than 30 times in the decision.
Now, Chevron is trying to tie Patton Boggs lawyers to that fraud. The company hailed the judge’s ruling on Monday.
“This month, a U.S. Federal Court found that the Ecuadorian judgment against Chevron was the product of fraud and racketeering activity, finding it unenforceable. Patton Boggs came into the case at a critical moment when the scheme was collapsing and proceeded to resurrect it and then try to cover it up,” Chevron said on Monday through a spokesman.
“Chevron is pursuing claims against Patton Boggs to hold it accountable for its role in perpetuating this fraud against the company.”
— This story was updated at 5:45 p.m.