Chevron Corp. v. Donziger
2011 U.S. Dist. LEXIS 41170
S.D.N.Y.2011Background
- Lago Agrio judgment creditors (LAPs) obtained >$18 billion against Chevron’s predecessor Texaco; Chevron seeks a declaratory judgment that the Lago Agrio Judgment is not recognizable or enforceable outside Ecuador.
- Chevron moved for bifurcated, expedited discovery and trial on the declaratory-judgment claim (Count 9) to determine non-recognition/enforceability quickly due to imminent outside-enforcement risks.
- LAPs and others oppose bifurcation on Seventh Amendment/separation concerns and argued about potential prejudice and overlap of proofs.
- The Court previously issued a preliminary injunction barring enforcement actions outside Ecuador; enforcement remains possible abroad and could be immediate.
- The Court held that Count 9 should be bifurcated for separate trial, emphasizing expediency, potential worldwide impact, and manageable overlap, while preserving Seventh Amendment rights.
- The Court notes it can adjust the bifurcation order to protect rights as proceedings evolve.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Count 9 should be bifurcated for a separate trial | Chevron seeks prompt resolution to prevent global enforcement | Defendants argue bifurcation risks Seventh Amendment rights and prejudice | Yes; bifurcation granted with safeguards. |
| Seventh Amendment impact of bifurcation | Bifurcation does not deprive rights if underlying issues are trial-ready | Separation could deny jury on common issues | Not violated; no proof of mandatory non-jury on Count 9. |
| Potential overlap of Count 9 with other counts | Some overlap may exist but can be managed | Overlap could prejudice or duplicate proof | Overlap possible but manageable; separate trial warranted. |
| Procedural basis for expedited ruling under Rule 57 and 42(b) | Early resolution is highly desirable given enforcement risk | Need to avoid unfairness and preserve trial rights | Rules support expedited, separate-trial approach. |
| Effect on appeal and severance options | Separate trial facilitates prompt appellate review | Uncertain paths for appeal | Court may consider severance or Rule 54(b) as needed; not decided. |
Key Cases Cited
- Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959) (right to jury on underlying issues governs bifurcation)
- Dairy Queen v. Wood, 369 U.S. 469 (1962) (legal claims determined before equitable ones when issues overlap)
- Pereira v. Farace, 413 F.3d 330 (2d Cir. 2005) (standard for evaluating declaratory judgments and underlying claims)
- Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959) (reiterated principles on jury rights in declaratory actions)
- Aetna Life Ins. Co. v. Haworth, 300 U.S. 227 (1937) (Declaratory Judgment Act is procedural; underlying substantive rights control)