Chevron Corp. v. Donziger
871 F. Supp. 2d 229
S.D.N.Y.2012Background
- Lago Agrio Judgment against Chevron in Ecuador led Chevron to sue LAPs, Donziger, Stratus, and others in SDNY for alleged nationwide fraud and RICO scheme.
- Complaint alleges US-based Defendants conceived/financed/ supervised a US-led scheme to extort Chevron by Ecuadorian litigation and related actions.
- Alleged predicate acts include extortion, mail/wire fraud, money laundering, witness tampering, and obstruction of justice.
- Court previously enjoined LAPs from enforcement outside Ecuador and stayed Counts 1–8 pending Count 9; Count 9 dismissed on remand; only eight counts remain.
- Court reviews Rule 12(b)(6) arguments strictly against the amended complaint, with incorporated materials, for purposes of dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RICO §1962(c) applies extraterritorially. | Chevron argues pattern of domestic activity injuring a US plaintiff justifies domestic application. | Donziger Defendants rely on Morrison/Norex to limit extraterritorial reach. | RICO may apply domestically to a domestic pattern; Morrison/Norex not controlling; motion denied on this point. |
| Whether Chevron pleads a sufficient pattern of racketeering activity (the single scheme argument). | Chevron pleads multiple related predicate acts forming a pattern. | D argues single extortion episode yields only one predicate act. | Pattern adequately pleaded; multiple predicates within a single scheme satisfy RICO pattern. |
| Whether predicate acts (extortion, mail/wire fraud, money laundering, obstruction/witness tampering) are sufficiently pleaded. | Chevron asserts comprehensive scheme with diverse acts aimed at coercion and deception. | D argues insufficiency of certain predicates or reliance. | Predicate acts sufficiently pleaded; causes of action survive as to these predicates. |
| Causation and damages: can Chevron recover under RICO damages and obtain injunctive relief? | Chevron asserts direct causation from predicate acts to injury and continued threat to enjoin enforcement. | Defendants challenge proximate causation and ongoing injury. | Chevron adequately pleads causation; injunctive relief may be viable; damages claim survives as to causation. |
| Whether Chevron's common law fraud claim can rest on third-party reliance and/or its own reliance. | Chevron contends third-party reliance suffices; some reliance allegations may support first-party reliance. | D argues lack of first-party reliance and in some aspects third-party reliance is insufficient. | New York law supports third-party reliance; first-party reliance insufficient as plead; claim survives on third-party reliance theory. |
Key Cases Cited
- Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (U.S. 2010) (presumption against extraterritoriality; focus on domestic injury/Application)
- Norex Petroleum Ltd. v. Access Industries, Inc., 631 F.3d 29 (2d Cir. 2010) (RICO silent on extraterritoriality; domestic pattern focus rejected in Norex context)
- CGC Holding Co. v. Hutchens, 824 F.Supp.2d 1193 (D. Colo. 2011) (pattern-focused approach to domestic vs. foreign RICO application)
- United States v. Philip Morris USA, Inc., 783 F.Supp.2d 26 (D.D.C. 2011) (discussed pattern of racketeering activity and domestic focus)
- City of New York v. Smokes-Spirits.com, Inc., 541 F.3d 425 (2d Cir. 2008) (reliance and causation considerations in RICO context)