Chevron Lawsuit Hits K Street Giants, Prompting Charges of Poaching

Posted July 13, 2012 at 5:36pm

K Street can be cruel.

A 20-year-old lawsuit against Chevron Corp.  in Ecuador — a multimillion-dollar matrix of litigation, lobbying and public relations — is exhibit A. The dispute over alleged pollution in the Amazon rainforest has swept up two of Washington’s biggest lobbying practices: Patton Boggs and Ogilvy Government Relations.

And though the firms have been on opposite sides in the litigation, they now have something in common: Rival K Street shops are using fallout from the case to try to lure away Patton Boggs and Ogilvy clients.

It’s called poaching. One firm’s troubles become another’s opportunity.

Patton Boggs represents plaintiffs in the Amazon who have won an $18 billion judgment in an Ecuadorian court against Chevron. But the energy giant has lashed back, blasting the judgment as fraudulent and accusing Patton Boggs, which joined the case in 2010, of perpetuating the fraud, according to court documents and interviews with Chevron representatives.

Ogilvy long served as one of Chevron’s top outside lobbying firms until earlier this year, when the oil company said it discovered that an employee of Ogilvy’s public relations division had previously worked on the side of Patton Boggs and the Amazon rainforest plaintiffs.

Chevron fired Ogilvy, and shortly after that, at least four of the firm’s lobbyists departed, including GOP rainmakers Wayne Berman and Drew Maloney.

Now, enterprising K Streeters say privately they are approaching the clients of both firms, looking to woo them away. An Ogilvy spokesman did not return a call or email seeking comment.

“We will be targeting all of Patton Boggs corporate clients for potential work,” said one GOP lobbyist, who would only speak on condition of anonymity. This lobbyist noted that his firm, along with others, had already set its sights on Ogilvy’s client roster once word of its staffing turmoil become public.

James Tyrrell Jr., a partner at Patton Boggs who is the firm’s point person on the case, said the poaching is part of an effort orchestrated by Chevron.

“There is no doubt that Chevron basically is not only interested in defeating the Ecuadorian plaintiffs, but in punishing anyone that has the temerity to side with the Ecuadorian plaintiffs,” Tyrrell said. “When it comes to poaching clients, whether those people are opportunists or encouraged by Chevron or those working with Chevron, there is no doubt that Chevron is following a scorched-earth policy.”

Poaching certainly is not unique to the Chevron case.

Howard Marlowe, president of the American League of Lobbyists, said “in a difficult economy, we are seeing more, regrettably more, poaching going on.”

Marlowe himself has lost clients to poachers, he said. “It’s something that you wish that you could do something about legally,” he said. “But really there are limitations what you can do under District law.”

Despite uncertainty surrounding the case and its impact on Ogilvy and Patton Boggs, Chevron’s general manager of public affairs, Dave Samson, said the oil company is not in the market for a new K Street shop.

“We have a number of firms that already work with us, so that work has been absorbed by others. We’re not really looking for a new firm at this point. But we’ve had people reach out to us, for sure,” he said.

Chevron claimed a conflict of interest with Patton Boggs after the firm acquired  former Chevron lobbyists in the Breaux-Lott Leadership Group, a lobbying shop founded by former Sens. John Breaux (D-La.) and Trent Lott (R-Miss.), who now work at Patton Boggs. Patton Boggs responded by suing Chevron’s law firm, Gibson Dunn, for tortuous interference in a case that was dismissed on appeal last month.

“This was a frivolous lawsuit meant to change the subject from the fraud they were immersed in,” Gibson Dunn partner Theodore Boutrous said.

The original court case was brought by thousands of Ecuadorian residents, who alleged that a subsidiary of Texaco — which was later acquired by Chevron — dumped oil waste that left their local environment polluted. After years of litigation, a court in Ecuador ruled that Chevron should pay $18 billion to the plaintiffs. But Chevron lawyers argue that they have evidence that experts and lawyers in the case committed fraud, and they have brought a racketeering case of their own in U.S. courts.

Karen Hinton, a spokeswomen for the plaintiffs, said her side “categorically” denies the fraud charges and called it part of an effort by Chevron to distract attention from its legal loss.

“Chevron continues to do everything it possibly can to not pay,” Tyrrell said. As for Patton Boggs’ involvement in any alleged fraud, Tyrrell rebutted an argument that Chevron lawyer Randy Mastro of Gibson Dunn made in a D.C. court on July 6. Mastro said, according to a court transcript: “Mr. Tyrrell says ask the question, would Patton Boggs be risking their reputation on these Ecuadorian plaintiffs and throwing themselves in and doubling down on the fraud? The answer, unfortunately, is yes.”

In an interview, Tyrrell said that Mastro accused Patton Boggs of the “most egregious fraud he’s ever seen,” but, Tyrrell noted, at the time Patton Boggs wasn’t even involved in the case.

Even the U.S. Chamber of Commerce has gotten into the mix. In a July 11 editorial, the group’s president, Thomas Donohue, spoke out again “tort tourism” and said the Supreme Court should hear the Chevron case “and rule that when there is evidence that a foreign judgement has been procured by fraud or corruption, the victim of the ill-gotten reward should have the right to preemptively block recognition of the award in U.S. courts.”