Chevron to Face Trial in Nigeria Suit
A federal judge has ordered ChevronTexaco Corp. to stand trial for the actions of a subsidiary that allegedly worked closely with Nigerian military personnel who killed villagers protesting the oil giant’s operations.
The ruling, made public Thursday, is a setback for the second-largest U.S. oil company, one of several multinational corporations being sued in U.S. courts over alleged human rights abuses overseas.
Unocal Corp. is facing trial on a similar lawsuit filed by 15 Myanmar refugees who are accusing the El Segundo oil company of abuses committed during the construction of a pipeline in the Asian country, formerly known as Burma.
“These ‘unique’ trials aren’t going to be so unique,” said Elliot Schrage, a fellow at the Council on Foreign Relations in New York and former vice president for global affairs at Gap Inc. The suits against Unocal and San Ramon, Calif.-based ChevronTexaco “suggest that corporations are increasingly at risk of civil liability in U.S. courts based on their global business practices.”
Rulings in the two cases also suggest that U.S. judges don’t view such claims as frivolous, Schrage said.
“There’s no doubt” that oil and mining companies have learned a lesson from the Unocal case, he said. “The real warning shot is to other global corporations that have global supply chains that do business in countries with repressive practices.”
A group of Nigerian villagers filed suit against ChevronTexaco in San Francisco in May 1999, accusing the company and its subsidiary Chevron Nigeria Ltd. of responsibility for a series of deadly skirmishes involving the African nation’s military.
In one incident, the plaintiffs allege, military and police hired by Chevron Nigeria to provide security killed two villagers when they fired on protesters who had boarded the company’s Parabe offshore drilling platform. At the time, the protesters were holding a large group of oil workers hostage.
ChevronTexaco disputes the accounts laid out in the lawsuit. The parent company has said it didn’t authorize the military actions in Nigeria and wasn’t involved in deciding how Chevron Nigeria would react to the platform protest.
In her ruling Wednesday, U.S. District Judge Susan Illston cleared ChevronTexaco and subsidiary ChevronTexaco Overseas Petroleum of “direct” liability, ruling that there was no evidence that those companies directly ordered the actions at issue in the case.
But the judge ruled that there was enough evidence to convince a reasonable juror that ChevronTexaco might have “indirect” culpability and be liable for unspecified damages because it had an “extraordinarily close relationship” with Chevron Nigeria.
“They had their hand on the pulse of what was going on in Nigeria because it affected profits,” said Theresa Traber, an attorney representing the Nigerians.
UCLA law professor Stephen M. Bainbridge said it wasn’t surprising that Illston ordered the case to go to trial.
These cases “really don’t lend themselves to summary disposition before trial, particularly in complex cases like the Unocal and Chevron cases,” he said.
In a statement, ChevronTexaco officials said: “We agree with the court’s determination that there is no evidence that ChevronTexaco or ChevronTexaco Overseas Petroleum can be held directly liable for events complained of by plaintiffs. ChevronTexaco continues to believe that the Nigerians who unlawfully occupied an offshore drilling platform and held some 200 Nigerian and expatriate workers hostage for three days have no basis in fact or in law to claim that their rights were violated when the Nigerian military restored order.”
The oil company, California’s largest publicly traded corporation, is one of several major oil companies with operations in Nigeria. The company produced a net equivalent of 131,000 barrels of oil there a day in 2003, but its production has been interrupted periodically by local incidents, including instances in which its employees were held hostage.
U.S. business groups have pressed the courts to turn back the tide of litigation from abroad. The U.S. Supreme Court is set to hear arguments in a Mexico case that is expected to resolve some of the disputes over the use of the 215-year-old Alien Tort Claims Act to bring such suits.
“Whatever happens in these individual cases, the real matter is the case before the Supreme Court,” said Timothy Deal, senior vice president of the U.S. Council for International Business, an advocacy group. “We’re hoping that there will be a clean ruling on this matter and clean up this issue.”
Shares of ChevronTexaco fell $1.20 to $84.68 on the New York Stock Exchange. News of the ruling spread after regular trading.
