The following are excerpts from recent news stories:
Law Blog doesn’t know where U.S. District Judge Lewis Kaplan plans to spend the holidays, but one thing is sure: he’ll have plenty to read while he’s there. Judge Kaplan is presiding over the racketeering case of New York lawyer Steven Donziger, whom Chevron Corp. has accused of fraud, conspiracy and a host of other unseemly actions relating to a massive environmental verdict against the oil giant in an Ecuadorean court.
Mr. Donziger led a team representing Ecuadorean villagers who sued over decades-old pollution from oil exploration in the Amazon rainforest. Chevron has denied liability for any contamination, and says the $9.5 billion judgment issued in 2011 was fraudulently obtained because the plaintiffs’ team allegedly agreed to pay off court officials, fabricated evidence and ghostwrote much of the final judgment.
In the latest filings Chevron (which submitted more than 900 pages) portrayed Mr. Donziger as a money-mad attorney who engineered a transnational fraud in hopes of a huge payoff, and said he and the defendants failed to disprove any of the claims against them…
Thus, this trial record proved what Chevron has been saying all along—that Donziger, who professes merely to be a lawyer representing clients, is, in reality, a liar, con man, and criminal who has headed a racketeering enterprise targeting Chevron as its deep-pocketed victim… Indeed, Donziger himself stands to personally make $600 million or more if this scheme succeeds. Chevron asks this Court to exercise its equitable power to prevent Defendants from profiting from their crimes, and to remedy the harm to Chevron. (Wall Street Journal, Law Blog)
As is typical in this decades-long battle, the two sides agree on almost nothing. Chevron says it’s the victim of an audacious shakedown scheme in which Donziger enlisted Ecuadorean villagers to serve as cut-out plaintiffs for a lawsuit that would largely benefit himself and outside financiers, including billionaire online poker magnate J. Russell DeLeon…
Claim: The Ecuadorean plaintiffs wrote the “independent” expert’s report the court relied upon to assess damages against Chevron. Chevron presented overwhelming evidence — including the admissions of executives at Stratus, a Colorado environmental consulting firm — that the report of court-appointed expert Richard Cabrera was actually written by the plaintiffs. Chevron also presented evidence that Donziger tried to hide this fact, including testimony from lawyer Jeff Shinder that he quit the case after learning of the deception…
Claim: The plaintiffs wrote Judge Zambrano’s judgment against Chevron. Zambrano testified he worked “very hard” on the 188-page judgment “for many hours, many days, including several weekends.” But Chevron’s lawyers tripped up the judge by getting him to admit he didn’t know the meaning of terms he’d used in his judgment, including “TPH” (total petroleum hydrocarbons), which appears 38 times in the judgment and accounts for $5 billion of damages. He also couldn’t explain the meaning of the English word “workover,” which appears twice in the judgment and also in plaintiff materials Chevron says the judge copied verbatim. The judge also said he dictated almost the entire judgment to an 18-year-old assistant, although he couldn’t explain how typographical errors in plaintiff legal documents made it through dictation to appear in his judgment.
Chevron, in its 350-page filing, cites numerous examples of alleged fraudulent behavior in the U.S., including the creation of the Cabrera report in Colorado. “The majority of the conspirators were American, carrying out their fraudulent scheme largely in and from the United States through evidence manufactured here, for the purposes of extorting an American company,” Chevron says.
The facts: Starting in 1964, Texaco drilled in the Oriente region of Ecuador in a consortium with Gulf Oil and Ecuador’s state-owned oil company, now called Petroecuador. Texaco managed the operation but Petroecuador was majority owner and got the vast majority of the profits: $23 billion from 1964 to 1992, compared with $500 million for Texaco, according to Chevron, which bought Texaco in 2001.
Ecuador pushed Texaco out of the country in 1992 and has subsequently drilled 414 wells, 30% more than during the consortium, spreading pollution widely through the jungle.
Chevron says Texaco paid $40 million in a cleanup effort from 1995 to 1998, in exchange for a release from the government of Ecuador — and expressions of gratitude from Hugo Camacho, one of the plaintiffs suing Chevron. Donziger originally sued in 1992 in New York. In 1999 a new regime in Ecuador passed a law allowing private citizens to sue over environmental damage, and after Donziger’s case was transferred to Ecuador he filed a new case in 2003, naming Chevron.
Why don’t the plaintiffs sue the primary polluter in the jungle, Petroecuador? They say they can choose who to sue, and Chevron can always try to recover any judgment from Petroecuador. But Chevron says the plaintiffs also negotiated a deal with the government of Ecuador in 1996 waiving all claims against Petroecuador. (Forbes)
AFTER THE DONZIGER TRIAL, CHEVRON CAN REST EASY
If Chevron outside counsel Randy Mastro of Gibson, Dunn & Crutcher has any regret after the Chevron Corporation v. Donziger trial, it could only be that he didn’t request a jury. To any objective observer, the Manhattan bench trial was a rout. Virtually all of Chevron’s claims about serial deception by the lawyers who sued it in Ecuador were persuasive and corroborated. Virtually none of Chevron’s opponents’ explanations were plausible or corroborated. Their star witness, the Ecuadorian ex-judge Nicolas Zambrano, wearing a winter cap with an Angry Birds insignia, flailed on the stand at the most basic questions about the opinion he claims to have written. Chevron nemesis Steven Donziger, who is a master of public relations outside the courtroom, responded with evasions.
In a few months U.S. District Judge Lewis Kaplan will issue a doorstop opinion that reflects these evidentiary realities. In due course the arbitrators hearing the meta-dispute between Chevron and Ecuador will do the same. Donziger may win points now or on appeal about the U.S. law implications of Kaplan’s findings of fact, and Ecuador may win points about the international law implications of the arbitration tribunal’s findings of fact. But the facts will stand. And regardless of their formal legal effect, the facts will neutralize the Ecuadorian judgment against Chevron, now valued at $9.5 billion. Somewhere along the line as Chevron made its case in U.S. court, the Ecuadorian judgment became unenforceable for laughability. If Donziger’s dreams of recovery weren’t already dead, they died with the gasps in the gallery when the judge in the Angry Birds cap drew blanks about his own purported decision. (Litigation Daily)
CHEVRON APPEALS FRAUDULENT ECUADOR COURT DECISION
U.S. energy company Chevron Corp appealed on Monday to Ecuador’s highest court, asking it to cancel a $9.5 billion fine for polluting the Amazon rainforest in a long-running case. Last month Ecuador’s National Court of Justice upheld a 2011 verdict by a lower court that Chevron was responsible for pollution in the area caused by U.S. oil firm Texaco, whose assets were bought by Chevron in 2001.
Chevron says that 2011 ruling was obtained by fraud and it is pursuing a case in New York against the U.S. lawyer representing the plaintiffs who it says resorted to corruption to win what it calls an “illegitimate” verdict. “Chevron Corp asked the Constitutional Court of Ecuador today to revoke the fraudulent $9.5 billion sentence against the company because of the multiple violations of constitutional guarantees,” the U.S. company said in a statement.
Chevron says Texaco cleaned up the area before handing it to Ecuador’s state oil company, Petroecuador, which Chevron says bears the responsibility. (Reuters)
Last month Ecuador’s National Court of Justice upheld a 2011 verdict by a lower court that Chevron was responsible for pollution in the area caused by US oil firm Texaco, whose assets were bought by Chevron in 2001.
Chevron says that 2011 ruling was obtained by fraud and it is pursuing a case in New York against the US lawyer representing the plaintiffs who it says resorted to corruption to win what it calls an “illegitimate” verdict. (Upstream)
INTERNATIONAL HEARINGS CONTINUE IN DC IN JANUARY
Meanwhile, on a parallel legal track, Chevron is trying to extinguish its pollution liability by seeking an international-arbitration ruling against the government of Ecuador. In that action, the San Ramon (Calif.) energy giant has alleged that under a bilateral investment treaty with the U.S., Ecuador had an obligation to protect the due-process rights of an American company doing business in the Andean country. (The company in question was actually Texaco, which Chevron acquired in 2001, eight years after the pollution litigation began.)
A panel of three arbitrators is scheduled to reconvene in Washington, D.C., in January to continue its years-long assessment of Chevron’s treaty claims. Much of the evidence in the arbitration case mirrors what Chevron presented during the six-week civil-racketeering trial in New York in October and November…
That’s not to say that the outcome—Chevron’s expected victory—would be any different if Gibson, Dunn had faced a more muscular opponent. While Winston & Strawn’s filings in the arbitration case raise some interesting questions, Ecuador’s lawyers have little fresh to say, on most topics, about the troubling evidence of crooked Ecuadorian judicial proceedings. (Bloomberg BusinessWeek)
ADDENDUM: ECUADORIAN PRESIDENT LASHES OUT AT AMERICAN MEDIA
Ecuadorian president Rafael Correa lashed out at the Washington Free Beacon over the weekend, accusing it of being in hock to oil company Chevron, which is engaged in a legal battle involving alleged environmental damage in the South American nation.
“Con cariño para @FreeBeacon” – with love, for the Free Beacon – Correa wrote on his official Twitter account. He included a picture that called the Free Beacon “corrupt” and wished readers a Merry Christmas and Happy New Year.
The president was responding to an article that detailed the government’s ties to the Spanish anti-piracy firm Ares Rights that has allegedly abused intellectual property protections on YouTube in an attempt to remove Chevron’s videos criticizing the government’s role in an $18 billion civil judgment against the company.
The Free Beacon story detailed the ties between Ares Rights and the Ecuadorian government and noted allegations by Chevron and legal blogger Adam Steinbaugh that the company’s copyright infringement claims were naked attempts to suppress communications critical of the government.
The company has extensively documented evidence of fraud on the plaintiffs’ part on its website, the Amazon Post, and in YouTube videos. Ares Rights targeted the latter and succeeded in getting a number of videos removed. They were later reinstated.
The OAS special rapporteur on press freedom, the office that Correa sought to weaken, criticized the Correa administration in 2011 for using “desacato” (literally, “disrespect,” similar in effect to libel) laws to silence journalists that criticized the government.
“Ecuador has spearheaded a resurgence in the use of archaic criminal defamation laws…to silence dissent,” the Committee to Protect Journalists wrote in March. Those CPJ remarks came after the director of daily newspaper La Nación was jailed for exposing wrongdoing by María Helena Villarreal, the governor of Ecuador’s Carchi province. Villarreal resigned after the paper published its expose.
The Ecuadorian government sentenced in 2011 three editors and one reporter at El Universo, one of the country’s largest newspapers, to three years in prison for supposedly defaming Correa.
Condemnation of the Correa administration by international human rights watchdogs has elicited conspiratorial replies from Correa’s administration.
A recent report from Transparency International ranked Ecuador 102 out of 170 nations in TI’s “corruption perceptions index.” The government brushed off the findings because TI has received financial support from Chevron. (The Washington Free Beacon)
Canadian Court of Appeal Decision in Ecuador Enforcement Proceeding
Separately, in Canada, the Court of Appeal for Ontario said that the Ecuadorian plaintiffs could try their luck in the Canadian judicial system after Chevron flatly refused to pay up on a $9.5 billion judgment in Ecuador. The Canadian ruling was not a victory on the merits for the rain-forest residents fighting Chevron.
The oil company has vowed never to comply with the 2011 Ecuadorian judgment, which Chevron claims was based on judicial coercion, fabricated evidence, and bribery. In fact, Chevron has sued the main American lawyer for the Ecuadorian plaintiffs, Steven Donziger, accusing him of running what amounts to a racketeering conspiracy designed to shake down the company. (Bloomberg BusinessWeek)