Inside Chevron’s Discovery Campaign in Ecuador – The American Lawyer

Michael D. Goldhaber, The American Lawyer

In 2009, Chevron Corporation was on a path to losing a $9.5 billion judgment in an Amazon courtroom for oil pollution in Ecuador. What the plaintiffs saw as the world’s greatest environmental trial, the company perceived as the world’s greatest litigation fraud. Either way, it evolved into the world’s most intensive dispute. To expose the truth about the Amazon trial—and to neutralize the Ecuadoreans’ indomitable lawyer Steven Donziger—Chevron would eventually hire more than 2,000 professionals from 60 law firms.

Paul Dans was far from the most illustrious. Sure, he had the credentials—two degrees from MIT, years of training as an associate at Dewey & LeBoeuf and Debevoise & Plimpton. But when the music stopped in 2009, Dans was passed over for partnership at a less lofty firm, and he found himself calling old contacts for contract work. He got a call from Miami’s two-partner Rivero Mestre, which represented one of the in-house Chevron lawyers indicted by Ecuador. They wanted a fresh pair of eyes on the case file. In the early summer of 2009 they offered Dans $85 an hour—less than 5 percent of the rate of the top biller at Gibson, Dunn & Crutcher, which has led Chevron’s U.S. counter-strategy. Dans said no. At summer’s end his recruiters came up to $100 an hour, and Dans relented.

Chevron regards the Amazon case as a blood libel, and it is willing to spend what it takes to clear its name. By The American Lawyer’s estimate, America’s third-largest company has spent more than half a billion dollars on litigation costs, which is likely a record for a single dispute. Yet to catch a renegade like Donziger, who worked at his kitchen table in a two-bedroom condo on New York’s Upper West Side, it took another lawyer off the midtown grid, who often worked at his kitchen table in a two-bedroom rental two blocks away. Dans started tugging on the right thread, and Gibson Dunn kept tugging. By the time Chevron and Gibson were done with their ingenious discovery campaign, Donziger would be stripped virtually naked.

Two days after Labor Day 2009, DanS plopped down his things at an empty cubicle with a cathode ray tube monitor at Rivero Mestre. There was a new feature film documenting the Ecuadorean case, “Crude,” and Dans thought that would be a logical place to begin. He clicked on the “Crude” trailer that afternoon, and couldn’t stop clicking. “This is something that you would never do in the United States,” Donziger said on screen as he prepared to ambush a judge with TV news cameras. “It’s dirty.”

Dans replayed the sequence five or 10 times. Well if you would never do it in the U.S., thought Dans, you should never do it anywhere. Did this guy just confess that he checked his ethics at JFK?

Dans saw that the movie was playing at New York’s IFC Center through September 20th. The timing would be rough because he had a visit planned to his wife, who was working in Dublin. Sitting in his Dublin hotel room the morning of the 20th, Dans kept thinking back to the trailer. At the last moment he booked a flight to New York instead of Miami, and bought tickets for the last evening of “Crude.”

Watching the movie in New York, Dans saw a lot more of concern. But he focused on an innocent scene where Donziger let his dog frolic in Riverside Park. Dans knew the location well; he lived two short blocks from Donziger, and jogged every evening past the same park bench. What struck Dans is that the dog was off leash in a park where leash laws were strictly enforced. This is a guy who flouts the rules, he thought.

Back at his desk, Dans noticed that the director, Joe Berlinger, boasted in his production notes of shooting 600 hours of raw footage. If Donziger was so indiscreet in the final cut, he wondered, what might he do in the outtakes?

Blessed with an insider’s legal skills and an outsider’s sense of the possible, Dans whipped up a memo calling for Chevron to subpoena the outtakes. Chevron’s in-house lawyers loved the idea, which was already percolating, but the bigger-name outside counsel urged caution. The media establishment would be in an uproar, and the little hints of misconduct in the movie probably weren’t enough to pierce the filmmaker’s First Amendment shield. Dans’ memo was put on a shelf.

At the time of the movie, both parties agreed that the linchpin of the Ecuadorean trial was the “Cabrera report”—a global damages report by the supposedly independent court-appointed expert Richard Cabrera, recommending up to $27 billion in damages. Cabrera swore unambiguously in Ecuadorean court that he had nothing to do with the plaintiffs, and vowed to operate with complete “independence vis-à-vis the parties.” When challenged, he reaffirmed: “I do not have any relations … with the plaintiffs,” and it’s “an insult against me that I should be linked with [them].”

Nonetheless, Chevron saw a host of small clues that Cabrera was coordinating with the plaintiffs. He openly used plaintiffs’ technicians on his first day of sample collections, and at one later point a plaintiffs’ technician seemed to surreptitiously tap his foot to guide Cabrera’s sampling location. The plaintiffs always seemed to mysteriously arrive in the field at the same time as Cabrera, even when he was hours late, and when Cabrera filed his report, plaintiffs’ staff were in attendance. Why did Cabrera’s report read better in English when it had supposedly been written in Spanish? Why was the plaintiffs’ supposed English translation so much better than Chevron’s, when Chevron could hire the best translators in the world?

Chevron was convinced that Cabrera was in cahoots with the plaintiffs, but as yet it had no smoking gun.

Enter Gibson Dunn. Chevron tapped Gibson Dunn just as the law firm was wrapping up a big win for Dole Food Company Inc. in a case with eerie parallels. In fall 2009, Gibson Dunn convinced a Florida federal court to declare a foreign judgment unenforceable because of corruption in the Nicaraguan courts. In a related case in California state court, Gibson Dunn showed that Nicaraguan farmworkers with children had been coached to swear that pesticides had made them sterile. Gibson Dunn’s Andrea Neuman, who used her niceness as a weapon, broke the case open when she got a Nicaraguan farmworker, who had never even worked on Dole’s banana plantations, to admit that he had been programmed to testify “like a parrot.”

The main lesson that Neuman, now tapped by Chevron, drew from the Dole litigation is that a company targeted by a foreign plaintiffs’ fraud needed to aggressively expose it through the U.S. courts. “Global offense, domestic defense,” is how she thought of it.

But Dole’s foes had come to the U.S. themselves—suing in California, and trying to collect a Nicaraguan judgment in Florida. How could Chevron get the Ecuadorean plaintiffs into U.S. court? The answer was a then-obscure law called 28 U.S.C. §1782, which allowed for U.S. discovery in aid of foreign actions. Wielding §1782, Neuman ultimately won more than 20 discovery actions from coast to coast. Chevron’s in-house counsel took to calling her Top Gun.

Neuman suspected that plaintiffs’ scientists at Stratus Consulting stood behind Cabrera, because she recognized Cabrera’s arguments from Stratus mediation papers. She urged a frontal attack. After much internal debate, Chevron opened its discovery campaign with a demand for Stratus’ work product in December 2009. Once a Denver judge granted that motion in March 2010, it was only a matter of time before Chevron confirmed its suspicions about the Cabrera report: It was based on Stratus work product. Yet the plaintiffs still did not roll over. The strategy, as Donziger described it in a series of emails with his discovery lawyers in late spring, was to “fight hard on all fronts all the time and concede nothing, buy as much time as possible.”

In internal discussions, one Donziger adviser floated an alternative approach: “I wonder whether we do better by explaining that we authored the report—rather than letting Chevron tell that story like Nancy Drew.” Luckily for fans of legal thrillers and narrative nonfiction, he failed to carry the day.

Chevron put some ingenious 
detectives on the ghostwriters’ trail. But improbably, its closest answer to Nancy Drew was its soft-spoken chief scientist on the case, Sara McMillen. To prove Cabrera’s ties to the plaintiffs, McMillen focused on a health study done by a Spanish biologist named Carlos Beristain as part of the Cabrera report.

The first hint that Beristain’s independence was compromised came when the plaintiffs accidentally sent an email to Chevron’s local lawyer that referred to a health study by the plaintiffs. McMillen thought that it sounded suspiciously like the Beristain study cited in the Cabrera report. Googling Beristain, she found a Spanish nonprofit’s website that cited the plaintiffs’ group as a participant in Beristain’s health study. To McMillen, this suggested that the two studies were one and the same.

When Chevron told the Ecuadorean court what it had found, the plaintiffs accused Chevron of fabrication, and the Spanish Web page vanished. McMillen, who had saved a screenshot, was shocked by plaintiffs’ brazenness. This fraud goes even deeper, she thought to herself.

McMillen recalled a scene in “Crude” where the plaintiffs’ team talked about health issues with indigenous residents in the community of Dureno. She felt in her gut that this meeting was part of the supposedly independent health study that Beristain conducted for the Cabrera report. Neuman’s lieutenant, Mike Crimmins, a Gibson Dunn counsel who later left the firm to head the detective agency Investigative Research Inc., directed Chevron’s gumshoes at Kroll to hone in on the Dureno scene. Their goal was to look for evidence that the plaintiffs and Cabrera—who swore they had nothing to do with each other—were inappropriately mixing their functions and personnel.

On the morning of March 24, 2009, Kroll associate Tamar Brott rolled into the suburban Los Angeles driveway of Sam Anson, a former journalist who was leaving Kroll to form his own investigative boutique, called Custom Information Services. They had already begun to log “Crude” footage, and they were all set to continue that morning. But Brott discovered she’d left her flash drive with a copy of “Crude” at home, and Anson’s wasn’t working. Anson gave his younger colleague a hard time. Brott didn’t want to drive home during an L.A. rush hour. She suggested that they look for a live-streamed version. They found one on Netflix, and began to review the Dureno scene.

Five seconds into the scene in the Netflix version, a man in a wide-brimmed hat strolled across the floor. Anson and Brott were riveted: That man was not in the DVD version. At 19 to 24 seconds, the camera again panned past him, arms crossed and head nodding. At 31 to 32 seconds, the man who wasn’t there was writing notes on a whiteboard. And he looked very familiar.

Anson called Crimmins on the phone. “Beristain’s in ‘Crude!'” he said. “He’s in the Dureno scene.” It was the connection they were looking for. Crimmins told Anson to get a high-definition camera and tripod and film the computer screen. They knew they had found the smoking gun, and they didn’t want it to disappear without a trace. To find a link between the plaintiffs and Cabrera’s team was good. If it turned out plaintiffs were trying to cover it up, that’d be even better.

Later that day, Gibson Dunn emailed Rivero Mestre to ask for their latest draft petition to subpoena the “Crude” outtakes. Chevron filed it two weeks later.

In the litigation that followed, Donziger’s attorneys asserted that the cut footage had no relevance to Chevron’s claims. When Cabrera’s team mixed with the plaintiffs’ team at the Dureno meeting, they argued, it was as innocuous as a few New York lawyers bumping into each other at a cocktail party. First Amendment guru Floyd Abrams—representing The New York Times, Dow Jones, CBS and CNN—argued that discovering outtakes would chill documentary filmmaking.

Judge Pierre Leval of the U.S. Court of Appeals for the Second Circuit, a well-respected liberal, took the First Amendment argument with the seriousness it deserved. But he reasoned that the “independence of the journalistic process is crucial”—and he concluded that “Crude” was not independent journalism. It bothered the court that Donziger had solicited the director, Joe Berlinger, to make the film. And it especially bothered the court that Berlinger had cut the Dureno footage at the plaintiffs’ demand. Indeed, in an email that turned up in discovery the plaintiffs’ local lawyer Pablo Fajardo had veritably begged Berlinger to make the cut: “This is so serious that we could lose everything, or a great deal, just because of these minuscule shots. I ask that you help me with this—for me this is extremely urgent.”

Berlinger complied, and the price was to hand over his 600 hours of outtakes. It later emerged that both the film and the litigation were mostly financed by a law school friend of Donziger, online gaming mogul Russell DeLeon.

On July 22, 2010, the first files of “Crude” outtakes crossed the desk of Gibson Dunn associate Kristen Hendricks. The first scene she looked at was from March 3, 2007. It showed the plaintiffs side all but giving Cabrera marching orders. In a PowerPoint session with Cabrera present, Fajardo told his troops to “make certain that the expert constantly coordinates with the plaintiffs’ technical and legal team.” Chevron’s “main problem right now is that it doesn’t know what the hell is going to happen,” he joked. “I hope none of you tell them, please.”

After the appreciative laughter faded, Fajardo summed up. According to Chevron’s translation: “What the expert is going to do is state his criteria, alright, and sign the report and review it. … But all of us, all together, have to contribute to that report.”

Cabrera showed up on camera for only five seconds near the start of the seven-hour meeting—and the camera seemed to rush by—but there was no doubt he was there. The next day at breakfast, a plaintiffs’ consultant suggested that it was “bizarre” that Cabrera had been in attendance. Donziger tugged on his earlobe, and told the cameraman that the conversation was off the record.

Hendricks left a voicemail for Crimmins: “You were right. Call me.” As the lawyers found more and more “hot clips,” they circulated them internally.

“Amazing,” remarked Gibson Dunn partner William Thomson. “Everything you always knew to be true, but there it is on the screen.”

The American Lawyer magazine petitioned 
U.S. District Judge Lewis Kaplan for the outtakes, and posted highlights at americanlawyer.com. Yet Donziger was ready with explanations. Suddenly, it seemed that the relationship with Cabrera that he had hidden and denied for three years was perfectly legitimate, and to suggest otherwise was disrespectful to Ecuadorean legal culture. Suddenly, after three years of touting Cabrera publicly and privately as the trial’s linchpin, Donziger asserted he was just another expert. This played well in the media. But the U.S. courts weren’t convinced, and they gave the green light to almost any discovery that Chevron requested.

“What has blatantly occurred in this matter would in fact be considered fraud by any court,” observed one magistrate judge. The “Crude” outtakes, remarked another, “sent shockwaves through the nation’s legal communities, primarily because the footage shows, with unflattering frankness, inappropriate, unethical and perhaps illegal conduct.”

To take discovery against Donziger himself, Chevron pulled in Gibson Dunn’s Randy Mastro. A Rudy Giuliani protégé, Mastro had made his name as a prosecutor purging the Mafia from the Teamsters union, and as deputy mayor purging the Mafia from Fulton Fish Market. It surprised no one when, at a three-hour hearing in Manhattan federal court on Sept. 23, 2010, Mastro called the Amazon litigation against Chevron “a racketeering enterprise that would make even the mob blush.” Mastro’s rhetoric was a sign of things to come. More immediately, he argued that Donziger had surrendered the protections of attorney-client privilege by committing fraud in the jungle and inviting cameras to track it frame by frame.

After watching a collection of greatest hits from the “Crude” outtakes in open court, Judge Kaplan remarked from the bench that Donziger operated less as a lawyer than the case’s “field general.”

Donziger’s conduct went “far beyond the role that lawyers customarily play,” Kaplan said, and he was prepared to grant discovery far beyond what is normally allowed against lawyers. “You’d be well-advised to start getting the material together,” he told Donziger’s counsel.

As its foes played for time, Chevron filed motions to compel discovery on both main fronts. On Oct. 1, after months of stonewalling by Stratus, the Denver judge ordered the consultancy to produce its workpapers; Stratus complied on the night before the deposition of its lead scientist on Oct. 6.

Gibson Dunn was expecting the document dump, and had signed up lawyers to stay up all night for what Crimmins gleefully called a “smoking gun treasure hunt.”

A team led by Pete Seley spread thousands of documents across a Denver conference table. Almost immediately, they began finding drafts of Cabrera’s annexes, and outlines of the Cabrera report. When anyone found a splashy document, they competed for attention with a blustery “listen to this email,” or “you won’t believe this.”

About 2:30 a.m. they found what they fondly called the “chart o’ fraud.” It was a table of the Cabrera report annexes, with one column identifying the real author (not Cabrera), and another identifying the attributed author (usually Cabrera). In one version of the chart there were final columns to check off for Donziger’s approval of the each section’s English version (which was really the original), and Donziger’s approval of each section’s Spanish version (really the translation).

The treasure hunt crew was stunned at the audacity of Donziger and his consultants. They hadn’t just helped Cabrera write the report, as Fajardo suggested that they would in the PowerPoint meeting. They wrote the bulk themselves, and had Cabrera pass it off as his own.

When confronted with the latest evidence, Donziger admitted under oath that Stratus ghostwrote the executive summary and 11 of 24 annexes nearly verbatim, but continued to insist that it was perfectly lawful.

Meanwhile in New York, Mastro complained that Donziger was holding back as well. Kaplan ordered more discovery, and 90,000 new Donziger emails arrived while Donziger was mid-deposition. Again, Chevron’s challenge was not to find a needle in the haystack, but to gauge which needle would prick sharpest. The Gibson Dunn lawyers rapidly built files of “hot docs,” “very hot docs” and “super hot docs.”

At 1:30 a.m. on Jan. 19, 2011, Gibson Dunn associate Virginia Fitt found a no-brainer super hot doc. After the §1782 motion against Stratus was initially granted, the junior Ecuadorean lawyer Julio Prieto wrote in an email to Donziger: “The problem, my friend, is that the effects are potentially devastating in Ecuador (apart from destroying the proceeding, all of us, your attorneys, might go to jail)”. The Ecuadorean case leaders, who were copied on the email, followed up by asking the Ecuadorean judge to shut down the Stratus §1782.

When Mastro awoke at 6:30 a.m., he read the Prieto email in his inbox. This panicked email was the perfect retort to Donziger’s new argument that secretly ghostwriting a court report was fine and dandy in Ecuador. Mastro ordered a rushed translation, and had one ready by 10 a.m. for Donziger’s deposition.

The special master deputized by Kaplan to handle discovery exploded with fury at Donziger’s counsel: “I’ve been sitting here and seeing emails that I, I, I don’t know what words to use. … The test of a good faith of a production is whether you’ve produced the documents you wish you didn’t have that are relevant. I cannot imagine, as I sit here, any document that is more relevant and that you couldn’t have less wished you had.” On Jan. 27, Kaplan ordered a mirror image of Donziger’s hard drive.

Excerpts from the “Crude” outtakes are available at americanlawyer.com.

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