In giving the pollution case against Chevron in Ecuador the full treatment it deserves, Barrett complements my focus on the oil company’s counterattack against the plaintiffs and their lead counsel, Chevron v. Donziger, in the ebook “Crude Awakening.” Barrett and I took differing journeys to reach the conclusion that the Ecuadorean plaintiffs’ team tragically undermined the cause of environmentalism and mocked the rule of law in its continuing quest to recover $9.5 billion against Chevron Corporation. But the all-points skepticism that makes Barrett a great reporter also makes him begrudge Chevron’s right to defend itself.
Barrett’s format allows him to explore every room in this Bleak House of global litigation. Barrett gives due space to Texaco’s original environmental sins and Chevron’s dirty tricks. He even slogs his way through the dense 2011 Ecuadorean ruling that held Chevron responsible for polluting the jungle, which is more than could be said for the judge who claimed to write it. Barrett is at his best in conveying Ecuador’s moral complexity.
It’s well-known that Chevron’s predecessor Texaco used unlined waste pits in its Ecuadorean oil fields. Obscenely, we learn that Texaco was unwilling to spend $4.2 million (total) to line them in 1980. We also learn that Petroecuador—the project’s majority owner since 1976 and sole owner-operator since 1992—uses unlined pits to this day. Both Texaco and the state operator that inherited its systems recklessly poured immense volumes of produced water of disputed toxicity into the Amazon despite the availability of reinjection technology. Petroecuador finally began to reinject its produced water underground in 2006.
Who benefited? Thanks to high taxes and royalties, Ecuador retained 93 percent of the $23.5 billion earned by the consortium from 1972 to 1992, according to independent figures cited by Barrett. Per capita GDP roughly quintupled—yet somehow the poverty rate rose from 47 to 67 percent over a similar 20-year period. Obviously, the benefits of Amazonian oil did not go to the historically exploited indigenous people. Nor did they go to the poor farmers who were urged to move to the region despite Texaco’s shoddy practices, without proper regulation of land use or protection of public health. The oil’s benefits went overwhelmingly to Ecuador’s elites.
Who paid the cost has been litigated for 22 years. Sadly, the plaintiffs lawyers were too focused on PR and misconduct to prove that residents of the Amazon suffered ill effects. Barrett and I agree that the epidemiology was flimsy and the damages grossly inflated. I also have deep doubts about the toxicology. Maybe a more scientifically committed plaintiffs team using fairer standards could have proved its case. Regardless, this proceeding was too tainted to prove anything.
The judge who heard Chevron’s New York countersuit, U.S. District Judge Lewis Kaplan, found that the plaintiffs team coerced the Ecuadorean court to appoint an expert of their choosing, bribed that expert, ghostwrote his reports, lied about his independence and touted his inflated damages figure to pressure Chevron into settling. Then the plaintiffs team bribed the judge in Ecuador in return for the ghostwriting of his interim orders and the judgment itself.
To Kaplan, this was a racket encompassing extortion, corruption, obstruction of justice, witness tampering, wire fraud and money laundering. In addition, Kaplan found that both plaintiffs lawyer Steven Donziger and his clients committed multiple frauds on the Ecuadorean court. As a remedy, Kaplan ordered that any worldwide damages collected by the plaintiffs be placed in trust for Chevron.
Putting aside the legal conclusions, any openminded trial observer would largely agree with Kaplan’s fact findings (as did Barrett and I). Donziger offered no meaningful factual defense, and there was overwhelming evidence to support every alleged misdeed except the final bribery. The account of corruption given in the testimony of former Ecuadorean judge Alberto Guerra may be open to question. But it was never needed to establish the ghostwriting of expert reports in return for bribes, nor the ghostwriting of interim orders in return for bribes, and certainly not the ghostwriting of the final judgment. When it comes to the facts of Chevron v. Donziger, there really is only one side to the case.
Of course the plaintiffs have a terrible grievance. Donziger’s first sin was to make redress impossible, while creating bad law and ill will for the human rights suits of the future. Worse, Donziger has undermined the rule of law, which is the foundation of both economic growth and social justice. Whatever Outside magazine may think, the rule of law is no small thing, and it does not stand in opposition to the environment. It’s almost incidental that Donziger is still trying to collect $9.5 billion on the basis of fraud, lies and chutzpah.
In Defense of Chevron, Gibson Dunn, and Kaplan
My main difference with Barrett is his implication that there is something somehow wrong with a company defending itself from this assault, or with a law firm asking a judge to save a business from this predicament, or with a judge trying to do so.
Barrett introduces the Chevron v. Donziger counterlitigation with an ill-considered sneer—equating Chevron’s well-founded fraud action with the plaintiffs instigating a baseless prosecution. “In the kidney-punching, shin-kicking context that the Ecuadorean litigation had become, Chevron seemed determined to maintain parity,” writes Barrett. “The plaintiffs lawyer thought he could engineer an Ecuadorean fraud investigation of Chevron’s attorneys? Well, the company would accuse Donziger in New York of being a racketeer.”
Barrett’s tone begs the question: What exactly did he expect Chevron to do when it faced a lawless $19 billion judgment in a corrupt and controlled court system? Despite spurning the U.S. early in the litigation, the company understandably sought to return the case to law-abiding institutions, and tried its luck with a variety of legal theories. There is room for legitimate argument as to the proper use of RICO law, the framing of litigation fraud as extortion, and the power of U.S. courts to issue worldwide injunctions. But the fraud that Chevron uncovered—as Barrett shows—was all too real. Go ahead and relish the historical irony. Just don’t leave the victim of litigation fraud defenseless in the present.
Next, Barrett takes a swipe at the law firm hired to execute what he calls Chevron’s “kill-the-messenger” strategy. Recalling the movie “Pulp Fiction,” he likens Gibson, Dunn & Crutcher to the underworld “cleaner” Winston Wolf, whose job is to scrub away the evidence of bloody murders.
Now Gibson Dunn is not exactly the hero of the saga. That honor belongs to The Lawyer Who Walked Away, Jeffrey Shinder of Constantine Cannon, who modeled professional responsibility by refusing to deny the undeniable or to try enforcing a fraudulent judgment. And even more so Judith Kimerling, a cause lawyer who has remained true to her cause and steered clear of the lawsuits against Texaco or Chevron because she saw from the start that the plaintiffs team was untrustworthy. Kimerling is the unsullied figure of moral authority in a story that Barrett suggests has none.
What may be said of Gibson Dunn is that it played an honorable role exceptionally well. I have sometimes accused the firm of hyping foreign litigation fraud. But where litigation fraud is proved, an aggressive response is warranted. Chevron does not wish to “kill the messenger” because of his message, but because (metaphorically) he committed capital crimes. Chevron is not retaliating against the litigation, but the litigation fraud. Let the courts draw careful lines, so the precedent is not abused. But don’t attack lawyers for ably defending a real fraud victim. In contrast to Winston Wolf, the firm of Gibson Dunn covered up no crimes, and arguably unearthed a great many.
Finally—and most seriously—Barrett undercuts Judge Kaplan. In so doing, Barrett inadvertently abets the plaintiffs’ cynical campaign to defame Kaplan, and to pretend that they have not been authoritatively discredited.
When Kaplan initially blocked enforcement of the Ecuadorean judgment, he gave a little speech on how people need gasoline. Barrett mocks the speech, and uses language uncomfortably close to the plaintiffs’ charges of bias. “Following this logic, Kaplan might have ruled against any plaintiff, no matter how righteous, posing a substantial financial threat to Chevron—a one-sided perspective for a supposedly disinterested judge,” writes Barrett. “His hostility to the plaintiffs undisguised, Kaplan did not explain the source of his authority to prevent enforcement of an Ecuadorean judgment in Singapore or Brazil or Canada. What was clear: Chevron had a powerful ally on the federal bench in New York, and Donziger had yet another enemy.”
Kaplan had his tonal lapses, as my book notes, and his legal rulings are not gospel. However, as Barrett agrees, Kaplan’s trial judgment was even-tempered and amply supported. So were his interim rulings. He deserves to be evaluated on the basis of his formal reasoning. His remarks from the bench need to be understood in context using common sense, and we need to recall that he was provoked by a party engaged in constant deception.
The suggestion that Kaplan would block any enforcement against an oil company is nonsense. He was trying to block enforcement of a judgment correctly shown to be fraudulent. And he was alarmed by the plaintiffs contemplating the use of political connections to get a judgment enforced notwithstanding the law. (Enforcement counsel Patton Boggs wrote in a memo to the plaintiffs that its “representation of numerous, geographically diverse foreign governments means that barriers to judgment recognition in a given country may not necessarily preclude enforcement there.”)
In real life, Kaplan found the source of his power to enjoin the Ecuadorean judgment in New York’s recognition act, and the appeals court disagreed. Continuing to imply that Kaplan was out of control, Barrett writes that this development “did not deter him. … Kaplan proceeded to issue a string of interim rulings inviting Chevron to use his courtroom to prove that Donziger exploited the Ecuadorean judicial system and extorted the American corporation.”
Barrett knows Donziger exploited the courts. So I presume his sinister tone is directed toward Kaplan’s theory of extortion. The equation of litigation and criminal extortion is admittedly disturbing. After all—with apologies to Max Weber—litigation might be defined as a monopoly on legitimate extortion.
Of course, Kaplan understands this, and he never says all litigation is pathological. “As long as a lawsuit is pursued by lawful and proper means, it is not extortion, in the criminal sense,” Kaplan wrote. A “litigant who magnifies the risks to its adversary by corrupting the litigation … creates [settlement] leverage purely attributable to the corruption, which is inherently wrongful, [and] bears no proper nexus to any plausible claim that may have been asserted in the first place.” The appeals court might wish to clarify just how deeply corrupted a litigation must be before it turns into extortion. But this is hardly a wild position to be passingly dismissed as betraying a bias.
The broader point is that Kaplan was supported by the evidence every step of the way. He was not slanted. He was not on a vendetta. Chevron’s lawyers presented extraordinary indicia of fraud that justified extraordinary discovery. Then they presented extraordinary evidence of fraud in a novel context, justifying a variety of creative legal rulings and remedies, which may stand or fall. There was nothing sinister here. I salute Kaplan for uncovering and explaining the frauds. My oft-expressed hope is that the obvious truth of his fact findings make global enforcement impossible, regardless of the legal holdings on appeal. To summarize our main difference, Barrett sees the “law of the jungle” as extending to U.S. courts. In my book, the U.S. courts bring a measure of redemption.
Or at least the promise of redemption. My book places more emphasis than Barrett’s on the plaintiffs’ ongoing manipulation of public opinion. If they can fool a big swath of the media, the thinking goes, maybe they can hoodwink one enforcing court, and evade legal control. As Barrett now takes fire from Donziger’s allies, I’m not sure he would stand by his assertion that Donziger has become isolated.
After Donziger stood trial in New York, 43 environmental and corporate accountability groups—including the Sierra Club, Earthrights International and Friends of the Earth—condemned Chevron’s “efforts to silence critics and ignore a $9.5 billion judgment.” Either these groups believe lies that have been definitively exposed, or they believe that corporate accountability means accountability for corporations only. Donziger will not be isolated until these groups properly condemn him, even if some choose to affirm their objection to Chevron’s tactics.
The Ecuadorean plaintiffs are still holding their own in the PR battle outside the legal and business press, especially in Latin America. A journalist of deep courage and integrity, Barrett is the target of rank calumny. With the publication of his unsparing book, the truth in Ecuador takes a big step toward victory.