Foreign legal systems and American lawyers cheat big business
By Theodore J. Boutrous, Jr.
A few years ago, the corruption convictions of several prominent plaintiffs’ lawyers put a spotlight on dishonesty in American civil courts. Now the sleaze has burst back into the news with cases involving Chevron and Dole Food Co., this time with an international twist.
Last month, a federal court in Manhattan found that a U.S. plaintiffs’ lawyer had masterminded a multibillion dollar fraud and extortion scheme against Chevron in Ecuador. Three days later, a California appellate court affirmed the dismissal of a lawsuit against Dole as a “fraud on the court” perpetrated by U.S. and Nicaraguan plaintiffs’ lawyers.
These rulings are welcome news not only for the companies involved, but also to anyone who cares about justice and the reliability of our legal system.
Bribery abroad
The U.S. lawyer behind the Chevron case, Steven Donziger, and his co-conspirators obtained a $19 billion judgment against the company in Ecuador based on false allegations of environmental contamination, while simultaneously mounting a relentless public pressure campaign hoping to embarrass the company into capitulating. Rather than settle, Chevron went on the offensive.
Following a seven-week trial last fall, a federal court has now confirmed the fraud, bribery and extortion at the core of the case and it has found that Donziger committed numerous violations of federal racketeering laws.
The opinion detailed how he and his team ghost-wrote a court-appointed expert’s report after secret payments to the expert. The court also found that Donziger and his affiliates bribed an Ecuadorean judge to let them write the $19 billion judgment against Chevron themselves.
Hollywood plot
The federal judge was so disturbed that he has ordered Donziger and the plaintiffs to pay Chevron anything they might win in foreign courts. The U.S. court described the scheme, which included clandestine meetings and a secret bank account, as including “things that normally come only out of Hollywood.”
The Dole litigation involved false allegations that the company had caused sterility of tens of thousands of banana workers in Nicaragua by exposing them to pesticides in the late 1970s. In 2007, a Los Angeles jury returned a multimillion dollar verdict in the first of potentially thousands of trials against Dole. But then Dole turned the tables.
Justice at home
After an international investigation by Dole, California courts found the litigation to be a “heinous conspiracy” orchestrated by lawyers in the U.S. and Nicaragua who recruited fake plaintiffs, coached them to lie, forged documents, falsified lab results and threatened witnesses. One of the “sterile” victims fathered three children, according to DNA tests.
The schemes against Chevron and Dole shared several common elements.
Both relied on a false — but superficially compelling — narrative of a multinational company invading an unsophisticated Third World country many years ago, harming the environment and disrupting indigenous communities. Both schemes sought to pressure the companies into huge settlements in the court of public opinion in the hopes that the facts behind the allegations would never be exposed.
This sort of wrongdoing not only harms the companies targeted by such schemes; it undermines our legal system itself.
As the United States Supreme Court has declared, fraud-on-the-court “involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public.”
To be sure, not every lawsuit is fraudulent. Companies that violate the law should be held accountable. That is one of the core functions of a civil justice system. But these cases demonstrate what can happen if that system is abused. Last month’s rulings should help kill these pernicious tactics — a benefit not just to the winning litigants, but also for anyone who believes in the rule of law.
Theodore J. Boutrous Jr. is a partner at Gibson, Dunn & Crutcher. He is a lead lawyer for Chevron and Dole.
