Chevron's Legacy

Chevron's Legacy
The Pollution Chevron Left Behind...Shushufindi pit 38. Chevron's scientists found no contamination at this pit.

Wednesday, October 22, 2014

A Hard Look at NOW's Support for Chevron In Ecuador Case Raises Ethical Concerns


NOW’s Elaine Wood Questioned About Failure to Tell Appellate Court About Her Business Ties to Chevron 

The relationship between the National Organization for Women ("NOW") and Chevron in the Ecuador pollution case is getting even more interesting. (For background, see this press release where Ecuadorian women criticized NOW and this blog for context.)

Figuring out why NOW's legal arm (called “Legal Momentum”) weighed in before a federal appellate court on behalf of Chevron’s targeting of indigenous villagers and their lawyers in Ecuador is the question. We think we are getting close to the answer.  

We have verified that Elaine Wood, the Board Chairperson of NOW’s Legal Momentum, is a managing director for a private corporate consulting firm that counts none other than Chevron as a client. At least three principals at the firm, called Alvarez & Masal, list Chevron as a client on the company's website.

That information comes on top of our disclosure last week that Chevron made a sudden and very major contribution to NOW’S legal group in 2013 when it became apparent the case would end up before the New York appellate court. The donation came at a time when Ms. Woods was a member of the organization’s Board of Directors. She became Chairperson of that board earlier this year.

Alvarez & Marsal claims on its website that Ms. Wood “conducts due diligence and fraud investigations and advises on corporate compliance” for the company. The bio of Ms. Woods, available here, also indicates she worked for 15 years as a top-level executive at Kroll. Kroll is the private investigations firm that has spied on and harassed U.S. lawyer Steven Donziger and his colleagues in exchange for millions of dollars of fees paid by Chevron.

Ms. Wood might consider using her "corporate compliance" skills to figure out how to comply with federal disclosure rules.

It is a requirement under the federal rules that any ties to a party in a litigation be disclosed in the first footnote of an amicus brief by a supposedly independent entity. At a minimum, Ms. Wood should immediately pull back NOW’s brief and re-file it with a proper disclosure so the court can have the information it needs to assess the organization’s credibility on the issue being considered.

That said, this incident can be enlightening for those who want to understand how Chevron uses its deep pockets to engage in “soft corruption” of governments and non-profit organizations. That is far more interesting than the technical legal issue involved.

The legal position being advocated by Chevron and NOW – that private parties should be able to use the civil racketeering law to target their political and litigation adversaries -- is highly dubious and likely to lose in court. For more on the flaws in the Chevron/NOWapproach, read how Chevron's own lawyers opposed the idea in another case. (That other case involved the same issue before the same New York appellate court, but Legal Momentum did not file a "friend of the court" brief in that matter.)

The overwhelming weight of legal authority in our federal courts is lined up against Chevron on the issue. Also against Chevron is the U.S. Department of Justice and the U.S. Chamber of Commerce (which does not want racketeering laws to be used to target corporations).  Long time pro-business stalwart Ted Olson, who will argue Chevron’s appeal in the Ecuador case, also opposed Chevron’s position when he was Solicitor General in the last Bush Administration.

Even with the limitations of NOW’s legal argument, the organization has a right to be heard. But to do so in this fashion -- in apparent exchange for a donation from a company that has spent huge sums to undermine the valid legal claims of impoverished women suffering in distant lands -- reflects poorly on the organization and its members. To do it without the required court disclosure makes it even more troubling.

Indigenous women in Ecuador for two decades have been part of an extraordinary community-based effort to hold Chevron accountable for deliberately dumping billions of gallons of toxic waste into the Amazon and creating an ecological calamity of shocking proportions. This dumping is visible for the world to see and has been verified by hundreds of journalists and visitors to the region as well as three layers of courts in Ecuador.

The question for NOW: why would it sacrifice its credibility for what appears to be temporary support from a big oil company? Even in Ms. Wood’s “friend of the court” brief, there is no mitigating language distancing NOW from Chevron’s atrocities in Ecuador. It reads as if it was designed, if not actually written by, a Chevron lawyer.

The easy answer is because NOW wants to use U.S. racketeering laws against anti-abortion protestors.  But that’s a superficial and in our view unsatisfactory explanation.  NOW can blast away at anti-abortion protestors to its heart's content without having to give cover to Chevron’s completely abusive litigation tactics in an entirely different case.

The more plausible explanation involves the skillful way in which Chevron uses its money to gin up influence. This behavior is consistent with the company’s misconduct throughout the two decades of the Ecuador litigation, as documented in stunning fashion in this sworn affidavit by Juan Pablo Saenz and in this article by Rolling Stone magazine.

At one point, Chevron apparently floated an illegal $1 billion bribe offer to Ecuador’s government (again, disguised in the form of a “donation”) in exchange for extinguishing the legal claims of the indigenous villagers. At another, it offered Ecuador’s government $700 million in "debt relief" for the same purpose. Wiki-leaks cables also show close collaboration between Chevron executives and U.S. diplomats in Quito to undermine the claims of the villagers. All of this is "soft corruption" in action.

Let’s sum up what we know about Elaine Wood’s and NOW’s relationship to Chevron:

**In 2012, just as the Ecuador case in the U.S. was heating up, Chevron suddenly gave its first donation to NOW’s legal arm. Chevron’s main outside law firm in the Ecuador matter also gave a large donation.

**Shortly thereafter, NOW's legal arm submitted a legal brief for Chevron without disclosing its ties to the company.

**The person who signed the brief, Elaine Wood, works for a consulting company that counts Chevron as a client. She is also not a practicing lawyer and is not on the staff of NOW's legal group.

**Ms. Wood formerly worked in the same division of the U.S. attorney's office in Manhattan where Randy Mastro worked. Mastro is Chevron's lead outside lawyer on the Ecuador matter.

**NOW's legal arm has refused to verify that it has disclosed all of the donations it received from Chevron or any of its related entities, including Mastro's law firm.

**Ms. Wood should also disclose whether the work Alvarez & Marsal has performed for Chevron involves the company's campaign to evade its Ecuador liability.

Ms. Wood also should explain why she – the person at NOW with ties to Chevron -- signed the legal brief alone. We are not familiar with the practice of a Board Chair writing a legal brief for her own non-profit organization when that organization has a staff of lawyers assigned to do that work.

Chevron has a long history of trying to “donate” to organizations so it can garner support that it would never receive organically. An attempt by the company to use one of its law firms in Canada to submit a "friend of the court brief" on a so-called "pro bono" basis recently backfired.  See here for background.

The last time we looked, helping an oil major attack impoverished women in developing countries was not part of NOW’s mission. Nor is failing to disclose conflicts of interest to federal courts.

Legal Momentum and its Board Chair have some explaining to do. NOW is a good organization. It deserves better from its leadership.






Monday, October 20, 2014

Chevron Paying Big Bucks to NOW and Others for "Friend of the Court" Briefs In Ecuador Case

U.S. Women's Advocates Cash Chevron Checks and Then Abandon Indigenous Women In Ecuador. Is It Worth It?

Increasingly isolated in its Ecuador pollution case, Chevron is paying for "friend of the court" briefs by supposedly independent parties such as the National Organization for Women ("NOW") that are designed to back the company's faltering defense to its $9.5 billion environmental liability.

Anxious to save its flawed non-jury verdict in its retaliatory RICO case, Chevron is again reaching into its deep pockets to garner support. The company already hired at least 60 law firms and 2,000 legal personnel to defend against the claims of the rainforest villagers. Yet the business community -- led by the U.S. Chamber of commerce -- is clearly skittish with Chevron's scorched earth approach. So too is the bulk of the U.S. human rights community.

NOW's legal arm (called Legal Momentum) apparently has no such qualms, prompting furious criticism of the organization by Ecuadorian women and their allies in the U.S. The organization received major donations in 2013 from Chevron and its lead outside law firm, Gibson Dunn. It then filed an amicus brief backing Chevron's unprecedented expansion of the RICO statute to target human rights lawyers and indigenous groups. Not even Gibson Dunn's own lawyers agree with Chevron's and NOW's untenable legal position, as this press release points out.

It appears that Gibson Dunn gave NOW's Legal Momentum a small amount annually until 2012. That's the year it became clear the appeal of Chevron's RICO case would be critical. So in 2012, Chevron started contributing to NOW's legal entity for the first time. That's also when Gibson Dunn upped its contribution significantly.

Among human rights lawyers, the only traction Chevron can get is by paying consulting fees to outliers like Professor Douglas Cassel whose agenda is to mitigate corporate human rights abuses by working closely with the abusers and making them feel less bad about themselves. Like Chevron, Cassell traffics in distorted facts about the litigation in Ecuador as this critique makes clear. (Cassell's diatribes about Ecuador got so bad that the Notre Dame faculty ordered them removed from his university website.)

The mainstream of the human rights and environmental communities in the U.S. -- including prominent groups like Amnesty International, Avaaz, Greenpeace, Rainforest Action Network, Friends of the Earth, Amazon Watch, and Earth Rights International -- have lined up squarely behind the rainforest communities in their two-decade battle to hold Chevron accountable for the dumping of billions of gallons of toxic waste. For a summary of the overwhelming evidence against Chevron, see here.

What Chevron's management should do is pay for the clean-up ordered by the court in its preferred forum of Ecuador. Chevron's stunning problems with the RICO case -- including a likely reversal on appeal -- were outlined recently by attorney Aaron Marr Page in this blog on the Huffington Post. Eight appellate judges in Ecuador have affirmed the trial court judgment. Because Chevron refuses to pay, the villagers are now being forced to pursue company assets in Canada, Brazil, and Argentina.

For a party to a litigation, paying for a "friend of the court" brief (also known as an "amicus" brief) without disclosure is a clear violation of the rules governing legal ethics. Such briefs are supposed to come from independent entities that offer a perspective that bears on an issue being considered by the appellate court. Any financial ties between the entity and a party to the litigation are required to be disclosed.

As usual, Chevron and its new "friends" are playing by their own rules. In NOW's case, there was no disclosure. Chevron gets around this by claiming it is not paying for the preparation of the briefs. Rather, it claims it is just making "general" donations to the organizations that wrote the briefs. Such a cute distinction. And so typical of Chevron.

Does NOW actually think it will receive Chevron money in the future because the company is so committed to protecting abortion clinics?

Chevron submitted its 185-page brief to the U.S. appellate court in early October. Its amicus briefs were filed soon thereafter. That's when new and unpleasant details of the company's strategy emerged. Consider:

**NOW filed a brief backing Chevron's use of the RICO statute to target the impoverished women and children suffering from cancer in the rainforest due to the company's pollution, as this press release points out. NOW admits on its website that took in at least $50,000 to $100,000 from Chevron and its law firm in 2013. NOW has thus far refused to disclose more recent payments from Chevron or Gibson Dunn, but they are likely sizable.

Mariana Jiminez, a community leader in Ecuador who lives in an area contaminated by the company, could not have said it better: "We are furious that a major American advocacy group that purports to advocate on behalf of women would sell out the women of Ecuador in this fashion."

**The U.S. Chamber of Commerce has openly received millions of dollars from Chevron in recent years. The Chamber's "friend of the court" brief on behalf of Chevron, which opposes "fraud" in litigation but is notably silent on the use of RICO, did not disclose any aspect of its extensive financial and lobbying dealings with Chevron.

**The Business Roundtable ("BR"), an organization that also receives substantial Chevron donations, submitted an amicus brief that also did not disclose its ties to the company. We believe it is likely that the four law professors who signed on to the BR brief were paid by BR. In other words, BR allowed itself to be used a conduit to launder Chevron's payments to the professors when court rules bar direct payments without disclosure.

The professor who led the BR brief, Roger Alford, once took an all-expense paid trip to Ecuador sponsored by Chevron. Another, Janet Walker, was a Chevron consultant on the case. Neither disclosed their ties to the company in the brief they signed.

**Then there's a curious brief by a small group of self-annointed "human rights and anti-corruption" lawyers who call themselves "jurists" even though they seem to engage in the tawdry practice of hourly billing just like most lawyers. Given Chevron's long history of corruption and bribes in Ecuador -- including an offer of $1 billion to extricate itself from the legal case and threats to put judges in jail -- one would think this group of "human rights jurists" would come down on the side of the indigenous groups who are being victimized by Chevron. But no.

While the "jurists" take no position on the "merits" of the case, the professors posit that if Judge Kaplan's "findings" are true (and we have explained repeatedly why they are not) then his unprecedented decision should be upheld. These "jurists" appear to have so much respect for the rule of law that they ignore the fact that two layers of Ecuador's appellate courts engaged in a de novo review of the 220,000-page evidentiary record and unanimously rejected Chevron's complaints.

In contrast, the meddling Judge Kaplan (who does not speak Spanish and has zero familiarity with Ecuadorian law) refused even to read the Ecuador trial court record. He also "ruled" that Ecuador's entire judicial system is flawed based on the testimony of one political opponent of the current President. We cannot remember another instance when an American trial judge thought he could overturn a foreign country's Supreme Court on issues of that country's laws.

Chevron's pay-for-briefs game recently took a dramatic bad turn for the company in Canada. That's a place where the judiciary seems to have more respect for the sovereignty of foreign courts than Judge Kaplan. It's also where Chevron has roughly $15 billion in assets. The villagers have an argument in early December before Canada's Supreme Court on a jurisdictional issue as Chevron continues its strategy of obsruction at every pass.

Even with its deep pockets, Chevron was unable to garner any support in Canada for the Supreme Court argument. First, the Canada Supreme Court rejected a request by the U.S. Chamber of Commerce to file an amicus brief for Chevron. Chevron then tried to strong-arm the Canadian Bar Association into filing an amicus brief. But that backfired when hundreds of members threatened to resign from the organization in protest.

The CBA then embarrassingly withdrew its planned amicus brief that had been drafted "pro bono" by none other than a law firm that had done extensive work for Chevron on its oil and gas business in Calgary. For background on Chevron's debacle in Canada, see here.

It is worth noting that the Ecuadorian villagers and New York human rights lawyer Steven Donziger (Chevron's primary targets) are being backed with "friend of the court" briefs by none other than 17 prominent non-profit groups and 35 international law scholars from more than 11 countries. In Canada, three prominent human rights groups (including the International Human Rights Program at the University of Toronto Faculty of Law) have weighed in on the side of the indigenous groups. Their amicus brief can be read here. Unlike NOW, none of these entities are being paid (excuse us, are receiving sudden large donations) for their work.

That support for the villagers is in addition to a letter signed by 43 U.S. non-profit groups criticizing Chevron's effort to use the RICO statute to silence and intimidate its critics.

Of course, Chevron's ethical shortcomings with its amicus briefs pale in comparison to the company's refusal to clean the billions of gallons of toxic waste it dumped into the rainforest. But it is part of a disturbing pattern of untoward behavior by the oil company. We also note that Elaine Wood, the director of NOW's legal arm, is a fomer executive at Kroll. Kroll is the private investigations service based in New York to whom Chevron paid at least $15 million to spy on, track, and harrass Donziger and his Ecuadorian colleagues.

We must wonder whether Ms. Wood is comfortable taking money from a company that not only pollutes the rainforest for profit but also engages in corporate espionage against adversary counsel.

It is the superprofits from Chevron's dumping in Ecuador that help allow it to make "contributions" to all sorts of non-profit organizations in the U.S. and elsewhere. We suspect that if NOW's members were to learn of their organization's acceptance of substantial funds from a corporate polluter that is harming indigenous women in the Amazon rainforest, they would not be happy.

For a reminder of the devastating human toll of Chevron's toxic dumping in Ecuador, see this gripping photo essay by journalist Lou Demettais. Ms. Wood, NOW's leaders, and the organization's members and supporters could do themselves a big favor by taking a close look.

Note: The leading amicus briefs for the villagers in the U.S. case -- which argue that Chevron's strategy violates the First Amendment and international law and comity -- are available here and hereThe appellate briefs from Donziger and his clients, which we believe expose the deep weaknesses in all of Chevron's factual and legal arguments, can be read here and here.

Tuesday, October 7, 2014

Chevron Lawyer Randy Mastro Resorts to Dirty Tricks In Ecuador Pollution Case


Chevron lawyer Randy Mastro again appears to be engaging in dirty tricks in a last-ditch effort to rescue the oil company from its worsening legal troubles related to its $9.5 billion liability in Ecuador.

Through backdoor manuevering, Mastro is trying to influence the New York federal appellate court that is hearing Chevron's defense of its ill-fated RICO case.

We hear from a little birdie that Mastro's latest trick involves an apparent unauthorized ex parte contact by his office with a clerk in the appellate court. Mastro's goal was to convince the clerk to change the caption of the RICO case on appeal to produce a more favorable review panel for Chevron.

Ex parte contacts with the court? Isn't that exactly the kind of behavior Mastro claimed repeatedly (albeit without legal basis) was "fraudulent" when it took place in Ecuador?

First, a little background. We already reported that Chevron never had a legal basis to bring the RICO case, as this document explains in detail. RICO never has been used to impose an injunction to block lawyers and impoverished indigenous villagers from bringing their claims against a corporate polluter, as Chevron tried to do in the case.

We might add that Chevron's fabricated complaints of "fraud" and "ghostwriting" were rejected by eight different appellate judges in Ecuador. Even so, controversial federal Judge Lewis A. Kaplan decided in favor of the company after a deeply flawed civil RICO trial based on corrupt witness testimony paid for by Chevron, among other problems.

Ultimately, Ecuador's highest court -- the equivalent of our Supreme Court -- affirmed Chevron's liability for causing massive pollution in a 5-0 decision last November. One would think the game would be over for Chevron and it would pay up, much as BP did after its Gulf spill.

Led by Mastro, who never saw a billing opportunity he didn't like, Chevron in 2010 came storming back to the same U.S. court where it earlier had tried to block the claims of the indigenous groups. On the verge of losing in Ecuador after an arduous eight-year trial, Chevron now wanted a second bite at the apple in the same court it had turned its back on years ago.

This was Chevron's ultimate act of forum shopping.

Judge Kaplan, a former corporate defense lawyer with a libertarian bent, was all too happy to indulge Chevron. In the process, he assigned his former law partner Max Gitter to serve as "Special Master" and reap enormous fees. The secret bills were paid exclusively by Chevron.

Encouraged by Kaplan's and Gitter's obvious hostility toward the Ecuadorians and their American lawyer, Chevron dispatched at least 114 lawyers from the Gibson Dunn firm to take over the jurist's giant federal courtroom and mount a retaliatory attack against the Ecuadorians and their counsel. Kaplan had invited Chevron to file the RICO case and then assigned the matter to himself. The courtroom was packed with Chevron executives and lawyers, including company General Counsel R. Hewitt Pate.

As presiding judge, Kaplan denied the defendants a jury on the eve of trial. He also excluded all evidence of Chevron's wrongdoing. He refused to read the Ecuador evidentiary record and he let the company present secret witness testimony.

Kaplan's proceeding was a show trial through and through, not to mention an utter embarrassment to the entire federal judiciary. The spectacle attracted the criticism of dozens of law scholars worldwide.

How things can change when you get to a real appellate court.

The  defendants in the RICO case -- including New York lawyer Steven Donziger and two Ecuadorian villagers, Hugo Camacho and Javier Piaguaje -- have slowly turned the tables on Chevron. Their appellate briefs (see here and here) have exposed Mastro's Trojan Horse case for what it is.

Not surprisingly, Mastro is now backing away from his previous bombast. He is claiming to reporters that Chevron's only real interest is in preserving Kaplan's flawed factual "findings" even if the RICO case gets thrown out.  Memo to Mastro: when a case gets thrown out on jurisdictional grounds, its factual findings go away.

Regardless, Kaplan's "findings" are so tarnished by his obvious bias that they will be worth far more to the Ecuadorians (as an example of U.S. judicial imperialism) than they will to Chevron.

Mastro probably cannot believe that Donziger and his clients secured competent appellate counsel.  One (Burt Neuborne) is a law professor at NYU who helped to settle the Holocaust cases. He is representing the villagers pro bono.  Donziger is represented by Deepak Gupta, a rising young star in the world of appellate advocacy who has argued multiple cases before the U.S. Supreme Court.

Chevron's management team -- whose strategy all along was to win by might what it could not win on merit -- is none too happy about the laser focus of Gupta and Neuborne on the weaknesses in the company's case. It should be no surprise that Chevron is again turning to Mastro to try to trick up the process.

The call by Mastro's office to the clerk is most impolitic and unethical. In any event, Mastro's team filed a brief last week where the caption of the case suddenly changed from Chevron v. Naranjo to Chevron v. Donziger.

Why does it appear that Chevron unilaterally decided to change the caption of the case?

The answer is simple and provides insight into Mastro's devious approach.

Chevron was reversed by the same federal appellate court in 2011. At that time, a three-judge panel threw out an unprecedented injunction imposed by Kaplan at Mastro's request that purported to block enforcment of the Ecuador judgment anywhere in the world. The title of that case: Chevron v. Naranjo.

If the appellate court keeps the same caption for the current appeal -- as it should given that the issues are the same  -- then Chevron likely will face the same three judges as before. These are judges who will not easily be deceived by Chevron's hijinks.

If Chevron gets the caption changed to Chevron v. Donziger, Mastro would claim that it is a different case warranting different judges. It also would allow Chevron to better align the case with its demonization campaign against Donziger, the lawyer who for two decades has prevailed time and again against Chevron and who has driven the company near mad in the process. (Chevron has used no fewer than 60 law firms and 2,000 lawyers on the case since its inception in 1993 while Donziger works from his kitchen table.)

When Mastro tried to defend Kaplan's illegal preliminary injunction before the appellate court in 2011, he was de-pantsed and literally laughed out of the courtroom. At the time, Mastro could not answer the most basic questions posed by the panel. That's one reason why Chevron wants to start anew.

To do so, Chevron has enlisted none other than star Supreme Court lawyer Ted Olson to try to put lipstick on its Ecuador pig. Olson is slated to make a rare appearance in a lower court and argue for the oil company. (It would be great for the villagers if Mastro argues.  Chevron might be stupid, but not that stupid.)

For background on Olson's previous failed attempts to save Chevron in the case, see here and here.

This ex parte lobbying is the modus operandi of Mastro and the litigation team at Gibson Dunn. Mastro and his teammates brag to scandal-plagued corporations about their uncanny ability to mount "rescue" operations. (The motto of the firm: "When the law is in the way, we change the law.")

What that really means is the firm uses corporate power, intimidation, and backdoor gamesmanship to get what it wants for clients willing to pay exorbitant fees. Usually it involves accusing opposing counsel of fraud or unethical behavior so the victims are left defenseless.

But Mastro's "dream team" already has run into major troubles given its own lack of ethics. Andrea Neumann and Kristin Hendricks were found by federal judges to have engaged in unethical behavior. Scott Edelman sued a lawyer for the Ecuadorians in California with no legal basis and was fined by a state court judge for violating the First Amendment.

Gibson Dunn's intimidation template was attractive to Chevron CEO John Watson until it started to unravel. We understand that company management is looking for an exit strategy.

It is increasingly clear that the  RICO case will not determine the outcome of the dispute. The Ecuadorian indigenous groups are pursuing multiple actions to seize the company's assets in foreign courts. There is nothing Chevron or any U.S. judge can do to stop the enforcement process.

We look forward to explaining to the appellate panel more details of the ethically-challenged Mastro's backdoor maneuvering. That will happen regardless of the caption of the case.





Sunday, October 5, 2014

Chevron Faces Risk of "Spectacular Implosion" In Ecuador Pollution Case

One of Chevron's many dark secrets -- one company management desperately tries to hide from  shareholders  -- is that its RICO defense in the Ecuador pollution case faces the risk of a "spectacular implosion" in the coming months.

At least that's the informed opinion of somebody in one of the best positions to assess the case.

That person is none other than Aaron Page, a young law professor and practitioner who has represented the indigenous and farmer communities of Ecuador since 2005. That's when Page joined the case in Quito as an intern just out of law school at the University of Michigan.

In between, he had a stint at a large corporate law firm before returning to work fulltime on his passion of human rights law.

Page now runs Forum Nobis, a law firm and consulting service dedicated to the advancement of international human rights. Page also was a member of the defense trial team in Chevron's RICO case last year in New York before judge Lewis A. Kaplan.

While Page did not stand up in court, he was part of the "brain trust" behind the scenes that fought Chevron's army of 114 lawyers at every turn. Though grossly outmatched in terms of resources, it is now clear that the trial team actually set up Chevron for the possibility of a spectacular fall on appeal.

(For the details of Chevron's many problems on appeal, read the appellate brief of New York attorney Steven Donziger; this brief from Professor Burt Neuborne of NYU school of law; and this brief from international law scholars criticizing Judge Kaplan.)

In a blog posting earlier this week on the Forum Nobis site, Page explained why Judge Kaplan's decision is unlikely to protect Chevron. He demonstrates how Chevron's attorneys -- led by the ethically-bereft Randy Mastro from Gibson Dunn -- seem desperate to salvage anything they can out of the case knowing a reversal is likely.

Page also explains how Kaplan's bloated 500-page "findings" in the RICO matter were based on tainted evidence, cultural ignorance, and a heavy dose of intellectual dishonesty as well as the judge's bullying of the Ecuadorian villagers and their counsel.

Here's Page in his own words:

While Chevron tries to pretend that Kaplan's decision is a juggernaut, it is increasingly apparent that it is really a Hindenberg, likely facing a spectacular implosion on appeal.  It is too controversial on too many fronts: too many sweeping jurisdictional assertions and novel legal conclusions; too little concern for core constitutional rights; too easy an embrace of deeply disturbing evidence, like the paid fact witness testimony; and ultimately, so much raw hostility directed at the defendants, on every page for 500 pages, that it starts to feel unseemly, no matter what your view of the facts.

Page also points out that Chevron, in its 185-page responsive brief, gives away its entire game in a single footnote.

In that footnote (#19 for the wonks among us), the company seems to prostrate itself before the appellate court and begs to let Kaplan's "freestanding" factual findings stand no matter what. Ouch.

Of course, Chevron ignores that Kaplan's factual findings are the result of a deeply flawed proceeding that excluded all evidence of the oil giant's contamination in Ecuador. The findings also purport to overturn a 5-0 decison by Ecuador's Supreme Court affirming Chevron's liability. (Ecuador is the venue where Chevron insisted the trial be held as a condition of the transfer of the litigation out of U.S. courts in 2001.)

Our apologies to Judge Kaplan, but we think Ecuador's Supreme Court might just know a little bit more than you about how to apply Ecuadorian law to the facts.

Page also quotes Judge Kaplan pontificating from the bench as to what he thought of Donziger and the historic enviroinmental litigation. Kaplan spouted on about the merits of the case even though the veteran jurist had not even held an evidentiary hearing.

Here is Page quoting Kaplan's own words:

The imagination of American lawyers is just without parallel in the world. It is our absolutely overwhelming comparative advantage against the rest of the world, apart from medicine. You know, we used to do a lot of other things. Now we cure people and kill them with interrogatories. It's a sad pass. But that's where we are. And Mr. Donziger is trying to become the next big thing in fixing the balance of payments deficit. I got it from the beginning.

Yes, we got it from the beginning too, Judge Kaplan. Your attitude is a most vivid example of U.S. judicial imperialism. It is also an embarrassment to the entire federal judiciary.

The entire blog can be read here.



Tuesday, September 30, 2014

Chevron Faces Rising Business Risk From Ecuador Judgment

Inside Counsel, a magazine for corporate lawyers, recently published an article by New York attorney Steven Donziger outlining Chevron's rising global business risks stemming from its $9.5 billion Ecuador environmental liability.

Donziger writes that Chevron's scorched earth litigation strategy in the Ecuador matter should serve as a "cautionary tale" for corporations facing major environmental liabilities.

Risks faced by Chevron include diplomatic resistance to the company by several governments in Latin America; an open political war with Ecuador's government, an OPEC-member nation; enforcement actions targeting strategic assets of the company in three overseas jurisdictions, including in Canada where Chevron's asserts are worth an estimated $15 billion; the likelihood that more enforcement actions will be filed against the company; and an expected reversal next year of the flawed RICO ruling by controversial U.S. Judge Lewis A. Kaplan, who admitted corrupt evidence and was openly  hostile to the Ecuadorian villagers.

Chevron CEO John Watson and General Counsel R. Hewitt Pate -- despite hiring some 60 law firms and 2,000 legal personnel to battle the villagers -- have done little other than waste shareholder funds in a doomed campaign to evade their legal obligations, said Donziger.  The judgment against Chevron was affirmed by Ecuador's Supreme Court last November in a 5-0 decision.

Watson also suffers from a major conflict of interest given that he vetted the purchase of Texaco in 2001 as a top-level Chevron executive.  However, he failed to recognize the enormous potential liability. For more on Watson's conflict, see the post "Way Down Watson" by Amazon Watch.

"Watson is still chasing his tail as a result of his utter failure to understand Texaco's horrific behavior in Ecuador when Chevron made its purchase," said Donziger. "As a result, Chevron paid far more for Texaco than it should have. The only way Watson thinks be can erase this major blot from his record is through endless litigation against impoverished indigenous groups. But that is producing a wave of additional risk for the company that continues to multiply across jurisdictions."

In the article, Donziger makes it clear that claims by Chevron that the corporation is in the clear because of a favorable decision by Kaplan are misguided. Kaplan never had the legal authority to issue his ruling against the Ecuadorians or their counsel.  The case had many other legal and factual flaws; Chevron had so little confidence in its own evidence that it dropped billions of dollars of potential damages on the eve of trial to avoid a jury of impartial fact finders.  (See this document for background on Kaplan's flawed decision and here for Donziger's appellate brief that addresses all of Chevron's arguments.)

 In sum, Donziger asserts that Chevron faces the following risks:
  • Enforcement actions filed by Ecuadorian rainforest communities are targeting billions of dollars of company assets in Canada, Brazil, and Argentina. In Canada, the company is in particular trouble with a likely trial next year that could result in the recovery of 100% of the liability.
  • Chevron's hardline approach to the litigation is causing major diplomatic fallout and increased business risk in Latin America. Several countries -- including oil-producing Venezuela, where Chevron maintains its largest investment in the region -- have joined with Ecuador's government to condemn the American company for flouting the Ecuador court judgment.
  • The villagers have been able to recruit some of the most prominent litigators in the world to seize Chevron's assets. They include Alan Lenczner in Toronto, Sergio Bermudes in Rio de Janiero, and Enrique Bruchou in Buenos Aries.
The article in its entirety can be read here.