Chevron's Legacy

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

Thursday, December 18, 2014

Chevron's 12-Step Program to Obtain Impunity for Its Crimes and Abuses In Ecuador


Why has Chevron still not paid up for its destruction of Ecuador's ecosytem after 22 years of litigation?

And why has Chevron still not paid a dollar directly to those affected by its pollution in Ecuador when BP voluntarily put up $20 billion to compensate victims within weeks of its much less impactful Gulf oil spill in the United States?

It is undisputed that Chevron deliberately dumped billions of gallons of toxic waste into the Amazon rainforest when the company (under the Texaco brand) operated in Ecuador from 1964 to 1992. Three layers of courts in Ecuador have confirmed that the oil gaint used substandard practices that decimated indigenous groups and caused health problems that have killed, or threaten to kill, thousands.

(For a summary of the overwhelming evidence against Chevron, see here.)

After an arduous eight-year trial, in 2011 the villagers finally won a judgment in Ecuador ordering the company to pay $9.5 billion to restore the environment and to provide clean water and appropriate medical care. Ecuador is where Chevron insisted the trial held and where the company accepted jurisdiction. The amount of the final judgment is modest compared to BP's liability in the U.S., which has grown to roughly $50 billion.

We have tried to understand how Chevron has been able to snub its nose at the court judgment with so few consequences.

It certainly has much to do with how Chevron uses its vast wealth to pay hordes of lawyers from 60 different firms to tie up the villagers in courts stretching across countries and continents. Chevron's annual revenues are four times greater than Ecuador's GDP. Chevron CEO John Watson obviously calculates that it is cheaper to use lawyers to delay justice than to remediate the disaster.

There is also the larger threat to Chevron's business model. Ecuador is hardly the only country where Chevron faces significant liability for causing environmental damage in the communities where it operates. The last thing Watson wants is for other indigenous and farmer communities to get the dangerous idea that they can pursue their own legal claims against the company.

More interesting is why judges around the world can't seem to put a stop to Chevron's abusive strategy. Maybe the world needs a new global court to resolve civil disputes so powerful companies can't play national court systems against each other, as Chevron has done so effectively.

Whatever the solution, the system obviously is not working when the claims of vulnerable human rights victims cannot be resolved after an eternity of effort and untold suffering.

Here's our description of Chevron's 12-step program for impunity stretching back to the launching of the case in 1993:

1) Ecuadorian villagers sue Texaco in New York federal court in 1993 seeking a clean-up of the remediation and compensation for personal injuries. Texaco claims it should not be held liable because it operated in Ecuador via a wholly-owned fourth-tier subsidiary called Texpet.

2) Texaco and then Chevron (which bought Texaco in 2001) plead with a U.S. judge for nine years to move the case to Ecuador. The company files 14 affidavits praising Ecuador's judicial system and expressly agrees to jurisdiction there. The case moves to Ecuador.

3) On the first day of trial in Ecuador in 2003, Chevron goes back on its promise and claims the Ecuador court has no jurisdiction. Again, the company argues that it cannot be held liable because it operated via a wholly-owned fourth-tier subsidiary. The court rejects Chevron's argument.

4) When the trial evidence against Chevron mounts, the company sells its service stations in Ecuador and strips its remaining assets from the country. It vows never to pay any judgment and begins to threaten judges with jail time if they do not rule in its favor.

5) Chevron openly mocks the rule of law in Ecuador. Company lawyer Sylvia Garrigo tells 60 Minutes: "We don't want to be in any court, period." A Chevron lobbyist tells Newsweek: "We can't let little countries screw around with big companies like this." The company promises the villagers "a lifetime of litigation" if they persist in pursuing their claims.

6) Faced with the prospect of being held accountable in Ecuador, Chevron retaliates by suing all of the villagers and their lawyers for "fraud" in the same New York court where the company had blocked the original lawsuit in 1993. Chevron convinces a controversial (and very biased) trial judge to block the villagers from enforcing their judgment in the U.S. That decision is under appeal.

7) Subsequent to the filing of the retaliatory New York lawsuit, two appellate courts in Ecuador (including the country's highest court) unanimously affirm the judgment against Chevron. No fewer than eight appellate judges in Ecuador reject Chevron's claims of fraud.

8) Left with few options in their own courts, the Ecuadorian villagers are forced to file new collection lawsuits to seize Chevron assets in Canada, Brazil and Argentina. Chevron tries to defend these actions by seeking to have them dismissed on various technical grounds.

9) To fight the Argentina collection action, Chevron resorts to blackmail. The company successfully conditions a multi-billion dollar investment on the dismissal of the lawsuit. Chevron CEO John Watson visits Argentina and meets with President Cristina Fernandez de Kirchner to finalize the deal.

10) In Canada, Chevron claims its assets should be off-limits to the villagers because they are held by a wholly-owned Canadian subsidiary, Chevron Canada. While that issue is being litigated, the villagers cannot access Chevron's funds. Almost three more years pass.

11) Separately, Chevron sues Ecuador's government before a private arbitration panel seeking a taxpayer-funded bailout (by Ecuadorian citizens) of its pollution liability. By rule, the villagers are not allowed to appear to defend themselves. That litigation has been ongoing for five years with no end in sight while the three private arbitrators are making millions of dollars each in fees.

12) Chevron tries to cut off funding for the litigation by suing two financial supporters of the villagers in Gibraltar. Chevron is asking the court to issue rulings on the very same factual issues that already have been litigated and resolved by three layers of courts in Ecuador. The company also sues five lawyers and dozens of supporters of the villagers in an attempt to try to drive them away from the case.

Let's summarize some of the results of Chevron's 12-step "lifetime of litigation" strategy.

In Ecuador, there's virtually no Chevron assets to collect because the company sold them off anticipating it would lose the lawsuit.

In Canada, where there are $15 billion in Chevron assets, the company claims it is immunized because those assets are held by a wholly-owned subsidiary that Chevron controls completely.

In the U.S., a trial judge who refused to even read the evidentiary record from the trial in Ecuador has ruled that Chevron's assets are completely off-limits to the villagers.

In Gibraltar, Chevron has effectively tied up the funders of the lawsuit in personal litigation to distract their attention from enforcing the judgment against Chevron's assets.

Despite these Chevron-made obstacles, the oil company still faces a substantial risk that it will be forced to pay the judgment in full. Chevron is feeling sufficient pressure such that its representatives recently floated the idea of a three-party settlement that would include the government. But is is unclear if at this late stage a settlement would even be desirable for the communities.

As we have explained, the U.S. judgment is likely to be reversed on appeal in the coming months. That would open up the U.S. to enforcement actions.

In Canada, justices on the country's high court seem ready to order Chevron to stand trial to determine the validity of the Ecuadorian judgment. If a Canadian court recognizes the judgment, the assets of Chevron's subsidiary in Canada and those in other countries will be in play for potential seizure.

Chevron also faces increased global business risk stemming from its failure to abide by the law in Ecuador. There is a huge political backlash developing against the company in Latin America. Some details are in this article by a U.S. legal advisor to the Ecuadorians, Steven Donziger.

Chevron's strategy is also enormously expensive and has provoked regular challenges of CEO Watson from influential company shareholders. To defend against the pollution claims, Chevron has used at least 60 law firms, 2,000 lawyers, six public relations firms, and ten private investigations firms.

We estimate Chevron has spent at least $2 billion to try to grind down the villagers and their supporters. The company has paid at least $15 million to Kroll, the world's largest private spook company. Kroll admitted to running an espionage and intimidation operation against the lawyers for the villagers. It also admitted that it prepared at least 20 reports on Donziger's private life for Chevron's consumption.

Bottom line: Chevron's litigation abuse needs to stop. Courts around the world need to stand up to Chevron's harassment model and prevent it from litigating the same issues again and again. The claims of the villagers to enforce their judgment need to be resolved on the merits, once and for all.

The stakes are far greater than the outcome of this particular case. Chevron's blocking plan has profoundly negative implications for human rights victims and rule of law advocates everywhere.

Tuesday, December 16, 2014

Canada's Supreme Court Poised to Force Chevron To Stand Trial Over $9.5 Billion Judgment


Chevron Lawyer Clark Hunter Poses Dare to Justices: "Fairness" Should Have Nothing to do With It

Chevron's brazen plan to inflict a "lifetime of litigation" on the indigenous communities it poisoned in Ecuador's Amazon continues to grind its way through courts around the world. We are now in the third decade of litigation since the original lawsuit was filed in 1993 in New York.

The latest stop in Chevron’s global road show of evasion occurred last week in Canada's Supreme Court. On a snowy day in Ottawa, Chevron’s small army of Canadian lawyers put the dare to seven respected justices on the country's highest court. Chevron challenged them to try to stop the company's "lifetime of litigation" strategy designed to block the villagers from collecting their $9.5 billion judgment won in the courts of Chevron's choosing in Ecuador.

Chevron might have met its match in Canada. The country is known for having an outstanding judicial system that is more than capable of standing up to Chevron's game of musical courts that has stretched across countries and continents.


After almost three hours of argument, the seven justices seem to be seriously considering an order that would force Chevron into a trial that could determine whether it pays the entirety of the Ecuador judgment. Unlike in Ecuador -- where Chevron stripped its assets in anticipation of losing the lawsuit -- the company maintains substantial holdings in Canada via a wholly-owned subsidiary. These holdings could fully cover the company's obligations in Ecuador and result in a comprehensive clean-up of the ancestral lands of the indigenous groups.

The specific issue before the Supreme Court of Canada is whether the Ecuadorian villagers should be forced to overcome a new jurisdictional hurdle invented by Chevron that appears to have no precedent in the law. As far as we can tell, never have courts in either Canada or the U.S. (or in any other country) required the holder of a foreign judgment pursuing a scofflaw debtor like Chevron to prove jurisdiction for a second time after jurisdiction already was established where the underlying matter was heard. That's the new barrier Chevron is asking the justices to erect.

In fact, Chevron voluntarily accepted jurisdiction in Ecuador. It had eight years to defend itself in the country and it did so mightily. It often inundated the court with frivolous motions and threatened judges with jail if they failed to rule in the company's favor. It submitted dozens of evidentiary reports and hundreds of motions challenging court rulings. Chevron lost on the merits based on 105 expert evidentiary reports and 220,000 pages of trial evidence.

An intermediate Ecuadorian appellate court unanimously affirmed the judgment after a de novo review of the trial record. Ecuador's highest court, the National Court of Justice, unanimously affirmed the de novo decision. In all, eight different appellate judges in Ecuador rejected Chevron's complaints of an unfair trial and confirmed the validity of the overwhelming evidence against the oil company.

If Chevron's proposed jurisdictional rule is adopted, it could severely hamper if not quash the ability of the indigenous communities to enforce their judgment in Canada. As a general matter, Chevron appears to believe that judges should erect new barriers to justice whenever the existing ones don't seem to work well enough to immunize it from its rampant misconduct in Ecuador.

(For detailed background on that misconduct, see this extraordinary affidavit by Ecuadorian lawyer Juan Pablo Saenz. For more on Chevron's "lifetime of litigation" strategy as applied to Canada, see this press release and this background document.)


The trial took place in Ecuador only because Chevron wanted it there. In fact, Chevron filed 14 affidavits before a U.S. judge in the 1990s praising the fairness of Ecuador's courts as part of its plan to block the case from being heard by a jury in New York.

When the trial started in Ecuador and the scientific evidence against Chevron mounted, the company began to play dirty. It launched a vicious attack on Ecuador's judiciary. It also lobbied Presidents Bush and Obama to eliminate bilateral trade preferences for the country -- a move that would have cost Ecuador an estimated 300,000 jobs had it succeeded. Chevron also sued Ecuador's government in a secret investor arbitration seeking a taxpayer-funded bailout in Ecuador of its clean-up liability.

Chevron did not stop there. It openly used threats and intimidation. The company issued a press release in 2007 promising the villagers "a lifetime of collateral and appellate litigation" if they continued to pursue their claims. "We don't want to be in any court, period," Chevron lawyer Sylvia Garrigo told the CBS news show 60 Minutes in 2009.

Chevron has roughly $15 billion of assets in Canada in a wholly-owned subsidiary, Chevron Canada. The assets include two offshore oil fields, a refinery in British Columbia, and a large tar sands project in Alberta. The parent company is said to collect between $2 billion and $4 billion annually in dividends from its Canadian operations.


So while Chevron and its shareholders benefit greatly from profits produced by the company's subsidiary Chevron Canada, in Chevron's view Chevron Canada should receive full immunity from any of Chevron's liabilities. That's Chevron's notion of corporate impunity in action.

There are also six wholly-owned Chevron subsidiaries between Chevron the parent and Chevron Canada. It is clear that these entities exist only on paper. Their sole useful function appears to be to shield Chevron from liability. Yet they are touted by Chevron as yet another reason the enforcement action of the villagers should not go forward.

We might add that the size of the Ecuador judgment is modest compared to the magnitude of the damage Chevron caused when operating in Ecuador under the Texaco brand from 1964 to 1992. Chevron abandoned roughly 1,000 toxic waste pits gouged out of the jungle floor. It also admitted to the systematic discharge of 15 billion gallons of oil-laced water into streams and rivers that indigenous groups relied on for their drinking water, bathing, and fishing. Cancer rates in the region predictably have skyrocketed.


BP’s liability in the United States for the far smaller spill in the Gulf of Mexico now stands at $48 billion. That's about five times greater than Chevron's liability in Ecuador. Only four years after the Gulf spill, BP already has paid out an estimated $30 billion in damages. Almost five decades after Chevron began operating in Ecuador, the company has yet to pay even one dollar directly to the affected communities.

Chevron's theory that it owes no compensation provides insight into how large multinational corporations try to evade accountability for human rights abuses. But judges are under no obligation to accept Chevron's outdated theories of subsidiary immunity given the increasing evidence they run counter to international human rights law and evolving global standards of corporate accountability.


This was exactly the point made by several Canadian human rights groups -- including the Human Rights Program at the University of Toronto Facuty of Law -- that filed friend of the court briefs in Canada in support of the villagers. These insightful briefs explain how Chevron's approach will hurt the ability of human rights victims everywhere to receive legal redress. They can be read here and here.

It bears mention that roughly 80% of Chevron’s revenues worldwide come from its wholly owned subsidiaries located outside the United States. Chevron makes almost no revenue except through the operations of its subsidiaries. Chevron does not even own its global headquarters building in California. Virtually the only way to recover Chevron's assets is to sue its subsidiaries.


Think for a moment about the degree of impunity to which Chevron feels it is entitled.


Under Chevron’s scenario, the indigenous villagers cannot recover in Ecuador even though the company promised to accept jurisdiction there. That’s because Chevron has no assets in the country.

The villagers also cannot recover in Chevron’s home country of the U.S. That’s where Chevron convinced a controversial trial judge from New York (after a farcical proceeding last year that is under appeal) to bar the villagers from seeking to collect their judgment in all 50 U.S. states. 


As for the rest of the world, that’s off limits too under Chevron’s theory of subsidiary immunity. That’s because the company claims that its assets in wholly-owned subsidiaries are not owned by Chevron.

Chevron’s promise of a “lifetime of litigation” is treading dangerously close to a new form of impunity for an oil company that nobody disputes has caused massive environmental damage. That should deeply disturb anybody who cares about access to justice and corporate accountability.

Chevron’s able lawyers who appeared before the Supreme Court of Canada, Clark Hunter and Benjamin Zarnett, focused purely on the technical. Neither spoke a word about the devastating life conditions caused by the company’s dumping. (Some of the personal stories of the people affected have been captured vividly by photojournalist Lou Dematteis.)

Mr. Hunter went so far as to warn the justices of the “danger of paying too much attention to fairness” in their analysis. When asked if he was requesting that the court create a new jurisdictional barrier for the villagers that had never before existed in Canada, he evaded answering the question.

To Chevron, “fairness” never had any place in either its brutally messy operations in Ecuador or in its arguments in court. Hopefully, judges who hear these cases will reject Mr. Hunter's plea to ignore fairness. The affected villagers deserve to be able to seek to collect on what they have won after far too many years of Chevron-instigated delay. Fairness should be front and center in any legal analysis.

Absent extraordinary circumstances not present here, enforcement actions against a company that refuses to pay a valid court judgment must be heard on the merits. To deny the villagers an enforcement trial would make little sense in our increasingly globalized world. It would also be a manifest injustice to those vulnerable communities that have fought bravely for 22 years to obtain a resolution of their claims.








Thursday, November 20, 2014

Ecuador Government Should Sue Chevron For Fraud Over Environmental Remediation

It is high time for Ecuador's government to step up and better defend its citizens who are slowly dying off because of Chevron's deliberate contamination of the country's Amazon region. One way it could step up its game: sue Chevron for fraud because of ongoing problems related to the company's sham remediation of the area in the mid-1990s.


Evidence that Chevron defrauded Ecuador's government and its 14 million citizens is adding to the growing business risks facing CEO John Watson from the $9.5 billion Ecuador judgment, as this excellent summary in Inside Counsel magazine explains. A successful suit by Ecuador's government against Chevron could add billions more to the company's tab and further complicate its business prospects in South America and perhaps elsewhere.


Just days ago, the Huffington Post published a story by our colleague Karen Hinton showing that during its "clean up" in Ecuador Chevron used norms that were at least 100 times more lax than those in effect in the U.S. at the time. (They were also at least ten times more lax than norms used under Ecuador's laws.) It then used these fake "norms" to try claim it had "remediated" hundreds of toxic waste pits when in reality it simply covered them up with dirt without actually cleaning them out. It then presented fake evidence to induce Ecuador's government to approve the remediation.


With regard to Chevron's purported remediation in Ecuador, Hinton writes:

Six different sets of tests have shown that Texaco only dumped dirt on top of the pits to hide the contamination, not clean it. And, eight Ecuador judges and two U.S. judges who've heard evidence related to the 22-year-old lawsuit have either ignored the remediation agreement, thrown it out or stated it had no merit in Chevron's defense. All of this evidence adds up to one thing: Texaco committed fraud against the Ecuador government. And Chevron has done the same by lying about the remediation to Ecuador and U.S. courts.
Although the "release" Chevron received for its fake clean-up expressly excludes the legal claims of the private citizens who later obtained the judgment, in an act of pure chutzpah Chevron still asserts the release as a defense. Even though no court has accepted this argument, just by litigating it Chevron can buy time before it has to pay up. Hinton calls the fraudulent release Chevron's hoped-for "get out of jail free" card.


It won't work over the long haul. Chevron's main problem is that the scientific evidence during the eight-year trial in Ecuador produced 105 technical reports that are full of chemical sampling results that prove the so-called "remediated" pits are highly contaminated with life-threatening toxins such as cadmium, zinc, and polycyclic aromatic hydrocarbons.


The human toll from Chevron's toxic dumping can be measured in the form of increased cancers, nervous system damage, and spontaneous miscarriages. Read this summary of the cancer studies and see this photo essay by award-winning journalist Lou Dematteis for background on the thousands of people who have died or who face life-threatening diseases because of the pollution.

Instead of going after Chevron for fraud, Ecuador's government has fallen into Chevron's trap. It is spending millions of dollars on an American law firm to defend its interests against an illegitimate and secret arbitration action brought by Chevron that attempts to shift the entirety of the clean-up liability to Ecuador's government.

In other words, Chevron is seeking a taxpayer-funded bailout from Ecuadorian citizens of its clean-up obligations. It wants Ecuadorians to pay for the bullet Chevron used to shoot them. To do this, Chevron is using a private star chamber "investment" court that bars the communities from appearing. Again, it won't work. But it does put Ecuador's government needlessly on the defensive. What the government should do is man up and sue Chevron for fraud in its own courts.

Can you imagine the uproar if BP tried to pull Chevron's Ecuador stunt in the U.S. after its Gulf Spill and sued the U.S. government in a secret investment court for a bailout? The racism that permeates Chevron's strategy in Ecuador is palpable.

The scientific evidence against Chevron in Ecuador is overwhelming. According to Hinton, Chevron expert Marcelo Munoz found evidence of the company's illegal contamination. Chevron then refused to pay Munoz because the company did not like the results he produced.


In 2003, Ecuador's auditors discovered pits oozing with oil that Chevron had certified as clean. In 2013, a U.S. engineering firm (the Louis Berger Group) also found high levels of contamination at the so-called "remediated" pits. LBG reviewed the work of Chevron's experts and found numerous flaws. See pages 35 to 42 of this document to better understand Chevron's remediation fraud.

What is getting more clear is that Chevron is suffering from a pronounced moral rot under Watson's leadership. The high-level executive who organized the fake remediation still has a thriving career with the company. Ricardo Reis Veiga is pulling down a huge salary as the director of special litigation projects for Chevron even though he was criminally indicted in Ecuador for lying to the government.

Reis Veiga's sidekick and co-conspirator in Chevron's cover-up, Sarah McMillan (who sports the title of  Chevron's "lead scientist" despite having limited academic credentials), also continues to pull down a fat salary from the company. For more on how McMillan and her Chevron colleague John Conner tried to cheat the court during the Ecuador trial, see here.


Chevron's fake remediation was just the tip of the iceberg in terms of the company's corruption in Ecuador. Chevron's lawyers threatened judges with jail time, inundated the court with frivolous motions, tried to bribe Ecuador's government, set up dummy front companies, and hid dirty soil samples from the court to minimize evidence of the company's homicidal conduct in a mad pursuit of ever greater profits. Company operatives also spied on lawyers for the communities and tried to harass them.

For those who want to call attention to Chevron's outrageous behavior, vote for the company to win a lifetime achievement award for corporate abuse. The online voting for the recipient of The Public Eye Award can be found here.


For more details on Chevron's misconduct, see this affidavit by Ecuadorian lawyer Juan Pablo Saenz; this video documenting the company's pump and dump operation and human rights violations; and this recent article in Rolling Stone that explains the company's unethical and illegal litigation tactics.

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 & Marsal, 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.