Kindergarten Lessons from Chevron in Ecuador

When I returned from the terrific "Lessons of Chevron" conference held by the Stanford Journal of Complex Litigation in February, my kindergartener asked for one simple lesson from the world’s biggest case. "Be careful what you wish for," I told her.

As Stanford Law School’s Nora Freeman Engstrom cleverly noted at the conference, both parties got exactly what they wanted: Chevron got its case into Ecuadorian court, and the plaintiffs got their film about the oil company’s alleged predations in the Amazon into the Sundance Film Festival.

My little girl was satisfied. She appreciated the irony that Chevron has spent the second decade of the dispute trying to get out of the court it spent the first decade getting into; and that plaintiffs tipped Chevron to their alleged fraud in the documentary that they worked so hard to enter into Sundance. Nonetheless, we all spent the day trying, and usually failing, to improve on that answer. Here are 10 other lessons that got my juices flowing, including some of my own. In the spirit of kindergarten, I’ll keep them all to 11 words or less.

"Litigation is not the same as a political and media campaign," ventured Chevron counsel Theodore Boutrous Jr. of Gibson, Dunn & Crutcher. I would have been more convinced by this one if my view at the conference hadn’t been obstructed by the Chevron PR consultants checking their email in the next row all day. Of course, there’s nothing wrong with a media strategy unless its based on lies. When Boutrous observed that repeating a lie a thousand lies does not make a truth, I found myself nodding.

"U.S. plaintiffs lawyers are exploiting poor uneducated citizens of foreign countries," offered Boutrous. Of course, this need not be so. For a rebuttal focused especially on the extra-judicial efforts of global tort plaintiffs, see my essay, " Think Globally, Sue Locally, Don’t Generalize Wildly." The way I would put it is that the onus is on human rights litigators to show that they can be pure, and can benefit their clients. At last month’s conference, professors Catherine Rogers of Penn State and Morris Ratner of U.C. Hastings had it right when they wisely suggested that U.S. lawyers abroad should be subject to U.S. ethical strictures.

A different pair of false lessons were offered by Graham Erion, an affable lawyer for the Ecuadorian plaintiffs who is himself untarred by the scandals. Ecuador’s legal culture deserves respect, was his first argument. The academics at last month’s symposium, not knowing all the facts, were sympathetic. However, this argument has always missed the point–and Chevron’s latest allegations of fraud and corruption make it laughable. Ex parte contacts may be legal in a given time and place. But it’s a universal wrong for a party to secretly write a court report to predetermine the case’s result, let alone to write its own judgment and purchase the result.

Second, Erion found it inimical that Gibson Dunn has taken to stamping out fraud in global litigation. This lesson might be paraphrased as: It’s the policeman’s fault. Erion used a more colorful metaphor, the "kill step," for Gibson Dunn’s aggressive approach, and credited it to my magazine. For the record, David Hechler–who wrote the classic Corporate Counsel piece about the fraud inflicted on Dole in Nicaragua–says that Dole’s general counsel borrowed the term "kill step" from the lexicon of food safety. The definitive answer to Erion is that, if the bacteria are proved to be harmful, the bacteria can’t blame the food inspector.

(For the best recent summaries of Chevron’s fraud claims against the plaintiffs from the judge overseeing the case, see here and here. For my recent columns on Chevron’s new documentary evidence, see here and here. While I’ve taken a strong position on the enforceability of the plaintiffs’ $19 billion Ecuadorian judgment, I am not pre-judging the merits of either the arbitration or the civil trial in New York.)

To my mind, the big question is how global litigation abuses may be controlled. Chevron is pursuing every possible path: appeals in Ecuador, public relations, lobbying, private investigation, U.S. court discovery, U.S. injunctive relief, U.S. civil liability for plaintiffs lawyers, the threat of U.S. criminal and ethical sanctions, arbitral interim measures against Ecuador, investment law liability for Ecuador, and defenses to enforcement wherever plaintiffs aim to collect. We can’t draw grand lessons yet, because we don’t even know which forum will be remembered as the main event. We do know that, if Chevron prevails anywhere, they’ll owe it largely to the revelations in their 23 motions for discovery in aid of a foreign dispute. As I pointed out here and here, it pays to play Nancy Drew.

We also know that the abuse of transnational litigation would never have happened had the U.S. held on to the case. And that demands a discussion of forum non conveniens (FNC) doctrine.

"Hard cases make bad law," is the lesson that professors Christopher Whytock of U.C. Irvine and Howard Erichson at Fordham drew in their thoughtful papers on the topic. Don’t change FNC rules to accommodate an extraordinary case, they say, or we’ll end up distorting routine cases. This is a valid concern, and not only for forum non conveniens. Others worry that future courts will be too ready to grant transnational discovery motions, or too unready to grant enforcement. My response is that future courts may confine extraordinary precedents to their facts. At this stage of the game I worry more about decision-makers who fail to recognize the extraordinary facts, or to interpret their mandate to accommodate them.

The great blunder in this dispute was to ship it to Ecuador in the name of forum non conveniens. The U.S. courts could have saved everyone a lot of grief had they recognized that a case is more prone to abuse when the issues are (a) high-stakes or (b) politicized. I learned from Russia’s Yukos affair that, even if a weak judicial system has made significant progress, it does not deserve trust in a hot-button case of great magnitude. It was reckless to expect Ecuador (even if it had just adopted a new set of corruption reforms) to handle a huge case pitting gringo oil companies against indigenous rights. My modest suggestion is to incorporate these factors into the FNC analysis.

A natural lesson for Chevron to draw would be that business defendants should stop invoking FNC, and stop trying to get into foreign court. In other words, once again: "Be careful what you wish for." Alas, Chevron seems to think that complex litigation is not as simple as kindergarten.

Boutrous and Chevron’s general counsel, R. Hewitt Pate, both declare that U.S. business should instead work to improve the rule of law overseas. In part this may reflect a rigid belief in the evils of U.S. court. Then again, who am I to argue with a powerful corporation that wishes to promote the rule of law in the nations where it operates? Improving the legal capacity of developing nations is a worthy aspiration, shared by human rights advocates, and I encourage Chevron join the fight.

When I started following this case in 2004, I innocently hoped that it would prove the efficacy of foreign courts in an age of vigilant gatekeeping by U.S. courts. Chevron in Ecuador teaches that U.S. judges should sometimes be more grudging in their respect for other judges. But respect for foreign courts should still be the goal. So here is my final takeaway (which satisfies the 11-word rule if you split in two). Let’s work to improve the rule of law abroad–and meanwhile keep big political cases in courts that can handle them.