Lawyers at Gibson, Dunn & Crutcher turned to an often ignored section of U.S. law to obtain depositions, documents and outtakes of a documentary film in an effort to prove that environmental contamination claims brought in Ecuador against their client, Chevron Corp., are fraudulent.
The case, filed by a group of Ecuadorian citizens, alleges that a subsidiary of Texaco Inc., which was acquired by Chevron in 2001, contaminated the water while extracting oil in the region.
Gibson Dunn’s legal team has won several rulings, including some precedential decisions by circuit courts of appeal, that are carving out the case law for Section 1782 of Title 28 of the U.S. Code — a statute that permits parties to go to U.S. courts for discovery in cases pending in foreign countries.
The appellate rulings in the Chevron case could substantially smooth the path for companies facing litigation in foreign courts, said Theodore Boutrous Jr., a partner in Gibson Dunn’s Washington and Los Angeles offices. “One of the trends you see these days in the world of litigation is U.S. lawyers going to foreign countries with weak or corrupt judicial systems and creating litigation there,” Boutrous said. “The standards that the courts have applied under Section 1782 in the Chevron matters lay out the framework that would allow a defendant who’s been sued in these foreign countries to get discovery to defend itself here in the United States.”
Their efforts haven’t come without a fight. “Every one of these applications turned out to be litigated like a full-fledged litigation — because the parties on the other side, the plaintiffs in Ecuador, and on several occasions the government of Ecuador, came into courts to oppose the issuance of the subpoenas,” said Randy Mastro, a partner in Gibson Dunn’s New York office.
The case against Chevron originated in 1993 in the U.S. District Court for the Southern District of New York. It was moved to Ecuador, where Chevron is heading off claims that it caused $27 billion in damages based on the estimate of a supposed neutral expert in the case. That figure was later raised to $113 billion.
During the past year, Gibson Dunn’s lawyers have filed about 20 applications in U.S. courts under Section 1782. In 2004, the U.S. Supreme Court’s ruling in Intel Corp. v. Advanced Micro Devices Inc. set the standards for when a party could obtain discovery under the code section. Among the most important items Chevron obtained were outtakes from a 2009 documentary film called Crude. Gibson Dunn lawyers allege that those outtakes prove there was fraud and collusion in the case. “The film itself was revealing,” Mastro said. In the original version of the movie, for example, the plaintiffs’ lawyers were shown meeting with an assistant to the expert, he said; in the final version on DVD, those scenes were missing.
Videos of these outtakes are available on the Web site of NLJ affiliate Corporate Counsel, which has covered this litigation extensively. View them at http://tinyurl.com/6hg7e6g.
On July 15, the U.S. Court of Appeals for the 2d Circuit affirmed U.S. District Judge Lewis Kaplan’s finding that Chevron was entitled to the outtakes. “It was quite a smashing victory,” Mastro said.
The Ecuadorian plaintiffs had argued that the filmmaker, Joseph Berlinger, was a journalist, and therefore protected under a press privilege from turning over the outtakes. “We argued that the First Amendment covered him just like it would cover any journalist, and it would be unprecedented if a judge ordered NBC Nightly News to turn over all the footage of a newscast that wasn’t used in preparation of that segment,” said Karen Hinton, a spokeswoman for Amazon Defense Coalition, which represents the Ecuadorian plaintiffs.
In an opinion on Jan. 13, the 2d Circuit disagreed, noting that a former attorney for the plaintiffs, Steven Donziger, had approached Berlinger to do the movie — undermining the filmmaker’s claims of independence. But the court limited the outtakes to certain subject matters, slightly reducing the number from the 600 hours required under Kaplan’s original order.
In a related Section 1782 application on Dec. 15, the 2d Circuit affirmed Kaplan’s order requiring Donziger, who is in New York, to submit to a deposition and produce certain documents related to the Ecuadorian litigation. “He did public relations, lobbying, but he’s been the driving force, the ringleader,” Mastro said.
Hinton said the ruling set a “frightening” precedent for lawyers. “Part of the reasoning for it was that Steven Donziger had acted not just as the attorney for the plaintiffs but also was involved in public relations and advocacy — as if lawyers from the East Coast to the West Coast and every little town and village in between don’t do that,” she said.
On Sept. 8, the 5th Circuit, assessing a separate Section 1782 application, affirmed U.S. District Judge Gray Miller’s finding that officials from an environmental firm hired by the plaintiffs should be deposed to answer questions about whether their consultants had “ghostwritten” the report of the supposed neutral expert in the case.
Lawyers for Gibson Dunn had to show that they met the standards under Intel, said Thomas Dupree, a partner at Gibson Dunn in Washington.
“We showed we had a need for the information, we were unable to get it through the foreign tribunal, and we showed that the request was not unduly burdensome or invasive,” Dupree said. “This was an early important precedent because it got the district courts in the country analyzing the same types of issues presented in our appeal to the 5th Circuit: Does Chevron have a right to discovery?”
The 5th Circuit rejected the plaintiffs’ argument that Chevron could obtain similar information from the expert or that Chevron was evading discovery restrictions in Ecuador.
“The bar for discovery under this statute, 1782, is pretty low,” Hinton said. “So it doesn’t take a lot for a judge to rule that the discovery should be allowed. You don’t have to jump over a big high ball on it. For the 5th Circuit to uphold the lower court on that is not really that surprising or interesting.”
The added discovery obtained under Section 1782 has been crucial for Gibson Dunn lawyers, who filed a racketeering lawsuit in February against the plaintiffs’ lawyers and are heading off criminal proceedings against two Chevron lawyers in Ecuador who crafted a remediation agreement in Ecuador. In the underlying litigation, Kaplan granted a preliminary injunction on March 7 halting enforcement of a Feb. 14 judgment against Chevron that is now estimated to be worth more than $18 billion.
Apart from the Ecuadorian case, lawyers at Gibson Dunn requested an arbitration proceeding in 2009 under a bilateral investment treaty between the United States and Ecuador. Ecuador sought to stay that proceeding, which U.S. District Judge Leonard Sand denied. The 2d Circuit affirmed that denial on March 17.
NLJ VIDEO : Interview with Gibson Dunn’s Theodore Boutrous Jr.
Contact Amanda Bronstad at firstname.lastname@example.org.