Map of ChevronTexaco’s Ecuador operations, Chevron counsel Randy Mastro (top), and plaintiff’s attorney Steven Donziger ()
New York City attorney Steven Donziger corrupted and defrauded the judiciary in Ecuador on his way to securing a multi-billion dollar environmental damages judgment against Chevron, Southern District Judge Lewis Kaplan (See Profile) ruled Wednesday.
Kaplan issued an injunction against attempts by Donziger and his clients to enforce the judgment against Chevron anywhere in the United States.
The judge’s ruling came after a bench trial in October and November in 2013 in which he heard from 31 witnesses about the Lago Agrio litigation in Ecuador that ended with Chevron being assessed $9.5 billion in damages for the environ mental degradation created by Texaco, Chevron’s predecessor oil company in Ecuador.
Though Donziger testified at trial, his supporters condemned the proceeding from the outset because of alleged bias by Kaplan, whose removal they sought in vain on more than once occasion. Kaplan has issued a steady stream of opinions in Chevron’s favor since the oil company first filed in the Southern District seeking injunctive relief blocking Donziger and his associates from enforcing the judgment anywhere in the world.
Finding that Donziger and Ecuadorian defendants Hugo Gerado Camacho Natanjo and Javier Piaguaje Payaguaje engaged in a pattern of racketeering activity, Kaplan imposed a constructive trust for Chevron’s benefit on assets of the three that are traceable to the judgment in Ecuador and enjoined them from seeking to enforce the judgment in the United States “or from undertaking any acts to monetize or profit from the Judgment.”
Donziger, responding through a spokeswoman, called Kaplan’s decision “appalling.”
Donziger’s appellate attorney, Deepak Gupta of Gupta Beck said in a statement that “the court has taken the extraordinary and unprecedented step of appointing itself as a worldwide fact-finding commission and issuing what is in effect a global anti-collection injunction that would preclude enforcement of a judgment from another country in every jurisdiction.”
“The injunction is indistinguishable from an injunction issued by Kaplan in the case two years ago that was struck down on appeal.”
But Chevron lawyer Randy Mastro of Gibson Dunn & Crutcher distinguished what he said was “dicta” on the scope of Kaplan’s injunctive authority from an earlier Second Circuit decision in the litigation from the order Kaplan issued Tuesday.
At an afternoon press conference call with Chevron General Counsel Hew Pate, Mastro said “This RICO case was always about exposing the truth and getting justice for a United States party that was a victim of a travesty of justice in Ecuador, and now that truth has been revealed.”
Although the part of Kaplan’s order blocking enforcement efforts is limited to the United States, Mastro expressed confidence that the decision will be given preclusive effect in some jurisdictions outside the United States where the Lago Agrio plaintiffs try to enforce the judgment.
But even if not given preclusive effect, Mastro said Kaplan’s extensive factual findings “should have persuasive effect because of who was litigating this case—there could be collateral consequences as to the specific factors that go into whether a judgment is enforceable or not.”
‘Judgment Procured by Fraud’
In his 485-page opinion in Chevron Corp. v. Donziger, 11 Civ. 0691, Kaplan unleashed blistering criticism of Donziger.
“The decision in the Lago Agrio case was obtained by corrupt means,” Kaplan said. “The defendants here may not be allowed to benefit from that in any way. The order today will prevent them from doing so.”
Kaplan said Donziger and lawyers in Ecuador “submitted fraudulent evidence.”
“They coerced one judge, first to use a court-appointed, supposedly impartial, ‘global expert’ to make an overall damages assessment and, then to appoint to that important role a man whom Donziger hand-picked and paid to ‘totally play ball’ with the Lago Agrio plaintiffs,” Kaplan said. “They then paid a Colorado consulting firm secretly to write all or most of the global expert’s report, falsely presented the report as the work of their court-appointed and supposedly impartial expert, and told half-truths or worse to U.S. Courts in attempts to prevent exposure of that and other wrongdoing.”
“Ultimately” he said, the legal team for the Lago Agrio plaintiffs “wrote the Lago Agrio court’s Judgment themselves and promised $500,000 to the Ecuadorian to rule in their favor and sign their judgment.”
“If ever there were a case warranting equitable relief with respect to a judgment procured by fraud, this is it.”
Kaplan traced the history of the litigation—from Texaco’s agreement to remediate pollution, to its handoff by agreement to a state-owned oil company in Ecuador, to the dismissal of the initial case brought against Texaco in New York on grounds of forum non conveniens in 2001.
In that case, Aquinda v. Texaco, 142 F. Supp. 2d 534 (S.D.N.Y. 2001) Texaco argued the case should be litigated in Ecuador, Kaplan said, but Donziger and other lawyers argued “with equal irony” that Ecuador was an inadequate forum “because the Ecuadorian judiciary was weak and corrupt and did not provide impartial tribunals.”
From there, Kaplan said, Donziger and his team filed suit in 2003 in Ecuador against Chevron on behalf of 30,000 indigenous residents of the rain forest—and began a high-pressure campaign that included coercion of judges and even the pursuit of criminal charges against Chevron lawyers in Ecuador.
The judge said Donziger’s attitudes toward the judicial system in Ecuador and its corruptibility were clearly in evidence in outtakes from “Crude,” a documentary film that Donziger solicited about the Lago Agrio litigation.
One of Kaplan’s first acts in the multi-year litigation in New York was to enforce a Chevron subpoena for the outtakes.
On the outtakes, Donziger is seen saying of Ecuadorian judges, “It’s their birthright to be corrupt!” He also talked about applying pressure to the judiciary.
Kaplan noted in his opinion Tuesday that Donziger made these statements, and others, while still obliged to meet the standards for ethical conduct for members of the New York bar.
Donziger in his statement vowed to appeal.
“We believe Judge Kaplan is wrong on the law and wrong on the facts and that he repeatedly let his implacable hostility toward me, my Ecuadorian clients, and their country infest his view of the case,” he said. The decision “ignores the overwhelming evidence that Chevron committed environmental crimes and fraud in Ecuador,” he said.
Kaplan in his decision also documents the global litigation strategy employed by Donziger. He reviews the entry of Patton Boggs into the case both as Donziger’s counterweight to Gibson Dunn and as a means for Donziger to obtain litigation funding.
Patton Boggs, led by James Tyrrell, authored the so-called “Invictus” memo, which laid out a strategy of maximum pressure on Chevron by filing attachment actions in amenable jurisdictions, including those countries where the powerhouse lobbying firm could use its extensive contacts to work influence.
Tyrrell could not be reached for comment Tuesday.