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

Reposted from The Chevron Pit

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 now 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. The overwhelming weight of legal authority in our federal courts is 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 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 make itself 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 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 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. We hope they step up and fulfill their obligations. NOW is a good organization. It deserves better from its leadership.

Chevron Will Lose Ecuador Pollution Case on Both Law and Facts

Reposted from The Huffington Post

Prediction: Chevron will lose the historic Ecuador pollution case on both the law and the facts, despite what you may have read in articles by U.S. legal reporters about the 20-year plus lawsuit.

In fact, you may think the Ecuadorians have lost already. They haven't.

If you care about the plight of indigenous people everywhere, you should consider another set of facts you haven't heard much about, at least in the U.S., and then make your own prediction.

Earlier this year, New York Judge Lewis Kaplan ruled the $9 billion Ecuador judgment against Chevron was fraudulent and not "collectible" anywhere in the world. In 2012, Judge Kaplan ruled it was not "enforceable" but the 2nd Circuit Court of Appeals quickly reversed him sending Chevron's lawyer Randy Mastro backed to the command center at his law firm Gibson Dunn, where job number one is to protect multi-national companies taking advantage of weak judiciaries and governments in poverty-stricken areas often populated by indigenous groups.

Photo by Lou Dematteis

A group of prestigious U.S. lawyers appealing Judge Kaplan's ruling for the second time argue blocking "collection" of a foreign judgment violates international law and comity (legal reciprocity) as much as blocking "enforcement" and are betting the 2nd Circuit reverses again, based on that argument as well as a host of others concerning jurisdiction, the improper use of the RICO statute and, importantly, the fact that Ecuador's appellate court conducted a de novo review of the judgment and upheld it, meaning the appellate court acted as if the case was being considered for the first time, without deference to the lower court's ruling.

It appears the oil giant is impressed with the Ecuadorians' arguments and is hedging its bet on victory, based on a footnote in Chevron's recent appellate court brief.

Fearing defeat on the law, Gibson Dunn's footnote 19 asked the 2nd Circuit to uphold Judge Kaplan's "facts" even if the court can't uphold his legal logic. You see Chevron believes it needs an affirming statement on its "facts" to prevent the Ecuadorians from enforcing the $9 billion judgment in Canada, Brazil and Argentina, where legal proceedings are underway to seize company assets. (Chevron has few assets in Ecuador.)

Whether such a statement will make a difference in another country's court system is up for debate but the Ecuadorians and their attorneys expect they will be allowed to counter Chevron's "facts" with their own set of facts – facts that were discounted, ignored or not allowed into evidence in Judge Kaplan's courtroom.

So let's compare facts.

Chevron's Story: Lawyers for the Ecuadorians Wrote the Judgment

The abridged version of Chevron's story goes like this: the lawyers for the Ecuadorians promised to pay the presiding judge in Ecuador $500,000 in exchange for writing the judgment.

The Big Problem(s) with that Story

What is Chevron's proof that this illicit bargain took place? To guarantee Chevron its Pyrric victory in his trial, Judge Kaplan ignored several big holes in Chevron's story, as did most legal reporters, including two who have gone on to write books about the case.

Big hole number 1: Where's the body?

Chevron never found the "ghostwritten" judgment on any computers, emails, jump drives or in the sock drawers of any of the Ecuadorians' attorneys even though the company had access to literally the entirety of their written and electronic files during the relevant time period.

Big hole number 2): Chevron's own expert said the company's "fingerprint" evidence of what it calls "ghostwriting" is "gobbledygook." See page 133 of this brief.

Big hole number 3): Chevron's one witness who claimed to know about the bribe is himself being paid over $1 million by Chevron in exchange for his ever-changing testimony. This witness, a former judge (Alberto Guerra), has admitted to taking bribes in 14 other cases in Ecuador over which he presided. See pages 52 to 57 of this brief.

What Chevron Does Not Have

Even though Judge Kaplan allowed Chevron complete access to all of Steven Donziger's written and electronic files, Chevron has not found a copy or draft of the Ecuadorian judgment on his hard-drive; nor have the 2,000 lawyers and legal assistants working on the case for Chevron found it in any of his emails.

Remember, Donziger is the lawyer Chevron claims had complete control over the "conspiracy" to "extort" the company. Also not found is any email exchange or reference to a meeting with the Ecuador judge or with his alleged associate Guerra (more about him later) during which the Ecuadorians' lawyers supposedly struck their bribery deal.

Quite the contrary, internal emails between members of the Ecuadorians' legal team, practically up to the moment the trial judgment in Ecuador was issued, demonstrate that: (1) they had no idea when the Ecuador trial court would issue a final decision; (2) they were concerned that their final submission to the court would not be finished in time; and (3) they believed that if they did not get their act together quickly and submit their final written arguments, the Ecuador judge might rule for Chevron. See page 13 and page 58 for some of these emails.

The "Fingerprint" Evidence

Chevron (and Judge Kaplan) knew they couldn't hang the entire fraud ruling on the testimony of the paid witness who had admitted to taking bribes, so they argued the Ecuadorians' lawyers left "fingerprints" on the judgment that corroborate Guerra's testimony.

Chevron claims various legal documents written by the Ecuadorian attorneys were not entered into the court record during the trial in Ecuador, yet language from them appears in the judgment. Chevron concludes that whoever wrote the documents wrote the ruling, not the Ecuador judge.

First, there's nothing wrong with language originally written by lawyers in a court case appearing in a final ruling. That occurs often in courts everywhere, including the U.S. Judges constantly adopt language submitted by lawyers in their briefs and expert reports in their final decisions. In fact, Judge Kaplan adopted Chevron's "facts" and arguments in his final decision. It would be suspect, though, if the language had never been entered into the record or given to a judge for him/her to consider.

But that's not what happened.

• Documents were introduced to the Ecuador court but for various reasons were not included in the Ecuadorian trial record: Excerpts from the so-called "Fusion Memo" represent the most substantially overlapping text that Chevron argues proves the Ecuadorians' lawyers wrote the judgment. It's a legal memo about a completely non-controversial topic: why Chevron was liable for Texaco's contamination after the merger in 2001.

The issue of "successor liability" was publicly and frequently discussed in the Ecuadorian proceedings. For example, at a court-supervised inspection of a Chevron well site on June 12, 2008, the Texaco/Chevron merger was discussed and all of the exhibits to the Fusion Memo were submitted and added to the trial court record. It is very likely that the actual memo was submitted as well, but it is possible it was not stamped as part of the official court record. The Lago Agrio proceedings were chaotic. There are many other documented examples of Chevron's submissions to the court not being made part of the official record. The fact that all of the memo's exhibits were submitted and marked, but possibly not the memo itself, provides a perfectly plausible explanation for why language from this memo found itself into the trial judgment.

Here is a summary of emails among the Ecuadorians' lawyers. See page 141 and footnotes 526 to 531 that discuss the Fusion Memo.

• Chevron did not search the actual trial record in Ecuador so it has no way of knowing whether the Fusion Memo is actually in the record. Chevron has never claimed that it searched the physical trial record from the Lago Agrio proceedings. The only people who seem to have searched that trial record – the appellate court judges in Ecuador – found most of Chevron's argument to be without merit and upheld the judgment against Chevron, rejecting the company's fraud claims. The Ecuador Supreme Court also upheld the judgment, bringing the total number of eight appellate judges who have ruled against Chevron in Ecuador.

• Chevron did an unreliable OCR review. An OCR (Optical Character Recognition) is a fancy way of describing an electronic scan of a document. Instead of reviewing the full original trial record, Chevron relied on what it claimed was electronic scans using the OCR method. The company claims the pages of the Ecuadorian trial record were first scanned as image files, then subject to an OCR review, which purportedly renders those image files text searchable.

The problem is that these image files – which were drawn from thousands of loose sheets of paper, some with handwriting scribbled on them, fastened together by rubber bands and stored in an Amazon courthouse – when submitted to OCR review, were scrambled, leaving most of the text un-recognizable. There were likely various reasons for this: the state of the papers (some of which were soiled), that some of the text was handwritten and difficult to read, and the presence of accents in the original Spanish. See pages 131-135 for more on Chevron's OCR review.

Even one of Chevron's own experts called the OCR review "gobbledygook." Here's an example:

2014-10-21-ScreenShot20141020at9.44.52PM.png

Bottom line: Chevron had no way to know what was in or out of the Ecuador trial record. But that doesn't change the fact that any document submitted to be part of the record, but not officially recorded, can still be used by the court in rendering a judgment.

• Chevron's limited document-by-document review also was unreliable: Chevron did a limited document-by-document review of the scanned image files and submitted that document review as "expert testimony." There is no such thing. The limited set of documents that were reviewed – to prove that the overlapping text could not be found in the trial record – made up less than half of the Ecuadorian trial record.

For more details on Chevron's so-called "fingerprint" evidence, see pages 145-160 of this legal brief and pages 50-61 of this brief.

Paid-for Witness Testimony – Enter Alberto Guerra from Stage Left

Chevron's sole witness – the man who supposedly establishes the corrupt bargain between the Ecuadorians' lawyers and the Ecuador judge – is Alberto Guerra. It stretches the imagination – and breaks the limits of justice – that anyone would rely on his testimony.

• What Does Alberto Guerra (Hear) Say: It is important to be clear: Guerra admits that he was not present at any meeting when the lawyers allegedly bribed the Ecuador judge. Guerra testified the Ecuador judge, Nicolas Zambrano, told him that Pablo Fajardo (the lead lawyer for the Ecuadorians) had offered him (Judge Zambrano) money for the opportunity to write the judgment. (Judge Zambrano denied this accusation in sworn testimony.) This is called hearsay. And that is too kind – this is, at least, double hearsay. Hearsay evidence, of course, is not generally admissible in courts in the United States. This is another example of the "Kaplan exception" to the law taking hold in Chevron's favor.

• So why was Guerra involved at all: He wasn't present at the alleged "bribery" meeting with Judge Zambrano. Guerra did not negotiate the alleged "bribery" fee. He was not asked to write the judgment. So why was Guerra even involved? According to Guerra, he was going to be paid (between $100k and $200k, he can't remember which) by someone (he can't remember who) to basically fix typos in the judgment. That makes a whole lot of sense, right? I mean, if you are going to defraud a multi-billion dollar unscrupulous oil giant, what you would really want to do is include as many untrustworthy and extraneous people as you can in the conspiracy.

• How did Guerra come to testify: Guerra did not testify out of the goodness of his heart. Guerra is an admitted crook. He admits to paying and receiving 14 bribes, unrelated to the Chevron case, while working as a lawyer and a judge in Ecuador. He admits to soliciting payments from both Chevron and the Ecuadorians in this case. See page 53, footnote 14.

And he has received obscene sums of money and benefits from Chevron in return for his testimony.

Guerra claims he fears for his safety, thus justifying his political asylum. How about fearing prison for admitting in his Chevron deposition he had accepted 14 bribes in previous court cases? An all-expense-paid trip to America with a get-out-of-jail card was motivation enough to testify consistent with Chevron's narrative.

Strangely enough, Chevron's lawyers – including Miami-based Andres Rivero – tape-recorded some of the meetings where they tried to corrupt Guerra with suitcases full of cash. In these tapes, Guerra does not express fear of persecution – but he does express a desire for money. At one point, he asked Chevron's lawyers to "add a few zeroes" to their offer. Chevron's lawyers were all too happy to oblige and – in an almost cartoonish way – gave Guerra tens of thousands of dollars of cash and an offer of political asylum for him and his family. See here and here (pages 50-61)

All-in, Guerra will receive upwards of a $1 million from Chevron, if not more. This includes: housing, a car, furniture, monthly income, and legal immigrations services for his family provided by none other than the esteemed Ira Kurzbam, the former director of the American Immigration Lawyers Association. This might be a tempting offer for anyone, but it is truly an awful inducement for someone who is an admitted liar.

Guerra changes his story three times as evidence proves previous versions are false: Under questioning from Chevron, Guerra changed his story three times. First, he said the ghostwritten judgment was on his computer for him to edit. But he couldn't find it. Then, he said it was on a jump-drive, but he couldn't find the thumb-drive. Then, he said he edited the judgment on a laptop owned by one of the Ecuadorian attorneys. With each new story, he negotiated a higher fee from Chevron. He never was able to produce a copy of the judgment he said he edited on behalf of the Ecuadorians.

• Guerra submits evidence to prove he isn't lying this time: Guerra turned over to Chevron a daily planner, some shipping records and deposit slips to prove that, this time, he was not lying about anything.

Daily planner? This included a note about meeting with Zambrano nine months after the judge issued his final ruling. And Guerra claims he "lost" this planner the year he claims to have met with Donziger.

Shipping records? Neither Guerra nor Chevron offered any evidence authenticating records that supposedly showed Guerra delivered documents to the Ecuador judge. Guerra could have easily created the shipping records out of whole cloth. Chevron obviously had the resources to authenticate them from the shipping company, but chose not to. Take a look and decide for yourself.

Deposit slips? Again, Chevron submitted only copies of deposit slips showing payments into Guerra's account allegedly by a secretary for the Ecuadorian plaintiffs, not the originals. A normal judge never would have accepted them without authentication. The handwriting on the deposit slips looks very much like Guerra's handwriting in his daily planner. We believe Guerra created the deposit slips to jack up his payments from Chevron. In any event, the slips are so unreliable they never should have been accepted as evidence. Again, the "Kaplan exception" at work.

If Chevron wants to argue these "facts" in another court with unbiased judges – say in Canada, where the Ecuadorians are suing to seize Chevron's assets – I say bring it on.

In a court where a fair hearing of all the evidence is allowed – which was not the case in Judge Kaplan's courtroom – Chevron's "facts" won't be so convincing. I predict that in those courts and in the 2nd Circuit, both the law and the facts will remain on the side of the Ecuadorians.

Hall of SHAME? We Have a Winner!

Reposted from Eye on the Amazon

Vote Chevron for the Corporate Hall of Fame!
Please vote for Chevron in the 2014 Corporate Hall of Shame today!

There are many corporations worthy of being condemned for their actions that harm people and the planet, but none more deserving than Chevron. This company has reveled in its role as corporate criminal on the run from a $9.5 billion verdict against it in Ecuador for the deliberate dumping of billions of gallons of toxic wastewater into the rainforest. Chevron brazenly flaunts the fact that it will not be held to account by any court anywhere and will never stop fighting the very people who continue to suffer from its willful contamination.

As if that weren't enough to merit the shameful prize, Chevron's reputation goes well beyond the Ecuador disaster. Earlier this year simultaneous protests of Chevron's environmental and human rights crimes were held in 20 countries on five continents. Affected communities in Ecuador, Nigeria, Argentina, Romania and California called for solidarity and the global community has condemned Chevron.

Although Chevron was found liable after the most litigated case in the history of Ecuador, it refuses to pay. What's worse, instead the company has attacked the nation of Ecuador, its judicial system, and the very people it systematically poisoned. These baseless fraud accusations are only given any credence in the media because the company has spent hundreds of millions of dollars, not to clean up, but to hire lawyers and PR firms advocating that Chevron is "the victim." Really?!?

Most concerning is the fact that Chevron's method of dirty tricks and legal attacks is being lauded by corporate advocates seeking to silence critics speaking out about corporate abuse. This is precisely why Chevron's methods have been condemned by Amnesty International, The Sierra Club, Greenpeace, Avaaz, Rainforest Action Network, Corporate Accountability International and some 35 other human rights and environmental organizations. Over 250,000 people have petitioned the U.S. Senate to investigate Chevron's manipulation and abuse of the legal system that violates the First Amendment.

Chevron's legal attacks pose a severe threat to the rights to expression, association, political participation, and access to courts guaranteed by the First Amendment. If the corporation is permitted to use these methods against public interest groups and activists who engage in First Amendment-protected activities to seek to hold private parties accountable, democracy itself is threatened.

Chevron's actions pose THE biggest attack on corporate accountability efforts to date. That's why – more than any other corporation – Chevron deserves this award. Please vote for Chevron in the 2014 Corporate Hall of Shame today.

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?

Reposted from The Chevron Pit

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.

Legal Momentum and its Board Chair have some explaining to do. We hope they step up and fulfill their obligations. NOW is a good organization. It deserves better from its leadership.

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 here. The 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

Did Chevron Just Fund Its Legal Opponents in Ecuador?

Reposted from the CSR Strategy Group

Did Chevron just hand its legal opponents in Ecuador $106 million?

That appears to be the case according to a press release put out this week by the communities that have sued Chevron for oil pollution in the Ecuadoran rainforest.

In what could be a huge boost to their campaign to force Chevron to comply with a $9.5 billion environmental judgment in Ecuador, rainforest villagers plan to enforce a court order directing them to take possession of a $106 million arbitral award won recently by the oil giant from Ecuador’s government in a case that recently became final in Dutch courts….

The $106 million figure comes from the amount of an arbitral award that Chevron won from Ecuador under the U.S.-Ecuador Bilateral Investment Treaty in an unrelated series of commercial disputes dating to the early 1990s between the American company and Ecuador's state-owned oil company, Petroecuador. A Dutch court last week denied Ecuador's last appeal of the award, rendering the arbitral decision final.

One of Chevron's principal tactics in this litigation has been to starve the Ecuadoran communities of the money that they need to pursue their case. Chevron has flipped two of the financiers of the case: Burford Capital and Patton Boggs. The oil company has also sued two others: Russell DeLeon and Woodsford Litigation Financing. But, if the Ecuadoran government hands over the $106 million arbitral award to the Ecuadoran communities, it would completely replenish the plaintiffs' legal war chest.

The likelihood appears high that the Ecuadoran government will indeed give the money to the plaintiffs. Firstly, the Ecuadoran courts have already ruled that the rainforest communities can seize all of Chevron's assets in Ecuador. Secondly, after Chevron's relentless attacks against Ecuador, it is hard to imagine that the Ecuadoran government would give Chevron any money that it could more appropriately channel to the plaintiffs.

The rainforest communities would likely make very good use of the $106 million. It could be used in part to pay for remediation of the oil pollution, as the Clean Water is already doing. Another portion could be used to fund new legal enforcement actions to seize Chevron's assets outside Ecuador to collect fully on the $9.5 judgment.

If the government of Ecuador gives the $105 million to the plaintiffs, Chevron management only has itself to blame for this possibly game-changing defeat. After all, it was Chevron that successfully petitioned to have the case moved from New York to Ecuador only to lose badly. If there's one thing that Chevron CEO John Watson does well in this case, it is making mistakes that cost millions to Chevron's shareholders.

Is it any wonder that Chevron's own shareholders have questioned management's competence in this case?