Thursday, December 18, 2014

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

Reposted from The Chevron Pit

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 estimated liability in the U.S., which has now grown to an estimated $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 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

Reposted from The Chevron Pit

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 against Chevron's predecessor company Texaco.

The latest stop in Chevron's global road show of evasion over the Amazon pollution in Ecuador 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 to stop the company's abusive "lifetime of litigation" strategy as it continues to block the villagers from having their claims resolved.

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 spread across countries and continents.


The seven justices who heard almost three hours of argument seem ready to order 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 Ecuador judgment was obtained only after Chevron tried to delay and sabotage the proceeding at almost every opportunity. 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 began to mount, the company started to viciously attack Ecuador's courts and launched a lobbying campaign in the U.S. to eliminate bilateral trade preferences for the country. Chevron also issued a press release 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 none of these entities exist other than on paper. None of them have operations. 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 be blocked.

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 to the villagers 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 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 absurd theory of subsidiary immunity. That's because the company claims that its assets in wholly-owned subsidiaries are not really owned by Chevron.

In other words, Chevron's promise of a "lifetime of litigation" is treading dangerously close to a new form of global immunity for a corporation that nobody disputes has caused massive environmental damage. That should be deeply disturbing to anybody who cares about corporate accountability and access to justice.

Chevron's able lawyers who appeared before the Supreme Court of Canada, Clark Hunter and Benjamin Zarnett, did what they are being paid to do. Their focus was on the technical. Neither spoke a word about the devastating life conditions caused by the company's dumping or referenced a single name of a Chevron victim. (Some of the personal stories of those 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 the question.

To Chevron, "fairness" never had any place in either its brutally messy operations in Ecuador or in its legal analyses in court. Hopefully, judges who hear these cases will reject Mr. Hunter's entreaties and use basic notions of fairness when interpreting the law. The affected villagers deserve to be able to seek to collect on what they have won after too many years of delay.

Absent some sort of extraordinary abuse not present here, enforcement actions against a company that refuses to pay a valid court judgment must be decided on the merits. To accept Chevron's theory and deny the villagers an enforcement trial would make little sense in our increasingly globalized world. It would also be a manifest injustice to those who have fought bravely for 22 years to obtain a resolution of their claims.

Friday, November 14, 2014

Chevron's Sham Remediation in Ecuador: Toxic Oil Pits Continue to Contaminate

Reposted from The Huffington Post

Chevron, Chevron Quite Contrary, How Does Your Garden Grow

With Polluted Soil & Toxic Water

And Wealthy Lawyers All In A Row

During the historic contamination trial against Chevron in Ecuador, the company often took journalists to its so-called "remediated" oil pits to prove that its predecessor Texaco cleaned its "share" of one of the world's worst environmental disasters, if not the worst.

Chevron's well-heeled lawyers would sometimes arrange for a nice picnic near the pits to show reporters how green its gardens had grown in the Amazon rainforest since Texaco signed a 1995 agreement with the Government of Ecuador to remediate toxic pits.

But lurking beneath the vegetation was and is pure crude mixed into the soil and underground drinking water and laced with carcinogens, such as benzene and cadmium.

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.

Ignoring the evidence, the oil giant continues to tout the agreement as its "get-out-of-jail-free" card, and U.S. reporters continue to use it in their stories as a legitimate response to the Ecuadorians' charges, while the "remediated" pits continue to leech dangerous toxins into the soil and water that indigenous peoples and rainforest villagers depend on for sustenance.

2014-11-12-photoSachaSurb.jpeg

The contamination of indigenous' ancestral homelands and the disease and death left behind is unlike anything you have ever seen. And, even though Ecuador's Supreme Court has upheld the $9.5 billion judgment against the oil giant, Chevron refuses to pay, arguing the agreement released it from any liability.

So, let's look a closer look at the agreement and the remediation itself:

Travel to any of the pits that Texaco agreed to clean and dig a few feet under the ground and you will find oil.

How does Chevron explain this? With classic Chevron chutzpah.

The company maintains that in the dead of night rainforest villagers "spike" the jungle floor with oil by digging holes at the pits, pouring fresh oil into them and covering them up with dirt and vegetation so they can return the next day with a visitor to prove Chevron is lying about the remediation.

With a straight face, Chevron spokesperson James Craig peddles this outrageous story to reporters, including this Miami Herald reporter:

"...Moncayo (an Ecuadorian) plunges his auger into the ground. Within a few inches the dirt gives off the pungent odor of petroleum. Within a few feet the dirt glistens with oil residue. When a few handfuls of the soil are dropped into a bucket of water, a thick oil-slick coats the surface.

"'This is their (Chevron's) remediation effort,' Moncayo says. 'They're no better than animals.'

"The (Ecuadorians) say it's proof that Chevron lied about the cleanup and then got compliant government officials to sign-off on its shoddy work.

"Chevron spokesman...James Craig, said it's not surprising to find degraded crude at the site. It might be naturally occurring, Moncayo might have dug outside the boundaries of the remediation area, or the plaintiffs might have spiked the ground with oil (emphasis added) to discredit Chevron, he said.

"'Even if you do find hydrocarbons in the ground, it doesn't mean that they're a risk to people's health or the environment,' Craig said."

(Read similar descriptions in The Telegraph, Associated Press, Bloomberg Markets, Washington Post, NY Times and Rolling Stone, among many others.)

Craig's explanation would be hilarious if the issue of remediation wasn't so pivotal to the outcome of the litigation battle, being fought now in countries where Chevron's assets can be seized as payment for the judgment. (Chevron has few assets in Ecuador.)

For the most part, Chevron doesn't dispute the contamination. One of its local lawyers, Rodrigo Perez Pallares, even admitted the company dumped 15 billion gallons of toxic waste into waterways.

In addition to intentionally dumping toxic water into streams, Texaco (Chevron bought Texaco in 2001) also built over 900 huge, unlined waste pits to permanently store pure crude oil and wastewater laced with carcinogens that are a byproduct of the drilling process.

Instead Chevron's army of lawyers argues that Texaco cut a deal with the Government of Ecuador to clean a small percentage (162 of 900 or so) of the oil pits in exchange for immunity from future lawsuits.

Yet even upon cursory examination, Chevron's so-called "release" is not even close to what the company claims.

The agreement, negotiated after the Ecuadorians filed their original lawsuit in the U.S. in 1993, released Texaco only against government claims of contamination. It expressly carved out any claims held by individuals, such as the Ecuadorians'. A Memorandum of Understanding between Texaco and Ecuador's government, signed in 1994, stated clearly that third-party private claims should not be "prejudiced" by the agreement.

From 1995 to 1998, Texaco conducted its fake cleanup – or cover-up, if you will. During the same time, Texaco's lawyers waved the remediation agreement in front of the U.S. federal court, hearing the contamination case in New York. But the American judge took no note of it, given that not even Texaco argued at the time that it trumped the claims of private citizens that were pending against the company in the lawsuit.

Later, another federal judge also caught onto Chevron's subterfuge, in a related arbitral proceeding that ended up in U.S. federal court.

U.S. Judge Leonard Sand analyzed the "release" agreement and, for all practical purposes, said it had nothing to do with the Ecuadorians' claims.

The learned Judge Sand concluded:

"...it would be extremely difficult for [Chevron] to establish that claims nominally brought by third parties in the Lago Agrio litigation were covered by the 1995 and 1998 Agreements between Texaco and Ecuador: it is highly unlikely that a settlement entered into while (the case) was pending would have neglected to mention the third-party claims being contemporaneously made ... if it had been intended to release those claims or to create an obligation to indemnify against them." (Republic of Ecuador v. ChevronTexaco Corp., 376 F. Supp. 2d 334, 374 (S.D.N.Y. 2005).

Fearful that Judge Sand would expose the release agreement for what it was, Chevron simply pulled its lawsuit back and ended the case.

While Chevron ran for the hills to avoid Judge Sand, it convinced federal Judge Jed Rakoff that the underlying claims case should be tried in Ecuador rather than in the U.S. To get the case transferred to Ecuador, the company filed no fewer than 14 sworn affidavits praising Ecuador's judicial system as "independent" and "fair". In 2003, per Chevron's request and Judge Rakoff's order, the villagers re-filed their lawsuit in Ecuador.

By 2013, after an arduous trial that produced 105 expert reports documenting Chevron's pollution, three layers of Ecuador's courts – trial, appellate, and Supreme Court – had ruled against the company. No fewer than eight appellate judges held Chevron responsible for the contamination and ruled that the 1995 remediation agreement did not apply to the private claims in the case and thus was without merit as a defense.

Even though Chevron had previously promised Judge Rakoff and three U.S. appellate judges that it would accept Ecuador's jurisdiction and abide by its court decisions in exchange for moving the case to Ecuador, Chevron has refused to pay and continues to argue in any court that will hear its complaints that the remediation agreement frees it from all responsibility for the damage it caused.

But, if that's really the case, why doesn't the remediation agreement have words to that effect? Or have the signatures of the villagers who brought the case? Even if a court ruled that the agreement released the claims (none has), the problem with the remediation itself remains. Why?

At best, it was terribly inadequate. At worst, it never happened. In either event, it was a sham.

Most likely, Texaco's contractor dumped dirt over the pits to cover up the oil and called it a day. Over time, some vegetation grew on top of the dirt and that's why Chevron began having picnics to show reporters how green its gardens grew.

Which brings us back to Chevron's James Craig and the band of merry Ecuadorians digging holes under full moons in the jungle to "sabotage" Texaco's so-called remediation.

Six different field tests taken by different parties, including those taken by Chevron, prove the remediation was a fraud. The so-called "cleaned" pits are just as contaminated as those not cleaned. See here for information about the field tests described below.

1) Chevron's own tests taken at Texaco's remediated well sites show illegal levels of total petroleum hydrocarbons (TPH). For example, Chevron found 13,000 parts per million (ppm) of TPH levels at the oil well site, known as Shushufindi 48. Ecuador requires the TPH level to be below 1,000 ppm; the average U.S. standard is even lower, at 100 ppm.

2) Chevron also took additional tests in March 2009, as the trial was coming to a close. Chevron's expert Marcelo Munoz tested eight purportedly "remediated" sites and found illegal levels of contamination at two. Chevron refused to pay Munoz for his report, even though the oil company requested that he conduct the tests.

3) In 2003, five years after the fake cleanup, Ecuador government auditors reported they had discovered pits oozing with oil and concluded the government had "erred in certifying" the cleanup. "Texaco has caused irreversible damage," stated a report by the General Controller, a government agency that audits public contracts. "The environmental remediation and repair agreement goes against the country's interest." The auditors' tests found that over 85% of pits tested had toxic levels higher than 1,000 ppm of TPH. They also found oil seeping out of 41 "remediated" Texaco waste pits and said 59 pits had been left uncovered.

4) In 2009, an Ecuador prosecutor ordered yet another series of tests. Of the 20 tests conducted at nine sites, 16 returned with toxic levels higher than the Ecuadorian standard of 1,000 ppm, and of those, 13 had levels higher than 5,000 ppm.

5) The Ecuadorians also did a series of tests at the "remediated" pits and found TPH levels higher than 30,000 ppm.

6) And, in 2013, a U.S. environmental engineering firm, The Louis Berger Group, did additional tests for the Government of Ecuador and found, once again, high levels of contamination. The American company also reviewed the work of Chevron's experts at the so-called remediated sites and found numerous flaws and incorrect conclusions. See pages 35 to 42.

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.

Chevron is responsible for what Texaco did. It's also responsible for what Texaco never did – which was cleanup its toxic mess that is literally killing or threatening to kill thousands of people from cancer.

Thursday, October 30, 2014

Donny Rico Gives Credit Where Credit Is Due: Judge Kaplan

Reposted from Eye on the Amazon


Chevron's retaliatory RICO case against the Ecuadorians and their lawyers would not have come about were it not for the generous suggestion of U.S. Federal Judge Lewis Kaplan. Chevron spent millions upon millions filing cases against the Ecuadorians everywhere other than Ecuador once the company saw the verdict was about to come down, but when they met Kaplan, they hit pay dirt.

Chevron's strategy has always been to denounce and attempt to discredit any adverse decision from the Ecuadorian judicial system, but Kaplan gave them something they'd never dreamed of: a trial without the facts. An excellent breakdown of the weaknesses is laid out in a recent post on the Huffington Post.

In reality Chevron only cares about Kaplan's "facts." What they want most is to be able to tout that a US Federal Judge found that there was fraud – to the media, to their shareholders and to foreign courts, even if they have no legitimate legal remedy available to them. It's a SLAPP suit on steroids. Of course, you wouldn't know that if you read the business media's fawning reporting in Chevron's favor, each outlet trying to out scoop the other in repeating the company's talking points.

Donny Rico nails it, but to hit a few of Kaplan's finest moments:

  • Kaplan suggested the case be brought in the first place
  • Kaplan rejected normal procedure and assigned the case to his own court
  • Kaplan began by calling the Ecuadorians "so-called" plaintiffs
  • Kaplan issued a global injunction before even hearing the case (later slapped down)
  • Kaplan refused to let the evidence of Chevron's misdeeds be considered
  • Kaplan treated the Ecuadorians like second class citizens
  • Kaplan allowed Chevron to seize protected and privileged documents
  • Kaplan violated the First Amendment rights of journalists and others allowing Chevron to seize private emails and other protected documents
  • Kaplan refused to allow a jury in the case
  • Kaplan decided not to disclose that he owns Chevron stock through several mutual funds
  • Kaplan permitted double hearsay testimony from an admitted liar as the key witness for Chevron

Remember, these are just highlights. For a more complete breakdown check out the "Mockery of Justice" report.

Donny Rico is out there telling it like it is – a glowing example of corporate power abusing the legal system to trample people and planet. If allowed to stand, Kaplan's legacy could make Citizens United look like just the beginning.


Please vote for Chevron in the 2014 Corporate Hall of Shame today.

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?

Chevron Lawyer Randy Mastro Resorts to Dirty Tricks in Ecuador Pollution Case

Reposted from The Chevron Pit

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.