Appeals Court to Consider Removing Key U.S. Judge in Chevron-Ecuador Case

Reposted from The Chevron Pit

A New York appellate court has said it will consider a petition to reassign federal judge Lewis A. Kaplan from an Ecuador environmental case that resulted in a $19 billion judgment against Chevron.

A press release issued today by the DC-based Gowen Group law firm outlines this potentially game-changing legal update in the case. Founding partner Chris Gowen has taken up duties as an adviser to and spokesperson for Steven Donziger, the New York human rights lawyer who has earned the ire of Chevron for his dogged two-decade effort to bring the oil giant to justice for massive pollution and human rights abuses in the Ecuadorian Amazon.

The press release continues:

The Second Circuit Court of Appeals has set Sept. 26 for oral
argument on the petition to reassign the judge, who has been criticized
for unfairly promoting a retaliatory Chevron "fraud" case against
Ecuadorians villagers and their U.S. counsel. The reassignment petition,
which is based primarily on Judge Kaplan's refusal to follow prior
appellate court orders in the case, can be read here and here.

Judge Lewis A. Kaplan is presiding over a lawsuit brought by Chevron against Donziger, Ecuadorian community leaders and Goldman prize winners Pablo Fajardo and Luis Yanza, as well as dozens of the "named plaintiffs" in the original suit against the oil company. Most of the named plaintiffs are from indigenous communities living in an area of the Ecuadorian Amazon devastated by Chevron's oil pollution. These communities have seen their livelihoods destroyed by pollution, their culture decimated by rainforest destruction, and lost loved ones to cancer and other diseases related to the toxins Chevron has admitted dumping into their environment. But that hasn't stopped Chevron from retaliating, and Judge Kaplan has wondered aloud whether these people even exist.

From the press release:

Judge Kaplan has been accused of bias for calling the Ecuador case a
"giant game" invented by lawyers to "fix the balance of payments
deficit" of the United States. He also referred to thousands of
indigenous Ecuadorians as the "so-called" plaintiffs before imposing an
illegal injunction purporting to block the Ecuador judgment from being
enforced anywhere in the world. For background, see here and here.

Judge Kaplan's injunction was reversed unanimously in 2011 by a three-judge appellate panel, dealing a stunning rebuke
to Chevron's primary defense in the case. The current petition for
reassignment explains how Kaplan has continued to defy that appellate
order by issuing a series of decisions disparaging Ecuador's judicial
system.

Donziger and the other defendants in the Chevron's retaliatory RICO case filed what is called a petition for a writ of mandamus, asking the Appeals Court to remove Kaplan form the case due to the bias he has repeatedly shown towards Chevron.

Amazon Watch's Eye on the Amazon blog writes that Kaplan insinuates that an "important company like Chevron should be guarded from judgment collection efforts
that apparently might be acceptable if the company were deemed less
vital" and quotes Judge Kaplan from an early court proceeding:

"[W]e are dealing here with a company of considerable otherwise importance to our economy that employs thousands all over the world, that supplies a group of commodities, gasoline, heating oil, other fuels and lubricants on which every one of us depends every single day. I don't think there is anybody in this courtroom who wants to pull his car into a gas station to fill up and finds that there isn't any gas there because these folks have attached it in Singapore or wherever else."

Back to today's press release for comment from Chris Gowen, an adjunct professor at the
Washington College of Law who is advising the Ecuadorians and Donziger: "Chevron is desperately suing everybody it can to evade a valid
judgment won by the rainforest communities the company has contaminated
with toxic waste," he said. "Chevron's approach is clearly one of the greatest abuses of the legal system ever."

Judge Kaplan has made numerous rulings and comments that will likely come under additional scrutiny when oral arguments on the mandamus petition take place in front of the Second Circuit Court of Appeals on Sept. 26th.

Already, Chevron has displayed some jitters as the the company's retaliatory lawsuit approaches a trial date. As reported here last week:

In an otherwise routine scheduling conference recently before Judge Lewis A. Kaplan, Gibson Dunn lawyer Randy Mastro suggested the oil giant was prepared to drop all damages claims against the Ecuadorians and their counsel, Steven Donziger, just to avoid a jury trial.

Chevron was hoping that it could get a fraud finding from Judge Kaplan without having a new round of evidence of the company's abuses put under a spotlight before a jury and the public. But with Judge Kaplan under scrutiny himself, he doesn't look inclined to go that route.

It would seem that Judge Kaplan has been one of Chevron's best assets in the company's cynical efforts to evade responsibilty for its disaster in Ecuador.  Should the Appeals Court re-assign him, it would be a huge blow to those efforts.

Stay tuned.

And as always: for background on how Chevron decimated indigenous and farmer
communities by dumping billions of gallons of toxic waste in Ecuador's Amazon, watch this video overview or this 60 Minutes segment, or review this summary of the overwhelming evidence against the company.  Chevron is now fighting a $19 billion judgment against the company.

Chevron: The NSA of the Corporate World?

Reposted from The Chevron Pit

For anyone interested in how our national surveillance state and leading U.S. corporations work in lockstep, look no further than what Chevron is doing to spy on the critics of its environmental atrocities and human rights violations in Ecuador.

Yesterday, a Magistrate Judge in San Francisco granted oil giant Chevron access to many years of private email account information from nearly 40 email accounts belonging to human rights and environmental activists, lawyers, and their allies. All have some connection to the people who have held Chevron accountable
in the Ecuador litigation. However, sometimes the connection is tenuous at best,
as in the case of Australian law professor and journalist Kevin Jon
Heller, who blasted Chevron and its lawyers at Gibson Dunn & Crutcher on high profile legal blog Opinio Juris.

While quashing subpoenas for some of the accounts Chevron sought, U.S. Magistrate Judge Nathanael Cousins of the Northern District of California ordered Google and Yahoo! to turn over years of private email account information from dozens of other Yahoo! and Gmail accounts to Chevron. This follows last month's order from Judge Lewis A. Kaplan of the Southern District of New York, who ordered Microsoft to turn over private email information from an additional 30 Hotmail accounts.

So if you've already been worrying about who may be snooping on you, add Chevron Corporation to the list.

Chevron has a long history of trying to suppress the First Amendment rights of its critics. CEO John Watson lost his cool and had five such critics arrested at a Chevron shareholder meeting in 2010.  The environmental and human rights group Amazon Watch has been repeatedly harassed and subpoenaed by the company for exercising its constitutional right to call it out publicly for its abuses in Ecuador, but has managed to fight off the oil giant's bullying efforts to access troves of internal documents and communications.

Over the years, Watson and his CEO predecessor David O'Reilly have even repeatedly turned off the microphones of Ecuadorians indigenous leaders and farmers who have come to speak to them at shareholder meetings.

Even if Chevron isn't sweeping up data randomly from millions of people like the NSA, it is indisputable that it is using its vast oil riches to spy on and demand email data from its critics. But if you support the communities in Ecuador who have fought for decades to hold Chevron accountable for its widespread environmental devastation and human rights abuses, you may find yourself on the wrong side of a subpoena.

As Marcia Hofmann of the Electronic Frontier Foundation (EFF) said recently:

"Environmental advocates have the right to speak anonymously and travel without their every move and association being exposed to Chevron. These sweeping subpoenas create a chilling effect among those who have spoken out against the oil giant's activities in Ecuador."

The Electronic Frontier Foundation (EFF) and EarthRights International (ERI) provided legal assistance to third parties affected by the Chevron litigation. You can read their motions to quash the subpoenas in the Northern District of California here, and in the Northern District of New York here.

Incredibly, Judge Lewis A. Kaplan, who is presiding over and doing his best to promote the retaliatory RICO lawsuit Chevron is pursuing against lead U.S. attorney Steven Donziger and some of the "named plaintiffs" in the lawsuit against Chevron that resulted in a $19 billion judgment against the company, managed to find a way to sit by "special designation" to decide on the enforceability of the Microsoft subpoenas. Donziger and the "named plaintiffs" in the litigation against Chevron have filed a petition with the Second Circuit Court of Appeals to have Judge Kaplan removed from the case for bias. In an extraordinary move, the appellate court has set oral argument on the issue for September 26th. If Kaplan gets tossed, Chevron's strategy would suffer a devastating setback.

As a previous post here at The Chevron Pit notes:

The Second Circuit invited Kaplan to defend himself in light of a petition filed by the Ecuadorians and one of their lawyers, New York attorney Steven Donziger, seeking his reassignment. While most such requests are quickly dismissed, there clearly is something about Judge Kaplan's behavior that is catching the Second Circuit's attention.

But while in its fight to evade accountability for its devastation in Ecuador, Chevron may have found a tremendous ally in Judge Kaplan, the lengths to which the oil giant has shown it will go to evade justice is what's truly frightening.

Besides 2,000 legal personnel from 60 law firms, Chevron's efforts to evade justice have been aided by 180 investigators from Kroll, a large global private investigation firm which operates as a sort of private KGB spy service for its corporate clients. Kroll's shady services for Chevron first came to light when a journalist detailed the firm's attempts to bribe her to spy on Chevron critics in Ecuador. And the reality is that we don't really know what Chevron is doing behind the scenes. Kroll has admitted compiling “20 to 30” reports on Donziger, who along with his family has been followed around Manhattan and put under surveillance by unknown plainclothes operatives.

But now, with its mind-boggling resources and boundless cynicism, the oil behemoth has managed to convince judges in the U.S. to allow the company to go ahead and spy on Chevron critics itself, with the court's blessing.

Critics of the NSA's spying program have pointed out the slippery slope we've been sliding down when it comes to protecting free speech, privacy, and the rights guaranteed by the Constitution in this country.

Chevron gaining access to its critics' private email account information opens up a whole new slope, and it's oil-slick slippery. Will Big Oil want your info? Or another company you've protested over its dastardly deeds? What will they go after it next?

Or whom?

Chevron Getting the Jitters Over Its RICO Case

Shaky Evidence and Appellate Court Scrutiny Starting to Disrupt Company’s Master Plan

Reposted from The Chevron Pit

In an otherwise routine scheduling conference recently before Judge Lewis A. Kaplan, Gibson Dunn lawyer Randy Mastro suggested the oil giant was prepared to drop all damages claims against the Ecuadorians and their counsel, Steven Donziger, just to avoid a jury trial. The company's “Plan B” appears to be to seek a fraud finding from Judge Kaplan alone – something the judge does not seem inclined to do, and something that would have little chance of working even if he did.

The fact Chevron is even thinking of this possibility is a huge retreat. It's also a strong indication that Chevron believes its billion-dollar investment in the RICO case has suddenly become a high-stakes gamble with far greater risk than CEO John Watson is letting on to shareholders and the financial markets. A loss in the case via a jury verdict would be disastrous for the company both in the U.S. and in defending enforcement actions targeting its assets in countries around the world.

If it were to drop the damages claims, Chevron might avoid a civil jury trial which in most cases is only guaranteed to a defendant when money is at stake. But if Chevron chooses to go down this path, it will be left with virtually nothing to litigate. It might get a “finding” from the discredited Judge Kaplan, but that will be of little or no use in foreign courts who already see the judge as a vassal of U.S. judicial arrogance.

To be clear: Chevron never thought the RICO case would get this far. Juries are inherently unpredictable. For a large corporation like Chevron with a $19 billion liability and the reputations of its senior management team at stake, that's also terrifying. Chevron simply cannot afford to lose this case.

Chevron assumed that the small legal team for the Ecuadorians would be ground to a pulp by now. Or that Judge Kaplan would have found a way to rule in Chevron's favor on pre-trial motions. Both strategies have failed.

After being unanimously reversed in 2012 when he tried to block the Ecuador judgment from being enforced anywhere in the world, Judge Kaplan appears anxious to push Chevron's allegations into the hands of a jury. (That will come after the judge continues to make evidentiary decisions to rig the trial in Chevron's favor. See here and here for a taste of Kaplan's bias.) In the end of the day, Judge Kaplan knows any finding he makes alone has little chance of surviving appeal and his own instincts at this point are to protect himself, even if it means Chevron cannot get everything it wants.

Chevron also knows juries tend to follow their gut. That does not bode well for Chevron's absurd notion that it is the victim of a global “racketeering scheme” foisted on it by the very indigenous groups who have had their ancestral lands poisoned by the company's toxic dumping. This “blame the victim” approach is classic historical revisionism practiced the world over by oppressors and Chevron is no different.

(For an understanding of the overwhelming evidence against Chevron in Ecuador, see this video, this 60 Minutes segment, and this summary of the evidence relied on by the Ecuador court to find the company liable for both polluting the delicate rainforest ecosystem and for trying to corrupt the trial that held it accountable.)

In 2011, the Second Circuit Court of Appeals reversed Judge Kaplan's illegal injunction purporting to block worldwide enforcement of the Ecuador judgment. Judge Kaplan's ham-fisted attempt to rescue Chevron from its misdeeds in Ecuador remains a sad example of ugly Americanism at its worst. See here, and here to get a feel for the international scorn provoked by this short-lived attempt by a U.S. trial judge to control the Ecuador judgment on a global basis.

Despite this personal setback – no Judge likes to get reversed – Kaplan does not appear to be the least bit chastened from the experience. And that's bad for Chevron because Judge Kaplan's hubris has put him in serious trouble yet again.

Just last week, the appellate court set oral argument in late September to determine whether Judge Kaplan should be removed from the RICO case altogether given his continued defiance of the Second Circuit's order that he not opine on the validity of the Ecuador judgment. See here for the latest facts underlying the petition for his removal. Let's just say it is serious business whenever a trial court thumbs its nose at an appellate court. To do it on multiple occasions and blatantly is even more perilous.

Judge Kaplan encouraged Chevron to bring the RICO action in the first place. Without his efforts, it likely never would have gotten past first base. The judge has jerry-rigged the evidence by repeatedly violating the due process rights of the Ecuadorians and Donziger. He even has ruled they will not be allowed to present testimony about Chevron's massive pollution in Ecuador, thus making it virtually impossible to mount a meaningful defense. Should the case be reassigned to a fair judge, look for Chevron's claims to lose all traction.

As for the lawyers, Mr. Donziger and others are still confident. It was Donziger who recently forced Chevron CEO Watson to testify about Ecuador during a deposition – a shocking risk given that he now could be charged with perjury if it is found that he lied under oath. This industry royal was forced to endure the humiliation of answering live questions posed by a solo practitioner (Donziger) he previously called a “criminal” on earnings calls with investors. (Chevron has gone to great lengths to keep Watson's testimony confidential. When the lies and memory lapses get exposed, Watson will be further embarrassed and the global shareholder campaign against him will pick up even more steam.) Given these problems, it is understandable why Mastro is nervous about a jury trial. But there are other reasons.

First, Mastro is known far more as a political fixer than a trial lawyer. He will fight like a pit bull to avoid ceding the high-profile trial stage to the many more talented lawyers at Gibson Dunn, including his colleagues Theodore Boutrous and former star federal prosecutor Reed Brodsky. Any defendant would want Mastro to lead the Chevron show before a jury. Let's hope he hangs in there.

We have seen from previous hearings before Judge Kaplan how Mastro and his sidekick, Andrea Neumann, lack basic courtroom agility and have an off-putting personal style. Mastro already lost three key appellate arguments in the case and literally was laughed out of court in 2011 when he couldn't answer the most basic questions when trying to defend Judge Kaplan's illegal injunction before a three-judge appellate panel.

Second, Chevron's witness list reads like a Who's Who of small-time thugs, criminals, and cartoon characters. Almost all have agreed to testify because of some combination of bribes or intimidation coming from Chevron headquarters. While the oil goliath has packaged this testimony for maximum effect in affidavits clearly ghostwritten by its own lawyers (leading to a lot of slanted reporting in its favor), under the klieg lights of trial it is doubtful that any of these people will retain even the slightest veneer of credibility.

Exhibit A is former Ecuador Judge Alberto Guerra Bastides, an admitted con artist who received a suitcase full of cash from Chevron lawyer Andres Rivero in Quito in exchange for favorable testimony. In a deal negotiated directly by Mastro, Chevron has committed to paying Guerra at least $326,000 or roughly ten times his annual salary. These payments are a clear violation of the ethical rules. Given his many credibility problems, it is unclear if Guerra will even take the stand. If he does, he will help the Ecuadorians more than Chevron.

Exhibit B is Christopher Bogart, the disgraced CEO of the litigation hedge fund Burford Capital. Bogart helped to fund the legal battle of the Ecuadorian communities until Chevron threatened to add Burford as a RICO defendant. In a panicked response, Bogart betrayed his clients and engaged in some cowardly double-dealing with Chevron – privately negotiating an exit from the case with Chevron's lawyers while supporting the Ecuadorian communities publicly. Bogart even emailed Mastro after the Chevron RICO filing and just weeks after he funded the Ecuadorians: “Randy – congratulations on a superbly executed campaign!”

Bogart eventually signed an affidavit to help Chevron where he clearly lied to the court about being “misled” by the Patton Boggs law firm and Donziger (Bogart's own emails, which are nauseating to read, showed he actually believed the opposite). See this devastating take-down of Bogart in a court brief filed by Patton Boggs as it seeks to strike his affidavit and impose sanctions against Chevron. It is unclear to us after reading this brief how Bogart will ever again work in the funding business.

(If any investor out there is thinking about Burford as an opportunity, they should read about the lack of ethics displayed by Bogart and another Burford director, Ernest J. Getto. Since Bogart cannot be trusted to disclose this document – it is nowhere to be found on Burford's website – we have decided to post it here.)

Chevron's other main witnesses have been similarly discredited. It is now clear that Chevron threatened Douglas Beltman and Ann Maest – former scientific consultants to the Ecuadorians – with personal bankruptcy and career destruction before they signed affidavits that contradicted prior sworn statements under oath attesting to the company's responsibility for massive pollution in Ecuador. Beltman and Maest, who since have been fired from their jobs, will have little credibility if they take the stand and try to help Chevron. Expect lawyers for the rainforest communities to call these Chevron witnesses as their own if Mastro gets cold feet.

Chevron's internal documents suggest the company is hanging itself by its own petard. When faced with overwhelming scientific evidence of its guilt in Ecuador, Chevron decided to launch a strategy to “demonize” Donziger to distract attention from its own environmental crimes and fraudulent remediation. This included using six Kroll operatives to spy on Donziger and his family in Manhattan. How will a jury view a big oil company that tries to cover up its atrocities by demonizing a human rights lawyer who helped hold it accountable?

Chevron also launched a campaign to attack the government of Ecuador and to declare war on its courts even though Chevron fought for years to venue the case there. A memo by Chevron consultant Sam Singer suggests the company adopt “message themes” that would portray Ecuador as “the next major threat to America” and “as the next Cuban missile crisis in the making.” This type of overreach actually reflects Chevron's level of desperation. The company's incessant attacks against Ecuador's popular President, Rafael Correa, have started to alienate almost every oil-producing nation in South America and put the company's business operations at further risk.

The Singer memo will not sit well with a New York jury either. Nor will other internal documents that show Chevron tried to bribe judges, pay off Ecuador's government to illegally quash the case, or ask its employees to engage in obstruction of justice by destroying damning documents about its many oil spills in the Amazon.

Chevron's entire strategy with the RICO case has been to obtain a huge judgment that it can then use to offset the enforcement actions (currently pending in Canada, Brazil, and Argentina) where the rainforest communities are targeting company assets. Chevron has sued Donziger and his clients for upwards of $60 billion, thought to be the largest potential personal liability in U.S. history. Giving up on that cannot be an easy decision.

Chevron is now caught in a maze of its own creation. Here is Chevron's dilemma. If it takes the case to trial before a jury, the entire house of cards is at risk of falling down. If it drops the damages claims to avoid a jury, any decision by Judge Kaplan will have little or no impact. And the court of appeals is watching so closely that Chevron simply cannot expect Kaplan to run roughshod over the Ecuadorians and Donziger as before, even if he is allowed to stay on.

After billing Chevron outrageous sums and making grandiose promises to the world, the pressure is now all on Gibson Dunn. The firm's lawyers know a jury is risky business for a major client like Chevron with a proven record of human rights abuses and other corrupt activities in Ecuador. See this gripping photo essay from journalist Lou Dematteis for a sense of the profound human devastation Chevron has caused and that Gibson Dunn with Judge Kaplan's help is trying to bury.

It would be a personal and professional disaster for Mastro and Chevron General Counsel R. Hewitt Pate to fail to deliver a verdict in the company's favor. Watch for more furious maneuvering by Chevron as the October trial date nears.

Judge Lewis A. Kaplan Socks Ecuador Indigenous Groups With Huge Bills for His "Special Master" Friends

The Disturbing Story of the Secret Invoices of Max Gitter and Theodore Katz

Reposted from The Chevron Pit

Just when you thought Judge Lewis A. Kaplan's maneuverings in favor of Chevron in the Ecuador case could not get any worse, they just did.

The controversial judge, who was unanimously reversed by an appellate court in an earlier phase of the case when he tried to impose an illegal injunction blocking the Ecuador judgment, now appears to be openly running a "pay-to-play" courtroom right in the heart of Manhattan.

The latest evidence: Judge Kaplan has socked impoverished indigenous groups in Ecuador with the exorbitant and secret bills of two "Special Masters" he appointed to oversee depositions in the case. The Special Masters, Max Gitter and Theodore Katz, are longtime friends and professional colleagues of Kaplan. Gitter was his former law partner and Katz served for many years as the chief magistrate judge on the court where Kaplan sits before opening a lucrative private mediation practice.

Hang on to your seats for this one.

When Judge Kaplan floated the idea several months ago of appointing Gitter and Katz at Chevron's request, the Ecuadorians and their longtime U.S. lawyer, Steven Donziger, objected strenuously. See this letter from famed trial lawyer John Keker for details. Not only did Gitter have a track record of blatant bias against Donziger, the fees were way beyond what the Ecuadorians – two rainforest residents named Hugo Camacho and Javier Piaguaje -- could afford. Further, there was obviously no need for the Special Masters other than to assist Chevron in gaming the depositions and further sapping the limited resources of the defendants.

True to form, Judge Kaplan appointed Gitter and Katz anyway. He then ordered Donziger and the Ecuadorians to split the fees of these high-end lawyers with Chevron. Chevron grossed $247 billion last year; company CEO John Watson received about $30 million in compensation. Mr. Donziger is a human rights lawyer who works out of his small apartment in Manhattan; the Ecuadorians live in the rainforest and in a good year might make $1,000 in income.

That should give you a good feel for Judge Kaplan's personal notion of fairness: a canoe operator in the Amazon rainforest (one of the Ecuadorian defendants) and the nation's third largest corporation should split the fees of high-priced U.S. Special Masters evenly.

Things then went from the bizarre to the surreal. Gitter informed the parties that he would bring along his young associate from Cleary Gottlieb to all of the depositions and bill him out at a "discounted" rate of $630 per hour. The associate, Justin Ormand, recently was spotted sipping drinks with Katz in the first class cabin on a flight from Newark to Peru after Judge Kaplan ordered Ecuadorian witnesses to be deposed in the U.S. embassy in Lima.

(Judge Kaplan's decision to force Ecuadorians to travel to Peru to be deposed because of fake "security" concerns is yet another illustration of his xenophobia and disdain for the country of Ecuador. See here for details.)

Later, something very curious happened. Both Gitter and Katz refused to send the bills for their time and expenses to the Ecuadorians and Donziger. Instead, without disclosing the amount of their bills, they asked Judge Kaplan for "guidance" about what they should do in light of the defendants stated refusal to not be able to pay. See this letter.

Julio Gomez, a solo practitioner from New Jersey who now represents Messrs. Camacho and Piaguaje after their previous counsel withdrew in May, asked the Special Masters for a copy of their invoices so he could respond to the letter to the court. Ormand, no doubt billing at his "discounted" rate of $630 per hour, wrote back a cryptic email asserting that the Special Masters were refusing to turn over the bills to Donziger and the Ecuadorians. See that email exchange here.

Gomez and Donziger then filed a complaint with Judge Kaplan about how the entire situation seemed at least a tad bit improper. No, make that dreadfully improper if not downright unethical. This is where it really gets interesting.

Rather than order Gitter and Katz to disclose their secret bills to the defendants, Judge Kaplan concocted a plan to get them paid in full while at the same time allowing Chevron to exert added leverage over the Ecuadorians and Donziger in the underlying case. This plan is so dazzling that only a judge as smart as Kaplan could possibly come up with it.

Judge Kaplan's extraordinary order, which can be read here, requires Chevron to pay 100% of the fees of the Special Masters. It refuses to order Gitter and Katz to disclose their secret bills. And, amazingly, it invites Chevron to sue the Ecuadorians and Donziger so he can enter a judgment for the oil giant for 50% of the amount of the bills that are supposedly their responsibility.

In other words, Judge Kaplan's scheme guarantees his friends will get paid what are surely exorbitant bills. And it cleverly leaves Chevron the option of not suing Donziger and the Ecuadorians if it concludes it would be too embarrassing for Judge Kaplan, the Special Masters, or the oil company for the amounts of the bills to be disclosed. This is one way that pay-to-play justice goes down in Judge Kaplan's courtroom.

There is precedent for how fancy Manhattan lawyers can exploit the plight of the Ecuadorian rainforest villagers to generate enormous billings for their law firms. It has been reported that Gibson Dunn & Crutcher is using at least 114 lawyers and billing Chevron an estimated $400 million annually to help the company evade the $19 billion judgment in Ecuador. This has caused all sorts of problems for Chevron shareholders, who have asked the SEC to investigate company management for failing to properly disclose the risk related to the Ecuador liability. It also has put intense pressure on CEO Watson, who recently was forced to testify under oath about the litigation and answer questions from Donziger.

As for Gitter and his secret bills, we have seen the same script before.

In 2011, Judge Kaplan appointed Gitter as Special Master to oversee depositions in several discovery actions initiated by Chevron related to the Ecuador case, including that of Donziger. Gitter mistreated Donziger to such an extent that he forced him to testify for 16 days – a likely record for an active lawyer on a case – and often tag-teamed with Chevron's lawyers when posing hostile questions. Donziger said at times it felt like being a defendant in the Salem witch trials.

During the marathon 16-day deposition spanning 2011 and 2012, Judge Kaplan ordered Donziger to pay one-third of the fees of Gitter and Ormand. (Given Gitter's hostile behavior, that's like ordering someone to pay for the bullet of his executioner.) Yet Gitter never sent Donziger a bill for his "services". Why wouldn't a high-end corporate lawyer like Gitter try his best to get paid?

We suspect it's the same reason Gitter won't disclose his bills to the defendants now. He likely was embarrassed for the world to know how much he was making from Chevron to help crush impoverished rainforest residents under the guise of being a neutral "Special Master". We suppose Gitter did send out his earlier bill to Chevron and the company paid it. It is indisputable he never copied Donziger nor asked that he pay his portion as ordered by Judge Kaplan.

A few weeks ago Donziger's counsel asked Gitter for a copy of that old bill. The idea was to use it as possible evidence to argue Gitter should not be appointed because of his liberal billing habits, lack of transparency, and obvious sympathies for Chevron. Gitter never provided the bill to Donziger, which remains secret to this day.

The sordid story of the billings of Gitter and Katz and the behind-the-scenes puppeteer role of Judge Kaplan is part of a larger and disturbing pattern. Judge Kaplan is trying to rig Chevron's retaliatory "fraud" case such that the truth cannot come out and Chevron will cruise to victory in a show trial. Chevron hopes to use any judgment to try to block lawsuits targeting its assets that are pending in countries around the world.

We have reported for weeks how Judge Kaplan is encouraging Chevron to use its overwhelming resources to win by might what it cannot win through merit. See this powerful letter exposing Judge Kaplan's efforts sent by Craig Smyser, a prominent Houston lawyer who formerly represented the Ecuadorians. The oil giant has used at least 60 law firms, 2,000 legal personnel, and 180 investigators to help it evade the Ecuador judgment.

We now understand better why over the course of weeks of depositions in May and June Gitter and Katz often delighted in making rulings limiting questioning of Chevron witnesses so as to hide the company's attempts to corrupt the Ecuador trial and spy on adversary counsel. See these complaints filed by Donziger for details.

It is well-documented that Kaplan has made what appear to be xenophobic comments while presiding over the case. He has called the Ecuadorians the "so-called plaintiffs" who are "said to reside" in the rainforest. He also famously said the Ecuador case was not "bona fide" litigation and was part of a "giant game" designed to by U.S. lawyers to rectify the balance of payments deficit. All in all, these comments do not reflect the kind of temperament that Americans expect from their judges.

We also reported how Judge Kaplan has jumped through hoops to block the Ecuadorians from being able to mount a meaningful defense. He ruled that they cannot mention the overwhelming scientific evidence used to find Chevron liable for massive contamination. He also ruled that Chevron's illegal spying operation that has targeted Donziger and his family is off limits, as are company videos that show Chevron scientists laughing at the pollution left in the rainforest and discussing ways to hide it from the court. Kaplan also has allowed Chevron to bury embarrassing documents by designating them "confidential" -- including emails outlining a long-term strategy to "demonize" Donziger and to bribe Ecuador's government to illegally quash the environmental case.

Donziger has protested repeatedly and asked Judge Kaplan for all sorts of procedural protections, but to no avail.

Donziger also accused Chevron of interfering with his right to counsel by suing numerous lawyers for the Ecuadorians and one of their funders for "fraud" so as to discourage lawyers from entering the case. Judge Kaplan did nothing to allow Donziger the necessary time to secure new counsel after Keker's withdrawal in May. Judge Kaplan also has refused to allow Donziger to proceed with counterclaims against Chevron that outline a chilling picture of the oil giant's illicit dumping in Ecuador, obstruction of justice, attempts to bribe the government, commit fraud on the court, and lie about the context of video outtakes. See here for a copy of the counterclaims.

"Judge Kaplan has made it abundantly clear that he will not allow me nor my Ecuadorian colleagues a fair trial in his courtroom," Donziger said in a statement in early May.

Well said and abundantly true. The way Judge Kaplan has been using the Special Masters is just one more damning piece of evidence to support Donziger's view.

Chevron Suffers Major Setback in Ecuador Case as Court Freezes $96 Million in Assets

CEO Watson Forced To Testify Under Oath

Reposted from The Chevron Pit

That Fourth of July party at Chevron's headquarters must have been a real dud.

Just before the holiday, news quietly surfaced in Latin America that $96 million in Chevron assets have been frozen in Ecuador at the behest of the indigenous and farmer communities who hold a judgment against the company. The communities want to use the funds to begin a long-awaited clean-up of their ancestral lands as ordered by Ecuador's courts, which imposed a $19 billion judgment against the oil giant in 2011.

The asset freeze represents a major setback for Chevron, which has refused to pay the Ecuador judgment even though it promised to do so when it fought to move the trial to the South American nation. The order also came just days after Chevron's John Watson suffered the ultimate CEO-humiliation by being forced to testify under oath about his company's malfeasance in Ecuador, exposing him to potential perjury charges. (More on that below.)

Diverting funds from Chevron to the Amazon – if it actually happens – might qualify as one of the more inspiring triumphs of indigenous groups over Big Oil in history.

The Associated Press reported that an Ecuador court froze a debt in the amount of $96 million that Ecuador's government owes Chevron from an unrelated international arbitration. If the communities get the money, they could use it not only to start the desperately-needed clean-up but also to hire teams of lawyers around the world to target Chevron assets to collect the full amount of the judgment. That would allow a comprehensive remediation to take place over an area equivalent to the U.S. state of Rhode Island.

(For background, see here for a video about how Chevron used substandard operational practices and then tried to corrupt the trial; here for a 60 Minutes segment documenting Chevron's deliberate pollution; and here for a summary of the court evidence against Chevron.).

Given Chevron's refusal to pay the judgment, which was unanimously affirmed on appeal, the rainforest communities have the legal right to seize Chevron assets wherever they can find them – similar to laws that allow a mother to pursue child support from the assets of a deadbeat father. For legal purposes, Chevron is now in the same category as a deadbeat debtor and thus is being chased to pay what it owes.

Thus far, the communities have hired top-rated litigators to file seizure lawsuits targeting Chevron assets in Canada, Brazil, and Argentina. Those actions are pending.

The $19 billion judgment came down in 2011 despite incessant efforts by Chevron to corrupt and sabotage Ecuador's court system and intimidate judges over the course of the eight-year trial. See this affidavit by Ecuadorian lawyer Juan Pablo Saenz for the chilling details on Chevron's improper efforts to block the judgment, a summary of which can be read here.

The real danger for Chevron is not that the rainforest communities will begin to remediate the company's ecological catastrophe. That clean-up is absolutely critical to save lives. But the far greater danger for Chevron is that the funds will unleash a torrent of new legal actions around the world. Such actions would likely bring to fruition the prediction of Chevron Comptroller Rex Mitchell that the Ecuador case will cause "irreparable harm" to the company's business operations on a global scale.

The Ecuador freeze order was handed down by Dr. Wilfrido Erazo, the presiding judge in the provincial court in the Oriente region of Ecuador where Chevron (under the Texaco brand) operated 378 wells and separation stations from 1964 to 1990. Erazo's decision lays the groundwork for the funds to be diverted to a trust fund set up under court order to pay for a clean-up.

Pablo Fajardo, the lead lawyer for the affected communities, told the AP that a further court decision on the final disposition of the funds can be expected in the coming weeks. Fajardo said the rainforest communities hope to use the funds to clean some of the 916 open-air toxic waste pits left by Texaco when it fled Ecuador in the early 1990s. (BP's $40 billion liability for the far smaller Deepwater Horizon disaster is a relevant benchmark for the cost of a clean-up.)

At the time it left Ecuador, Texaco's internal audits conducted by two environmental consulting firms painted a devastating picture of the nasty impact of the company's operations – including extensive toxic contamination at 100% of the well sites inspected and an utter failure to implement environmental controls. Records show that in Ecuador Texaco executives rejected spending even modest sums of money to line its hundreds of open-air toxic waste pits so that they wouldn't contaminate soils and groundwater. It also ordered, in a clear act of obstruction of justice, the destruction of documents relating to its many oil spills.

Robert F. Kennedy Jr. visited the disaster zone in the latter stages of Texaco's operations and wrote a powerful essay describing scenes “reminiscent of war” with rivers running black with oil and toxic waste pits dotting the landscape. Almost two decades later, Congressman Jim McGovern visited and found the same horrid conditions, as can be seen in this letter that he wrote at the time to President-elect Obama.

In the 1990s, as it faced mounting liability from the original lawsuit filed by the affected communities in the U.S., Texaco attempted a woefully inadequate clean-up that encompassed only 16% of its oily waste pits. That effort was a fraud pure and simple, as found by the Ecuador court and as confirmed by dozens of independent journalists who have visited the region.

Essentially, Texaco “remediated” by running dirt over a few waste pits to hide their existence and leaving others untouched by claiming that they were being used for fishing by local residents. See this recent picture of a waste pit to understand what Texaco's original pits look like today after its so-called “remediation”. The Ecuador court found that the abandoned pits continue to contaminate soils, groundwater, and surface water – putting at risk the lives of tens of thousands of people who rely on natural water sources for their survival.

The freeze order is not the only bad news of late for Chevron on the Ecuador case.

We reported last week that the crown jewel of Chevron's defense to the Ecuador judgment – its retaliatory “fraud” lawsuit against the Ecuadorians and their lawyers – is now in jeopardy because of the odd rulings of a U.S. federal judge who seems to openly favor Chevron and who has made comments from the bench that the Ecuadorians consider xenophobic.

An appellate court recently ordered Chevron and the judge to submit briefs explaining several rulings in the case that appear to defy established legal authority. The Ecuadorians and their lawyers are seeking to remove the judge, Lewis A. Kaplan; two of their petitions outlining his bias and outlier rulings can be read here and here.

The appellate court already unanimously reversed Judge Kaplan in 2012 when he tried to impose an illegal injunction purporting to block enforcement of the Ecuador judgment anywhere in the world. That injunction led to a fair amount of international scorn being heaped on the American judiciary.

The latest setbacks also come on the heels of a furious critique by many large Chevron shareholders of CEO Watson's mishandling of the Ecuador litigation (see here and here). Watson was the executive at Chevron in charge of mergers when the company acquired Texaco in 2001 for $36 billion. Watson clearly did not take into account Texaco's Ecuador liability in the purchase price, a fact which haunts him to this day and has prompted calls for an SEC investigation.

In what can only be described as a humbling experience for a man surely used to being treated like royalty, Watson was forced to answer questions under oath posed directly by his longtime nemesis, Steven Donziger. Donziger is a human rights lawyer who with local Ecuadorian counsel spent almost two decades building the case against Chevron. Chevron now targets Donziger as part of a vicious corporate retaliation campaign that includes surveillance of himself and his family. Read this affidavit to get a feel for Chevron's creepy tactics.

See here for how Donziger has sued Chevron for trying to use the New York “fraud” case to cover up its environmental wrongdoing, fraud, and attempted bribes in Ecuador that stretch over several decades. The existence of Donziger's claims (even though Judge Kaplan predictably has tried to block them) is a chilling reminder of the ugly truth that Chevron tries to sweep under the rug through distracting litigation and a deceptive corporate advertising campaign.

The transcript from Watson's deposition has been sealed, at least for now. Given what's gone in Judge Kaplan's courtroom, we cannot say we are surprised.