Chevron's Legacy

Chevron's Legacy
The Pollution Chevron Left Behind...Shushufindi pit 38. Chevron's scientists found no contamination at this pit.

Monday, July 23, 2012

Gibson Dunn Associates Begin to Flee as Firm’s Ethical Problems In Chevron’s Ecuador Case Deepen

Ethical problems in the “transnational litigation practice group” at Chevron’s lead outside law firm, Gibson Dunn and Crutcher (GDC), are mounting fast with word that top-ranking associate Kristin Hendricks –recently sanctioned by a U.S. federal court -- has abandoned her job. The departure of Hendricks appears to be part of a broader trend by young GDC lawyers disgusted with the firm’s tawdry tactics on the high-profile Ecuador environmental case, which has produced a series of devastating legal setbacks for Chevron and all sorts of problems for GDC over the last twelve months.

Hendricks, a 2006 graduate of NYU Law School, had been sanctioned in 2011 by U.S. Magistrate Judge Thomas M. Coffin in Oregon (see here) for “harassing” the executive director of a small environmental non-profit that had been helping the Ecuador rainforest communities that recently won an $18 billion judgment against Chevron. A detailed affidavit documenting GDC’s many unethical practices in the Oregon action (which included Hendricks, partner Randy Mastro, and associates Alexandra Southwell, and Gregory Shill) and on which Judge Coffin based his decision, can be found here.

The larger issue is that many young lawyers probably don’t want to represent a client who committed gross human rights abuses and then lied to cover up thousands of deaths, while the partners who orchestrate the litigation reap millions of dollars in fees. A video about the horrific human rights violations committed by Chevron in Ecuador can be found here and a summary of the overwhelming evidence against the company can be found here.

The background on how Hendricks found herself sanctioned by a federal court at the outset of her legal career – and how she was left hung out to dry by Gibson Dunn partner Mastro– can be found here. For broader context on GDC’s many ethical problems in the Ecuador case, including multiple sanctions imposed on the firm by courts in the U.S. and Ecuador, see this blog published in the Huffington Post.

With almost comical fanfare, Gibson Dunn in 2010 announced a new “Transnational Litigation and Foreign Judgments” practice group of 27 lawyers specializing in “defending multinational corporations against tort and related claims emanating from abroad.” Headed by Ted Boutrous, Scott Edelman, Andrea Neuman, and William Thomson – and using Mastro on the Chevron matter - the group has got off to stuttering start to say the least.As far as we can tell, the only client the group has signed up is Chevron.

GDC brags in its marketing materials that it is a bastion of "innovative thinking" whose lawyers conduct "rescue operations" for clients in trouble. While GDC’s marketing prowess no doubt has generated millions of dollars in fees from Chevron management for the firm’s partners, its courtroom performance has been nothing less than a disaster for Chevron shareholders.

Consider just some of the setbacks Chevron has suffered since General Counsel R. Hewitt Pate – himself a central beneficiary of this suspect operation who has his own conflicts of interest (see here) -- hired GDC’s vaunted “rescue operation” in 2009:

  • Only 18 months after GDC began its representation, Chevron was found liable in Ecuador for $18.2 billion in damages – the largest environmental judgment in history. A summary of the evidence can be seen here.
  • A three-judge panel on Ecuador’s appellate court affirmed the Ecuador trial court judgment in its entirety and blasted Chevron’s counsel for engaging in malfeasance and attempting to intimidate judges. In the process, it upheld a $9 billion punitive damages award.
  • In May and June, the Ecuadorians filed enforcement actions in Canada and Brazil, encumbering and potentially seizing billions of dollars worth of Chevron assets. A Chevron comptroller, in a sworn affidavit, had said the lawsuits would cause “irreparable harm” to the company.
  • Earlier this year, a U.S. federal appeals court in New York blew up GDC’s primary defense for Chevron. A three-judge panel vacated an illegal injunction purportedly blocking the Ecuadorians from enforcing their judgment. Mastro, who argued for Chevron, was literally laughed at by the panel when he tried to dodge simple questions. See here.
  • GDC’s “fraud” allegations against the Ecuadorian rainforest communities and their counsel have now been rejected outright or not adopted by the Ecuadorian trial court, the Ecuadorian appellate court, 15 U.S. federal trial courts, and four U.S. appellate courts.
  • Chevron CEO John Watson is facing a growing shareholder rebellion over his (and GDC’s) mishandling of the Ecuador litigation. Several shareholders excoriated him publicly at the company’s annual meeting in May. See here and here.
  • Under GDC’s watch, Chevron is also facing an investigation for lying to shareholders to cover up its Ecuador risk. In May, U.S. Rep. Jan Schakowsky petitioned the Securities and Exchange Commission to determine whether Chevron is misleading shareholders. The letter was based on a devastating report by securities lawyer Graham Erion.
  • In 2009, Chevron was ordered to pay all attorney fees associated with the defense of a civil lawsuit brought by GDC against Cristobal Bonifaz, a former lawyer for the Ecuadorians. A state judge in California found that the lawsuit was designed to harass Bonifaz and suppress his First Amendment rights.
  • Finally, the same GDC practice group used by Chevron in the Ecuador case recently was hit with sanctions from a second California judge for filing a frivolous lawsuit to suppress the free speech rights of a filmmaker who made a documentary about how pesticides used by Dole in Central America have poisoned banana workers.
  • GDC’s representation of Chevron also coincided with the use of an illegal corporate espionage and intimidation campaign against the lawyers for the Ecuadorians. In Manhattan, New York lawyer Steven Donziger was followed on a 24/7 basis for several weeks by six “investigators” believed to have ties to GDC. Lawyers fighting GDC in Ecuador have been subject to acts of spying and intimidation and have sought protection from the Inter-American Commission On Human Rights.
With problems like these growing, no wonder GDC is no longer considered a desired destination for young lawyers.

As Hendricks departs, we received word from three different sources that resumes are flying around New York as GDC associates try to bolt work on the Ecuador case, which is now considered a big loser of a career move. Stay tuned as details emerge.


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Thursday, July 19, 2012

Canadians Warned About Chevron's Machinations, Says Environmental Group


The internationally-respected Canadian and Brazilian courts can "put an end to Chevron's rope-a-dope strategy" to evade accountability for the widespread human suffering it caused in the Ecuadorian rainforest by illegally discharging billions of gallons of toxic waste, a worldwide environmental group said today in a blog on its website.

A group of Ecuadorian indigenous and farmer communities recently won an $18 billion judgment in Ecuador against Chevron, but the oil giant has refused to pay. The Ecuadorians are now seeking to enforce the judgment by seizing Chevron's assets in Canada and Brazil, as Chevron sold all of its assets in Ecuador.

Below is the blog, written by Paul Paz of Amazon Watch, a well-known environmental group working to protect the Amazon.  


Engaged for years in a campaign of subterfuge to evade its legal obligations related to a massive environmental contamination in Ecuador. In Canada, where the Ecuadorians have come to force Chevron to comply with the rule of law, people should be aware of this company's long track record of abusing indigenous communities in Ecuador by poisoning their streams and rivers with toxic waste. Internationally respected Canadian courts have a chance to put an end to Chevron's rope-a-dope strategy to delay, deny, and distract attention from this gross and even criminal misconduct.

Chevron predictably refuses to pay an $18 billion judgment against it in Ecuador, where it was found by a court after an eight-year trial to have recklessly operated six large oil fields in the rainforest from 1964 to 1992. To understand how easily it would be Chevron to pay this judgment, the company's gross annual profit since the trial started in 2003 is over $150 billion. That's over eight times the damages imposed by the court.

The judgment number is modest compared to the magnitude of the damage. By way of comparison, the smaller BP spill in the Gulf of Mexico produced a total liability of $40 billion, or more than twice as much as Chevron's liability in Ecuador.

The Ecuador court found that Chevron–out of pure greed–dumped more than 16 billion gallons of toxic "water of formation" into Amazon waterways, and the trial record is replete with evidence of how the company engaged in a fraudulent "remediation" to try to cover up the contamination; doctored soil and water samples to hide the extent of the contamination from the court; never spent a penny on environmental monitoring or safety; used sub-standard practices that produced an outbreak of cancer that has killed numerous people; and then tried to bribe both the judge and high-level officials in Ecuador's government to quash the legal case. This is the same company that has already paid a $30 million fine in the U.S. for violating the Foreign Corrupt Practices Act in Iraq.

Independent journalists have long confirmed the company's hand in creating this unprecedented catastrophe. See these recent news reports from the Australia program Sunday Night; the American show 60 Minutes and this extraordinary video from the plaintiffs summarizing the evidence and Chevron's corrupt attempts to derail the trial. A story in Vanity Fair on the courageous Ecuadorian lawyer Pablo Fajardo, who was raised in abject poverty and who has been targeted with death threats for trying to hold Chevron accountable, can be downloaded here.

The Ecuadorian communities originally filed the case in the U.S. in 1993; Chevron delayed the matter for nine years before convincing a U.S. judge to shift the venue to Ecuador. At the time, Chevron lawyers filed 14 sworn affidavits praising Ecuador's courts as fair and transparent. These affidavits can be read here.

Looking back, it is clear that Chevron thought it likely the plaintiffs would melt back into the jungle if the case was thrown out of U.S. courts. Instead, the affected communities re-filed their claims under Ecuadorian law in the local court where Chevron had begged for the trial to be held. When the evidence began to point to its guilt, Chevron started to attack as unfit the courts it had previously praised. It also engaged in political engineering, mounting a six-year lobbying effort that is still ongoing to convince the United States to cut trade preferences for Ecuador just for allowing the lawsuit to be brought in the place where Chevron wanted the trial to be held.

When asked by 60 Minutes to explain the hypocrisy of wanting the case in Ecuador and then trying to get out of the case once it got to Ecuador, Chevron lawyer Sylvia Garrigo said, "We don't want to be sued anywhere, period." Garrigo also compared the awful waste pits in Ecuador to the oil in the makeup on her face.

There is no better snapshot than Garrigo of Chevron's deeply held belief that it is entitled to impunity for its human rights abuses in Ecuador–abuses that have killed or threaten to kill thousands of people with cancer and other diseases, according to independent peer-reviewed health evaluations in the region. See here and here.

Chevron might think it can get away with ignoring court orders in Ecuador, but it will not easily obtain impunity in Canada's courts. Chevron's interest in various oil field and refining operations in Canada are reportedly worth billions of dollars. They could easily be sold with the proceeds redirected for clean-up in Ecuador. That would be poetic justice indeed for a company that admitted contaminating drinking water with benzene-laden "water of formation", and then denied it was legally responsible.

As terrible as the BP spill was, it was still an accident. Chevron's contamination of Ecuador's rainforest was the product of a planned design to inflate profits by externalizing production costs. The company even built pipes that continue to drain the toxic waste from its pits into nearby streams, as documented in the trial and in the 60 Minutes segment.

According to American law professor Judith Kimerling, who chronicled these facts in her 1991 book Amazon Crude, Chevron engineers told the indigenous people of the region that oil had vitamins and other positive medicinal effects. Robert F. Kennedy Jr., the noted environmental lawyer, penned a powerful firsthand essay after visiting the region in 1991. See here. Kennedy said he witnessed "antiquated equipment, rusting pipelines, and uncounted toxic waste sites"; the jungle, he said, "was broken by landscapes reminiscent of war."

Chevron is notorious in communities around the world for trying to win through intimidation, political lobbying, and corruption what it can't win legitimately in court. In Ecuador, the trial judge found that Chevron tried to grind the case to a halt as part of its defense strategy. The company once filed 18 motions in 30 minutes and then tried to recuse the judge when he did not rule on them fast enough. Chevron employee Diego Borja, under the direction of company lawyers, tried to bribe a sitting judge in a sting operation; Chevron threatened other Ecuadorian judges as well as lawyers for the plaintiffs with sham criminal prosecutions; and finally, offered $1 billion to Ecuador's government (half of which was to go to an environmental project) to induce it to illegally quash the case. Chevron lawyer Doak Bishop famously announced that the Ecuadorian plaintiffs "are irrelevant". This sworn affidavit from Ecuadorian lawyer Juan Pablo Saenz provides some of the gruesome details about Chevron's ongoing efforts to corrupt Ecuador's judicial system.

Chevron's new public relations narrative claims that the evidence in Ecuador is in its favor. What the evidence actually shows is that Chevron, via its own audits and technical reports, proved the claims of the plaintiffs and then lied about it to shareholders and the financial markets to artificially boost its stock price. That helps explain why a U.S. Congresswoman and three institutional investors recently asked U.S. regulatory authorities to investigate the company for violating securities laws. See here and here.

Another prominent U.S. elected official who visited the region in 2008, Rep. Jim McGovern of Massachusetts, described seeing a "terrible environmental and humanitarian crisis" that made him "ashamed" as an American. See here for a letter he wrote to President Obama about Chevron's activities in Ecuador.

Which brings us back the falsehoods Chevron will try to market in Canada. First, the few minutes of outtakes from the movie Crude that Chevron posted on its website are spliced and diced in its editing room to present a completely distorted view of the case. Joe Berlinger, the film's director, told Fortune that he is "dismayed at the level of mischaracterizations" in Chevron's presentation of his outtakes.

American lawyer Steven Donziger, who Chevron has spied on and harassed for years as he too tried to hold company officials accountable, emphasizes throughout the full 600 hours of outtakes the strength of the evidence against Chevron and his own frustration that Chevron that was corrupting the court and improperly delaying the trial. Chevron won't show you these outtakes, which faithfully reflect the conclusion among the legal team that the scientific evidence against Chevron is overwhelming.

Chevron's take on the science is equally unavailing. To the extent you can judge somebody by the company they keep, consider this: one of Chevron's scientific consultants in the Ecuador case is Dr. Douglas Southgate, who works with an institute funded by the oil and gas industry to cast doubt on global warming. See here. Another, Ralph Marquez, is the former lead lobbyist for the chemical industry in Texas. See here. Michael Kelsh–the author of a grossly flawed cancer study funded by Chevron–was hired by a company owned by a former Chevron Board member. See here. (One can better understand how Chevron uses junk science by reading the classic book Merchants of Doubt: How a Handful of Scientists Obscure the Truth On Issues from Tobacco Smoke to Global Warming.)

The evidence relied on by the Ecuador court clearly shows that all of the toxic substances Chevron and the plaintiffs found at hundreds of contaminated well sites in Ecuador are dangerous to human health and can kill people at high exposures, according to the Agency for Toxic Disease Registry, the leading authority on toxicity in the U.S. government. Yet Chevron continues to deny any harm has occurred.

Chevron's paid "expert reports" claiming there is no risk to human health are pre-cooked by company lawyers. For example, the Chevron-funded Kelsh study severely undercounts the incidence of cancer in Ecuador's Amazon by relying on official mortality data when most rainforest residents die quietly in the forest and therefore never enter the national cancer database. In its first iteration, Kelsh never disclosed in the study that he received funding from Chevron. Chevron can also cite the existence of some "clean" water and soil samples from the trial, but it lifted these samples up-gradient from the waste pits as part of its fraudulent sampling and analysis plan, exposed here in a report by Dr. Ann Maest.

Incidentally, Dr. Maest–one of the most respected experts in the world on how contaminants travel in groundwater–testified under oath recently that there is massive contamination of water in Chevron's concession area. See here and here. In a blatant act of deceit, in a recent blog Chevron leaves the false impression that Dr. Maest agrees with the company that there is no water contamination. See here.

Chevron's assertion that the plaintiffs wrote the judgment is a both a fabrication and a final act of desperation. It plays into the company's fundamentally racist notion that an Ecuadorian judge is simply not capable of writing a considered, intelligent 188-page decision that picks apart and destroys its arguments, as was done in this case.

Of course, these arguments already were litigated and resolved in the trial that Chevron wanted. But to Chevron, any court or judge who disagrees with it is just part of an ever-widening conspiracy. As of now, the members of this "conspiracy" include numerous judges in Ecuador, dozens of respected media outlets that Chevron claims have been "hoodwinked" by the plaintiffs, prominent U.S. law firms such as Patton Boggs, and the highly respected Canadian lawyer Alan Lenczner, who represents the Ecuadorians in their legal action. You might as well throw in Sergio Bermudes, probably the most respected litigator in Brazil, who just joined the case to help the plaintiffs.

Chevron's goal in Canada will be to reopen the litigation so it can kick the can down the road several more years, calculating it is cheaper to pay the hourly rates for an army lawyers than it would be to clean one of the largest oil disasters on the planet.

Canada's courts will have a great opportunity to finally block Chevron's rope-a-dope, cynical, and manipulative legal strategy.

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Tuesday, July 17, 2012

Chevron’s Growing Reputation As Rogue Company Reinforced by New Charges of Misconduct in Nigeria


Reinforcing Chevron’s growing reputation as a rogue company ignoring safety requirements and local laws in countries across the globe is a recent report that Chevron refused to allow its workers to evacuate an oilrig in Nigeria before an explosion killed two men.

Reuters recently reported the workers had raised safety concerns and asked to evacuate but Chevron refused. About 154 workers jumped from the rig into water and had to be rescued by local fishermen.

Chevron knew for over a week that the well was unstable yet they refused to evacuate us," a worker said in the Reuters article. A witness said, “If it were not for the fisherman those guys would have died in the water.”

This latest incident is one example of Chevron’s long history of ravaging natural environments, violating human rights and ignoring indigenous communities in countries across the globe, including Ecuador, Burma, Angola, Australia and even in its own corporate backyard, Richmond, California.





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