Friday, September 20, 2013

Chevron Imports The Great Ted Olson to Save Its RICO Case

Signs of More Serious Trouble For Oil Giant As It Tries to Evade Ecuador Judgment

There is now more evidence Chevron is running scared about its retaliatory New York RICO case filed against Ecuadorian villagers and one of their lawyers, New York attorney Steven R. Donziger.   The great Republican lawyer Theodore Olson – who argued the winning side in the famous Supreme Court case that landed George W. Bush the presidency – is joining the company’s legal team just days before a critical argument before a New York appellate court.

After an eight-year trial held in Ecuador at Chevron’s request, the Ecuadorian communities in 2011 won a judgment against the oil giant for causing massive toxic pollution to the Amazon, as summarized here and in this segment on 60 Minutes.  Chevron wants payback, but it is suddenly getting cold feet now that the Oct. 15 trial date is nearing. See here and here for more about Chevron’s sudden case of the jitters.
In an astounding move, Chevron recently disclosed that it is ready to drop all damages claims against the Ecuadorians and Donziger (who are being sued for $60 billion) just to avoid a jury of American citizens.  It is becoming abundantly clear that the facts of this case will never be Chevron’s friend.  The Ecuador court found that Chevron’s own scientific evidence and internal audit reports not only proved the claims against it, but also showed the company tried to obstruct justice by ordering employees to destroy incriminating documents
That’s why Chevron asked Judge Lewis A. Kaplan to rule the RICO trial will not include the overwhelming scientific evidence of Chevron’s contamination in Ecuador.  Kaplan granted Chevron’s request, essentially disabling any possibility of a meaningful defense in the case.  (The defendants want to use the scientific evidence to prove Chevron’s charges of fraud are baseless.)
Chevron’s new plan is to drop all damages claims so that Judge Kaplan can decide the case alone and provide the company with an injunction blocking the winners of the lawsuit from enforcing their judgment worldwide.  There are many problems with this approach, which we explain below. But a trial before Kaplan would virtually guarantee the company a temporary victory – however hollow and illegitimate it might be in the eyes of the world. 

There is a big problem - Judge Kaplan now faces an embarrassing motion for recusal that will be heard by the Second Circuit Court of Appeals on September 26 in Manhattan.  With the trial scheduled to start soon after, the timing is not good for Chevron.

With its options narrowing, Chevron’s desperation is almost palpable.

Just days ago, the company quietly notified the Second Circuit that Olson will replace Randy Mastro as the company’s lead appellate lawyer in the upcoming argument.  Mastro is the former New York City deputy mayor (under Rudy Guliani) and political operative whose trial skills earned his client a $19 billion adverse judgment out of Ecuador.
Olson comes from a different class altogether.  He is the former Solicitor General of the United States under the Bush Administration and has argued roughly 60 cases before the U.S. Supreme Court.   He joins an estimated 2,000 other Chevron legal personnel from the 60 law firms used by the oil giant to try to avoid paying for its toxic calamity in the Amazon. 

The other new Chevron team member for the upcoming argument is Michael Mukasey, the former Attorney General of the United States (also under the Bush Administration).  Mukasey has applied to appear on behalf of the U.S. Chamber of Commerce, an organization that in recent years has received millions of dollars in contributions from Chevron.  Mukasey is the former chief judge of the Southern District of New York, where Kaplan sits.
Olson and Mukasey are key members of our country’s Republican legal machine – the same machine that brought us Bush v. Gore and the unconscionable Swift Boating of John Kerry during the 2004 presidential campaign.  That the Republican dream team is now mobilizing to protect Judge Kaplan deserves attention. Without Judge Kaplan, there is real danger that Chevron’s house of cards will collapse and the plaintiff’s bar might finally hold an oil major accountable on a mass scale for crimes and wrongdoing overseas.  That’s never happened before.

We digress to note that R. Hewitt Pate, Chevron’s General Counsel, served in the Bush Administration with both Olson and Mukasey.  To illustrate the warped value system of Chevron’s management team, the company gave Pate a whopping raise to $7.5 million the same year his legal team was hit with a $19 billion adverse judgment in Ecuador.  Pate has also authorized Chevron to pay an estimated $1 billion in legal fees since 2009 to Olson’s law firm, Gibson Dunn & Crutcher, to lead the assault on the Ecuadorian villagers and their counsel.
For Chevron, the entire purpose of the RICO case is to create a “stink factor” that might muck up enforcement actions the Ecuadorians have filed against Chevron assets around the world to collect on their judgment.  Judge Kaplan has unabashedly promoted the RICO case at every turn, calling the Ecuadorians the “so-called” plaintiffs and saying Donziger’s goal is to “fix the balance of payments deficit” of the United States.  He also claimed the Ecuador case “is not bona fide” litigation.

Chevron recently disclosed to Kaplan’s court that it has at least 114 lawyers working on the matter at Gibson Dunn.  Donziger is representing himself pro se.  As far as we can tell, he and solo practitioner Julio Gomez (who represents the Ecuadorians) are doing a pretty good job of beating back the advancing Chevron army. 

We note the last time Chevron showed up before the Second Circuit the panel of judges reversed Judge Kaplan’s illegal global injunction purporting to block the Ecuador judgment worldwide.  Mastro literally was laughed out of court when he could not answer basic questions from the panel.

Chevron is now asking Judge Kaplan to ditch a jury and impose the exact same injunction that the Circuit previously said was illegal.   It makes no sense, and leaves us scratching our heads. This is increasingly looking like a chess game of giants in which Donziger and his clients are treated as pawns.
Olson normally would never show up for a regular recusal proceeding.  But there is nothing regular about this one. Judge Kaplan is a vital asset to Chevron as it attempts to fulfill its longstanding promise to tie up the Ecuadorians with a “lifetime of litigation” if they don’t drop their claims.  As famed lawyer John Keker (Donziger’s former counsel) said last May, Chevron is trying to win by might what it cannot win on merit. 

(For background on Ted Olson’s previous foray into the Ecuador case on behalf of Chevron, read this blog posting from October 10, 2012.)