Thursday, December 12, 2013

After the Smoke Clears: What Chevron’s RICO Trial Means, With Hindsight

Now that the evidentiary phase of Chevron’s retaliatory RICO bench trial against New York human rights lawyer Steven Donziger and his Ecuadorian clients is over, we can take a deep breath and analyze what really happened before the controversial Judge Lewis A. Kaplan.  The answer is not much, other than one of the greatest abuses of the American civil justice system ever. 

First, let’s take a step back and look at what is undisputed.  As Paul Paz y Mino of Amazon Watch wrote in his recent post at Eye on the Amazon blog, Chevron admits to dumping billions of gallons of toxic waste into Ecuador’s Amazon when it operated in the country from 1964 to 1992 under the Texaco brand.  A trial court decision finding Chevron liable for this dumping has been affirmed unanimously by Ecuador’s Supreme Court.  Since Chevron refuses to pay, judgment enforcement actions filed by the villagers continue to target billions of dollars of Chevron assets in Canada, Argentina, and Brazil.  Chevron is also hamstrung by its longstanding promise to U.S. courts to pay the $9.5 billion Ecuador judgment as a condition of the dispute being moved to the South American nation in 2002.

For these and other reasons, we always have maintained that the RICO trial was more an expensive therapy session for Chevron’s management team than a bona fide legal case.  None of the key Ecuadorians named by Chevron as “defendants” even showed up.  Given the bias of Judge Kaplan and the utter arrogance in the idea that a U.S. judge could rule on issues in the case already decided by Ecuador’s Supreme Court, Chevron is likely to face a ferocious backlash from foreign judges if it tries to peddle Kaplan’s ruling abroad.  

Chevron’s fundamental allegation was that it was treated unfairly during the trial.   That’s typical public relations blah-blah carted out after an oil company loses a trial fair and square.  Chevron fought for ten years to move the underlying environmental case from the U.S. (where it was filed in 1993) to Ecuador.  The company submitted 14 sworn affidavits to a U.S. federal court praising the fairness of Ecuador’s courts.  (It started attacking those courts only when the evidence at the trial pointed to its guilt.) Chevron recently won two significant legal cases in Ecuador against the state-owned oil company, PetroEcuador. The Ecuador Supreme Court just last month lowered the company’s liability by approximately $10 billion, a draconian result for the long-suffering rainforest communities who have been waiting almost 50 years for a clean-up.  That hardly sounds like the fix was in.

The RICO case is the most recent installment of Chevron’s global forum shopping to evade accountability for its toxic dumping. The company has filed thousands of motions in more than 30 U.S. courts to try to undermine the Ecuador judgment.  It also filed two claims against Ecuador’s government in a futile attempt to shift its own clean-up responsibility to Ecuadorian taxpayers.  It has attacked more than 100 supporters of the Ecuadorians, including bloggers and activists, with subpoenas seeking their private communications.  It has dispatched powerful lobbyists, including former Clinton Administration officials Mack McLarty and Mickey Kantor, to pressure the U.S. government to cancel trade benefits for Ecuador.  It also has hired six public relations firms to promote the fake narrative that the nation’s third largest oil company is being victimized by indigenous groups who lived mired in its oil contamination.  An internal Chevron memo from 2009 acknowledged the company’s long-term strategy for Ecuador was to “demonize Donziger” and turn the tables on the villagers rather than litigate the case on the merits.   That’s the context for the RICO case.

Chevron wanted the underlying claims to be heard in Ecuador as long it felt it could engineer its desired outcome.  In October 2003, company lawyer Ricardo Reis Veiga desperately tried to torpedo the litigation on the first day of trial by persuading the country’s Attorney General to do something entirely unethical and illegal – call the trial judge to urge him to throw out the case that Chevron said it would litigate in Ecuador.  Once judges in Ecuador began to resist Chevron’s pressure campaign, the company high-tailed it back to the friendly confines of Judge Kaplan’s courtroom where the activist judge was more than happy to grant a do-over.  

Almost everybody expects Judge Kaplan, who does not even speak Spanish, to rule in favor of Chevron based on his interpretation of Ecuadorian laws already decided by that country’s highest court. 

The RICO case remains a sideshow that Chevron is using to try to distract its shareholders and employees from evidence of its crimes, fraud, and human rights abuses in Ecuador – as documented in this stunning affidavit by Ecuadorian lawyer Juan Pablo Saenz or in this video or in this interview with Donziger on his website.
 But it is a stretch to think that any Kaplan ruling in favor of the oil giant will matter to the foreign enforcement courts who will decide under their own laws whether Chevron pays up.   (By the way, Chevron can raise as a defense all of its so-called “fraud” evidence that it is using during the RICO trial in the enforcement courts.)

Chevron’s trial of mass distraction before Kaplan also poses a different kind of threat to our body politic in the U.S.  As Paz eloquently wrote in his blog:

Unfortunately, there's even more going on here than a Chevron-friendly judge misusing his power to the detriment of 30,000 long-suffering people in Ecuador. This is the furthering of a strategy that corporations will continue to develop to crush the free speech of critics and limit our chances to fight back on anything resembling a level playing field. This RICO suit and everything Kaplan has allowed Chevron to get away with in its wake is a serious threat to open society and due process of law.
In our recent analysis, Chevron’s RICO Trial to Nowhere, we noted eight specific reasons why Chevron’s case has little or no chance of holding up on appeal in the U.S.

Besides the fundamental problem that Chevron failed to prove its case, there is also simply no remedy that any U.S. court can conceivably fashion to block a foreign court judgment.  When there’s no conceivable remedy, there’s no “case or controversy” as required by the U.S. Constitution.  And when there’s no case or controversy, there should be no trial. 

You won’t be hearing about the flaws in Chevron’s case from R. Hewitt Pate, the company’s general counsel.  With an air of smugness, Pate sat in Kaplan’s courtroom for six weeks while collecting some of his $7.5 million annual salary. After strong-arming Chevron to invest astonishing sums in the RICO case, he no doubt wanted to be the man to spin the daily results to Chevron’s Board of Directors and CEO John Watson.  (Watson, who oversaw Chevron’s purchase of Texaco without adequately vetting Texaco’s pending Ecuador liability, has long been the target of shareholder ire over his mishandling of the litigation.)

Pate’s effort to control the narrative before Chevron’s Board and shareholders has to be pure jiu-jitsu.  Here is a thumbnail sketch of Chevron’s legal problems with the RICO case:

Kaplan has no remedy to help Chevron
:  Having denied a jury trial and excluded key relevant evidence that contradicts Chevron’s narrative, Kaplan will no doubt “find” in favor of the company.  But once that happens, there is no place to go.  Under RICO, a private party like Chevron has no right to injunctive relief – a position the U.S. Department of Justice under the Bush Administration repeatedly asserted. Few judges would have the temerity to even think they could allow a law passed by Congress to bring down the Mafia to be twisted by a corporation to attack indigenous groups and human rights lawyers who held it accountable for its crimes.  That’s a rather scary assault on the very nature of political advocacy.  The Second Circuit Court of Appeals in New York already ruled in 2012 that the Ecuador rainforest communities “may seek to enforce their judgment in any country in the world where Chevron has assets.”  Nothing that Judge Kaplan does can change that.

Kaplan cannot act as the appellate court for Ecuador’s judiciary:
  It is an axiom of international law that judges in one country are not allowed to overrule court decisions of another country.  In Ecuador, three layers of courts – most recently the nation’s highest court – have upheld the trial court decision holding Chevron liable for dumping billions of gallons of toxic waste into the Amazon.   Judge Kaplan knows almost nothing about Ecuador; he cannot even read the trial court decision or the record on which it was based.  Yet Judge Kaplan has suggested that he plans to rule on the validity of Ecuador’s entire judicial system as part of his grand plan.  Doing so will look plain silly to the appeals court and even sillier to foreign judges being asked to enforce the Ecuador judgment. 
Kaplan manipulated evidentiary decisions:  Even after denying him a jury, Judge Kaplan would not let Donziger mount a real defense.  He refused to admit evidence of the extensive contamination relied on by the Ecuador court to find Chevron liable.  He excluded more than 100 technical reports from Chevron and other sources that documented high levels of Total Petroleum Hydrocarbons and other harmful toxins (such as lead, barium, zinc, and Chromium 6) at the company’s 376 former well sites.  This evidence was critical to show the Ecuador judgment was valid and not procured by fraud, as Chevron claims.  Judge Kaplan also refused to hear evidence of Chevron’s “unclean hands” – its crimes, fraud, and threats to judges and court personnel to sabotage the trial.  It is a basic legal principle dating back centuries that the party that arrives in court with “unclean hands” is not entitled to relief.  To deal with this problem, Judge Kaplan whitewashed the official record by excluding the extensive evidence of Chevron’s “unclean hands”.

Kaplan’s temperament is not befitting a federal judge
:  We have reported extensively on Kaplan’s displays of bias against Donziger and the Ecuadorians, including his comments from the bench disparaging Ecuador’s judicial system and his preposterous claim that Donziger’s goal is “to fix the balance of payments deficit” of the United States.  See here, here, and here.  During the trial, Judge Kaplan treated several witnesses from Ecuador with a conspicuous rudeness – threatening one with contempt if he did not turn over his computer to Chevron, using trick questions on another, and dismissing complaints about cultural insensitivity.  Letting Chevron get away with its final act of trickery – dropping $60 billion in money damages claims on the eve of trial
was the ultimate betrayal of his oath to administer justice fairly. That allowed Chevron to avoid a jury of impartial fact finders, which very likely would have meant another devastating courtroom setback for the company.  Kaplan then heaped insult upon injury by letting Chevron’s staff use the jury deliberation room as a private office during the trial.  Dropping a jury also means Chevron is going to be hampered by a decision from a judge with little credibility domestically and no legitimacy internationally.

Aside from the many legal problems, on the factual front Chevron’s case is a paper tiger.

Once you strip away the flotsam, the company’s supposed  evidence of “racketeering” boils down to two main allegations: (1) that the Ecuador judge was bribed so that the plaintiffs could “ghostwrite” his decision; and (2) that a particular expert damages report submitted by Richard Cabrera was fraudulent. On both points, Chevron’s allegations fall apart upon even superficial examination.

Testimony from Chevron’s lying judge, Alberto Guerra
: Guerra is an admitted liar who testified that he accepted as little as $200 to fix cases.  Chevron paid at least $326,000 in cash and other benefits for his testimony, in violation of U.S. law that prohibits payments to witnesses.   Chevron also hired Ira Kurzban, one of America’s most well-connected immigration attorneys, to help secure political asylum for Guerra and his family even though Guerra faces no threat in Ecuador other than prosecution for his admitted crimes. In exchange for Chevron’s money, Guerra offered a triple hearsay statement that the Ecuadorian lawyers bribed the judge – a charge denied by the judge himself.  (Donziger never even met the judge nor saw him before he testified in Kaplan’s court.)  For more detail, see Donziger’s motion to strike Guerra’s testimony and this blog by Paul Paz.   Bottom line: Guerra is another in a long line of Chevron witnesses bribed by the company to lie.

:  Chevron’s allegation that the 188-page trial court judgment was not written by Zambrano is a joke.  Chevron’s two main experts on “ghostwriting” – Hofstra professor Robert Leonard and 28-year-old tech whiz kid Spencer Lynch – both failed to undertake the much-vaunted “authorship analysis” that could have compared Zambrano’s judgment with his other publicly available decisions or writings to determine if they matched up.   The fact that Chevron did not produce such a report is telling. Chevron likely did commission the study, but buried it when it did not turn out how the company had hoped.

The Cabrera damages report
: One of 106 expert technical reports submitted into evidence, the Cabrera report was prepared in conformity with Ecuadorian law using the same methods Chevron’s lawyers used for the preparation of their expert reports.  (See pp. 46-53 of Donziger’s sworn witness statement for a deconstruction of Chevron’s fraudulent narrative regarding Cabrera.)   In any event, the Ecuador court did not rely on the Cabrera report when finding Chevron liable.  Instead, the court relied largely on scientific evidence of contamination proffered by Chevron’s own experts (such as Ernesto Baca and Gino Bianchi), as Donziger explains in paragraphs 46 and 47 of his witness statement.  The fact that Chevron’s own evidence proved the case against it was reinforced by an independent study conducted by the Louis Berger Group in the United States. 

Other Chevron “evidence” of racketeering is even more absurd.  The fact that Donziger was an aggressive promoter of press releases exposed Chevron’s human rights abuses and corruption in Ecuador is basic political advocacy protected by the First Amendment.  These tools of advocacy have been used by lawyers from Thurgood Marshall to Ralph Nader to Hew Pate himself, who loves to put out press releases
that dupe his own shareholders.   Similarly, Donziger’s suggestion that two Chevron lawyers in Ecuador be criminally prosecuted for engaging in a sham remediation was entirely proper.  Click here to read about how Chevron dropped a key plank of its RICO case to avoid the airing of evidence that would have proven the fraudulent nature of its so-called “remediation” in Ecuador.

Chevron of course will try to promote Kaplan’s decision far and wide. The fact Chevron repeatedly tried to corrupt the Ecuador proceedings and manipulate the RICO evidence will not be mentioned by the oil giant.  Meanwhile, it’s business as usual in San Ramon and Lago Agrio.  The indigenous uprising of the "so-called plaintiffs" in Ecuador is gaining ground around the world while the beleaguered Watson-Pate team digs in its heels.
Chevron needs to keep its corporate jets gassed and have its pilots at the ready.  Pate and his entourage should keep their travel bags packed and ice skates sharpened.  This battle is spreading.