Thursday, July 17, 2014

Chevron's Ill-fated RICO Suit Facing Doom and Gloom

Chevron’s New York RICO lawsuit is fast going from shock and awe to doom and gloom. 

Legal briefs filed this month before a New York federal appeals court appear to dismantle the very foundation of the shameful Chevron-financed “racketeering” show trial that went down in late 2013 in the courtroom of controversial federal judge Lewis A. Kaplan.  By reading the briefs – which are summarized below-- one can gain even more insight into what might have been one of the most abusive trials in recent memory.

What comes through loud and clear is that presiding Judge Kaplan essentially turned over his federal courtroom to a gigantic oil company so some of its 2,000 lawyers from 60 law firms could have a jolly good time billing huge fees to beat up on impoverished Ecuadorian villagers and their U.S. lawyer, solo practitioner Steven Donziger.  Donziger, who for years has worked out of his apartment in Manhattan to hold Chevron accountable for its human rights crimes in Ecuador, is the lead target of what is probably the most well-financed corporation retaliation campaign in history. 

During the RICO trial– attended daily by Chevron’s $7 million-per-year General Counsel R. Hewitt Pate – Kaplan excluded almost all evidence that would have contradicted Chevron’s fake narrative that it was the victim of the very indigenous groups it poisoned. Kaplan not only denied the defendants a jury of impartial fact finders, he excluded the overwhelming scientific evidence of Chevron’s contamination in Ecuador and generally behaved as an overwrought prosecutor for the oil company.

The key takeaway from the briefs is that Kaplan never had the legal right to let the case proceed in the first place.  This is why we repeatedly have called the RICO proceeding a show trial designed to produce bogus “factual findings” to help Chevron evade enforcement of the Ecuador judgment in foreign jurisdictions.  It bears noting that in 2011, Kaplan was unanimously reversed after he tried to impose an unprecedented injunction purporting to block the Ecuadorian villagers from enforcing their judgment anywhere in the world.

Except in rare circumstances not present here, both U.S. law and international law prohibit one country’s courts from trying to rule on another country's final judicial decisions.  This is exactly what the hyper-excited Kaplan purported to do in March is in his bloated 487-page RICO opinion, which reads more like spin from an oil industry talking head than sound legal reasoning.  Having made up his mind, Kaplan clearly started writing his  magnum opus even before the trial started or the evidence came in. 

It is even more clear from the appellate briefs that Kaplan's findings are based on a stinky stew of Chevron lies, distortions, and the judge's obvious ignorance of the law of a foreign nation whose language he does not speak.   Kaplan did not read the 220,000-page Ecuador trial record, the 188-page trial judgment against Chevron, or the country's civil code.  Nor did he see any of the contaminated sites with his own eyes.  Yet Kaplan decided from his Manhattan courtroom that he knows better how to apply Ecuadorian law than the courts of Ecuador.

As Deepak Gupta, Donziger’s appellate lawyer wrote, it would be hard to find a more extreme example of American “judicial imperialism” that Kaplan's handiwork in this case.

Kaplan thought he was clever to reverse-engineer the trial in Chevron’s favor by excluding key evidence.  But the briefs, which confirm what we have been saying all along about Kaplan’s intellectual dishonesty as a jurist, show him (at least in this case) to be the trickster that he is.   

You heard it here first: after reading these briefs, it is simply inconceivable that Kaplan’s decision survives appeal.  Those journalists who for years have been shamelessly cheerleading the Chevron/Kaplan sideshow – we are thinking mostly of Business Week’s Paul Barrett, Michael Goldhaber of American Lawyer Media, and the once-esteemed Roger Parloff of Fortune who refuses to even print our responses challenging his misleading reporting – better inch back off the Chevron limb if they want to retain even of smidgeon of credibility going forward.

Consider the contents of some of the submissions to the Second Circuit Court of Appeals from the principal defendants and their supporters, who filed “friend of the court” or amicus briefs:

New York Lawyer Steven Donziger:  Donziger, the main target of Chevron’s retaliation campaign, explains in his fact section how the company pays the investigations company Kroll to spy on adversary counsel – including himself and his family.  The brief exposes the dirty tricks used by Kaplan and Chevron’s lawyers to try to prejudice him at every turn – from presenting misleading film outtakes, to ordering him to turn over his entire privileged case file, to forcing him to sit for an American record 19 days of sworn depositions.  He also points out how Kaplan let Chevron use a clearly corrupted witness bribed with more than $1 million of company  money to falsely claim Donziger bribed a judge.   The brief demonstrates how Kaplan denied the defendants their right to a jury; how he never had jurisdiction; how he let Chevron unlawfully use the RICO statute to attack lawyers; and how he simply made up out of whole cloth – after the trial -- a common law fraud claim that Chevron never even asserted as part of a preposterous effort to salvage the company’s weakened legal position.  The brief also points to internal company emails to demonstrate how Chevron mounted a campaign to “demonize” Donziger and ruin his reputation, of which the RICO case was a central feature.

Donziger’s brief, prepared by rising appellate star Gupta of Gupta Beck and John Campbell and Justin Marceau, two young law professors at the University of Denver, can be read here.

Ecuadorian villagers:  Javier Piaguaje and Hugo Camacho, the two Ecuadorians who appeared in the RICO case (45 others rejected Kaplan’s jurisdiction), pointed out that Kaplan did not understand some of the basic differencse between a civil law system used in Latin America and the common law system of the U.S.  As a result, Kaplan spent his 487 pages attacking the wrong judgment – the one from the trial level, rather than the de novo appellate court judgment that was unanimously affirmed by Ecuador’s Supreme Court and is the only relevant decision at this point in the case.  A copy of the brief, prepared pro bono by noted law scholar Burt Neuborne from New York University, can be read here.

International law scholars:  More than 35 prominent international law experts from 11 countries – including Australia, Austria, Spain, the U.S., and Israel – submitted an amicus brief that explains the many ways that Kaplan’s decision violates international law.  The scholars accused Kaplan of trying to unlawfully “dictate” to judges in other countries how they should rule on the enforceability of the Ecuador judgment, in direct contravention of the sovereignty of those countries and U.S. domestic law.  That brief can be read here; a press release about it is here.

U.S. civil society organizations:  Several prominent U.S.-based non-profit organizations -- including Amnesty International, Friends of the Earth, and Amazon Watch – lambasted Kaplan for letting Chevron  use the RICO statute as a weapon to trample on the First Amendment rights of the numerous critics of the company’s Ecuador environmental disaster.  The brief persuasively demonstrates that Chevron used the RICO case as a SLAPP suit designed to harass and silence its critics, in violation of the Constitution.  They also point out that Kaplan, in a clear case of reversible error, never even considered the First Amendment implications of the defendants and their supporters before deciding the case.  That brief can be read here.

Government of Ecuador:  In urging reversal of the RICO decision, the government of Ecuador directs fire at Kaplan’s unprecedented frontal attack on the judiciary of a democratic nation, U.S. ally, and commercial trading partner.  The brief points out that Kaplan’s “finding” that Ecuador’s entire judicial system falls below international standards was based largely on the discredited testimony of Dr. Alvaro Grau, an Ecuadorian politician who is an opponent of the current President of Ecuador and who formed his conclusions based on newspapers stories from the opposition press.   The government also points out that Chevron repeatedly had praised Ecuador’s court system in the 1990s to transfer the matter from U.S. federal court (where it was originally filed in 1993) to the South American nation, and therefore should be prohibited now from complaining about Ecuador’s courts.  Only when the scientific evidence of toxic pollution began to mount against Chevron did the company switch gears and begin to attack Ecuador’s courts in a clear case of sour grapes, argued the government.   The brief, prepared by the American law firm Winston & Strawn, can be read here.

Earth Rights International:  This brief, filed by one of our nation’s most prominent environmental and human rights legal organizations, urges reversal on the grounds that Chevron agreed to submit to jurisdiction in Ecuador and therefore should be bound by the rulings of its courts.  For more on this brief, read here.

As compelling as they are, these briefs capture only a portion of Kaplan’s abuse.  For example, there is no mention of how Kaplan let Chevron pay 100% of the legal fees of his former law partner Max Gitter to serve as “Special Master” during the discovery phase of the RICO trial, but then let Gitter hide his actual invoices from Donziger and the Ecuadorians.  Chevron surely paid Gitter millions of dollars, but due to Kaplan the amount remains a secret.  Whatever the amount, this back-slapping relationship between a supposedly neutral jurist and Chevron is ugly.  And it helps explain why Gitter repeatedly ruled in favor of Chevron and ordered the wholesale disclosure of Donziger's privileged documents, while blocking Donziger from getting almost all of Chevron's documents.  See this analysis for more background on Gitter's biased behavior.

We have come a long way from the “shock and awe” days in 2010 when Chevron claimed every new piece of discovery was somehow proof of the “fraud” that never was.   Chevron CEO John Watson and Pate launched discovery suits in more than 20 federal courts to try to intimidate the villagers and their allies.  The Cabrera damages report ended up being a non-issue, as the Ecuador court refused to consider it; in any event Donziger and several prominent Ecuadorian law scholars stand by it.  The video outtakes of Donziger criticizing Ecuador’s courts are not relevant, and in any event they were manipulated by Chevron to try to taint Donziger’s image and mislead courts throughout the country.  And we now know that the real bribery in the case was Chevron’s -- of its star witness, crooked former judge Alberto Guerra.

It can’t be fun for Watson and Pate to go from shock and awe to doom and gloom, but that indeed is what has happened.  The RICO games don't much matter given that foreign courts are not bound by anything Kaplan orders, and it is likely he will be reversed yet again.  But the meltdown sure is interesting to watch.

Desperate to protect its favorite judge, Chevron has retained former Solicitor General Theodore Olsen to argue its case before the Second Circuit.  As we pointed out before, not even the great Supreme Court orator and now ersatz filmmaker is capable of putting lipstick on Chevron’s pig. 

Once the appellate court rules, Chevron likely will have lost not only in the courts of its chosen forum of Ecuador, but also in the U.S. where it enjoyed a home field advantage.  At that point, enforcement actions targeting billions of dollars of Chevron assets (and currently pending in Canada and Brazil) will be given a huge boost.

In the meantime, the human consequences of Kaplan's folly grow more acute.  Because Kaplan essentially gave Chevron’s management a false sense of confidence, thousands of rainforest villagers now have to put up with life-threatening levels of contamination on their ancestral lands for years longer.  Ultimately, the responsibility lies at the foot of Chevron CEO and Chairman Watson and the notoriously passive members of the company’s Board.  These mostly pale people of privilege, who collect huge fees for serving largely as “yes men” to company management, have done nothing to try to ameliorate a humanitarian disaster created on their watch.

Lance Ito let the O.J. case spiral out of control because of his failure to manage the proceedings.  What is most disturbing from the new briefs is how Kaplan so clearly orchestrated the entire process, even indicating to Chevron’s lawyers how they should present evidence, how they should modify their claims, and what he needed (wink wink) to best put the screws to Donziger, against whom he had a clear personal vendetta.  (See these briefs here and here for Kaplan’s disparaging and inappropriate comments about Donziger and his clients.)

The final death spasms of this sordid chapter in U.S. legal history are in motion.  Kudos to the excellent appellate lawyers who are fighting on, despite Chevron’s pressure campaign.