Wednesday, October 10, 2012

Ted Olson Loses a Big One for Chevron Before the U.S. Supreme Court

Ted Olson needs to learn that it’s hard to put lipstick on Chevron’s pig in Ecuador.

In yet another setback for Chevron, the U.S. Supreme Court this week declined a petition signed by Olson to restore the unprecedented global “injunction” obtained last year by the company purporting to block enforcement of the $19 billion Ecuador court judgment.  That injunction – imposed by controversial federal Judge Lewis A. Kaplan – provoked an uproar in the international legal community and was unainmously reversed by the Second Circuit Court of Appeals. 

Chevron General Counsel R. Hewitt Pate then brought in his friend Olson, the former Solicitor General of the United States and the mastermind behind more than 50 Supreme Court arguments (including the winning side in Bush v. Gore).  Olson asked the Court to take the radical step of summarily reversing the Second Circuit ruling without argument or briefing.

Instead of acceding to Olson’s unusual request, the Court decided not even to ask for briefs or argument as it would in a typical case.  It just flat out rejected the original request, and also rejected Olson’s backup plan to file briefs -- all without as much as a comment.

This is the ultimate rebuke not only to Chevron and Olson, but also to Judge Kaplan.  Kaplan's global injunction --  the crown jewel of Chevron's defense to enforcement -- is now officially dead.

One must ask if Olson really understands the extent to which his new client committed human rights violations against indigenous groups on a mass scale in Ecuador's rainforest.  To understand the extent of Chevron’s misconduct in Ecuador, see this video, this 60 Minutes segment, and this report from a highly-rated Australian news show.

The disaster in Ecuador was not an accident, like BP’s Deepwater Horizon spill in 2010.  Chevron designed its system of oil extraction in Ecuador to pollute, and pollute it did – to the tune of 4 million gallons of toxic waste dumped daily in to Amazon waterways for roughly two decades.  (Chevron operated in Ecuador from 1964 to 1992 under the Texaco brand.)  Environmental lawyer Robert Kennedy visited the area in the late 1980s and wrote of witnessing an apocalyptic environmental disaster.  

In his petition, Olson presented the Justices with Chevron’s "blame the victim" narrative that the indigenous groups and their U.S. counsel somehow defrauded the oil giant by filing the lawsuit.  After reading the reply of the Ecuadorians -- where Chevron is hung by evidence from its own corporate files that it committed gross wrongdoing -- the Justices clearly were not moved by Olson's pleading.

By denying Chevron, the Justices now have joined with 18 U.S. federal trial court judges and four federal appeals courts who have rejected Chevron's fraud claims in whole or in part in various litigations over the last two years.

The Supreme Court decision is also the latest blow to Olson’s law firm, Gibson Dunn & Crutcher.  Chevron hired the firm in 2009 to “rescue” it from the impending Ecuador liability.  Not only did Gibson Dunn lose the largest environmental case ever, it has continued to pile up losses for Chevron in various trial and appellate courts in the U.S. and Ecuador.  It's fast approaching Tebow Time for Chevron but there appears to be no Tebow on the roster.

Another big loser with the Supreme Court decision is Gibson Dunn’s self-anointed “mob prosecutor” Randy Mastro, who now has lost every argument he ever made on behalf of Chevron before a U.S. appellate court.  Mastro, the leader of the Gibson Dunn rescue mission, had found a willing audience in Judge Kaplan in New York.  But Kaplan now lacks any power to block the judgment, thus severing the rescue operation's last lifeline in the U.S.

At this point, Kaplan’s open biases against the Ecuadorians are so well-documented that they could well provoke a backlash against Chevron in foreign courts being asked to enforce the judgment.  Judges generally don't like to be told by courts of other countries what they can and cannot do.  That's not good for comity, international relations, or the image of the U.S. judiciary as a whole.

Gibson Dunn also has provoked fierce criticism for trying to help Chevron pry into the private emails of the company’s critics; for sending 11 lawyers to court to cover a minor hearing related to the Ecuador judgment; and for being involved in efforts to offer inducements (e.g., bribes) to Ecuador officials to violate their country's Constitution and quash the case.  The law firm itself was found by courts to have committed ethical violations on behalf of Chevron.

Much of Chevron's misconduct and fraud in Ecuador is documented in chilling detail in the affidavit of Juan Pablo Saenz and the lawsuit filed against Chevron by the longtime legal counsel for the Ecuadorians, Steven Donziger.  These documents provide a taste of how desperate the company has become to avoid being held accountable for the wanton destruction it caused in Ecuador.

Look for Olson and his partners to continue to exploit the billing opportunities provided by their increasingly futile legal odyssey  -- one that also has sparked a shareholder rebellion against their ultimate client, Chevron CEO John Watson.  Let's not forget as well the calls by shareholders and a U.S. Congresswoman for an SEC investigation to determine if Watson is lying to downplay the Ecuador risk.

Ted Olson is without question a brilliant lawyer.  Watson will certainly pay for the next batch of lipstick for Gibson Dunn to try to smear over the lips of the Ecuador judgment.  But that pig is not getting prettier.

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