Wednesday, June 26, 2013

Appeals Court Asks Judge Kaplan To Defend Bizarre Rulings In Ecuador Pollution Case

Federal Judge Lewis A. Kaplan’s actions in Chevron’s efforts to evade a $19 billion adverse judgment for toxic dumping in Ecuador has caught the attention of a New York appellate court.

In a move that has raised eyebrows around the New York bar, the state’s highest federal appellate court recently gave Judge Kaplan 30 days to file papers defending his unprecedented rulings in a “fraud” case Chevron has brought in New York.

The case is the baby of Randy Mastro, former deputy mayor to Rudolph Guliani and now a law partner at Gibson Dunn & Crutcher. (True to form, Mastro helped execute Guliani's racially divisive political strategy in the mid-1990s.)  The lawsuit is designed to help Chevron evade the judgment in Ecuador and retaliate against the indigenous communities and lawyers who have held the company accountable for what is thought to be the largest environmental catastrophe in history.

The Second Circuit invited Kaplan to defend himself in light of a petition filed by the Ecuadorians and one of their lawyers, New York attorney Steven Donziger, seeking his reassignment. While most such requests are quickly dismissed, there clearly is something about Judge Kaplan’s behavior that is catching the Second Circuit’s attention.

Kaplan’s hostility toward Donziger and the Ecuadorians is puzzling because the judge is highly regarded in some quarters.  But in the mandamus petition the facts speak for themselves. For whatever reason, Judge Kaplan seems to be putting his formidable intellect at the service of Chevron rather than using it to administer the case fairly.  For more background, read this supplemental filing and an earlier mandamus petition that documents some of Kaplan’s biased comments toward the Ecuadorians from the bench.

And it what can only be described as an act of chutzpah, Judge Kaplan petitioned the appellate court for more time to file his defense.  The Second Circuit order inviting Kaplan to respond can be read here.

The irony of Judge Kaplan’s request for an extension should not be lost.  In 2011, the judge denied a similar request from Donziger, leaving the solo practitioner only three days to respond to Chevron’s 150-page “fraud” complaint before Kaplan imposed an illegal injunction blocking worldwide enforcement of the Ecuador judgment.  That move was later reversed by the Second Circuit in a unanimous order, but only after severe damage had been done to efforts by the Ecuadorians to clean up Chevron’s toxic mess.

Kaplan also found Donziger “waived” attorney-client privilege because he did not turn in a privilege log quickly enough. In a penalty that only be described as draconian, Kaplan then forced Donziger to turn over to Chevron his entire 19-year case file.

In the meantime, Judge Kaplan continues to do all he can to protect Chevron from having to disclose information about its own corruption, witness tampering, and bribes in Ecuador.  He also has ruled that the Ecuadorians and Donziger cannot defend themselves by showing the overwhelming scientific evidence that formed the basis of the Ecuador court judgment against Chevron.

(For background on how Chevron lies about and distorts basic facts in the case, read this response to allegations from a law professor paid by Chevron.)

Kaplan is also trying to block key evidence that Chevron and its outside lawyers have mounted an espionage ring to spy on adversary counsel.  That’s a flagrant violation of the ethical rules governing the legal profession, and is likely illegal.  But to Kaplan, apparently that’s just what big oil companies do to protect their asset base.

Chevron has admitted it has used at least 180 investigators on the case, mostly from Kroll. Kroll is a large investigations firm that functions in numerous countries like a private KGB for its corporate clients.

Kroll employee San Anson was caught trying to pay $20,000 to an American journalist to spy on consultants to the Ecuadorians.  Another former Kroll spook, Yohi Ackerman, was caught in Ecuador offering $20,000 cash from a suitcase to an Ecuadorian judge in exchange for favorable testimony on behalf of Chevron.

Many of Kroll’s investigators like Anson and Ackerman are bad boys who thrive in the underworld.  But Judge Kaplan and his Special Masters on the case, including his former law partner Max Gitter, have essentially shut down the ability to question these individuals about their misconduct.

Kroll’s CEO, Daniel Karsen, was deposed in early June.  Because of Kaplan’s rulings, Karsen didn’t have to answer most of the questions posed.  Chevron’s harassment of opposing counsel was considered off-limits under Kaplan’s rules.

For a small window into Chevron's spy operation, read this affidavit about how a team of unknown individuals followed Donziger around Manhattan.  For evidence of how Chevron tries to intimidate and “flip” witnesses, read this affidavit from a consultant to the Ecuadorians.

Kaplan also is letting Chevron maintain as “confidential” a series of damning internal videos that prove the company committed a massive fraud in Ecuador by hiding evidence of contamination from the court. Chevron itself shot the videos of its own technicians laughing at the pollution the company left behind and discussing how they would hide it from the court.  Under Kaplan’s rules, this type of criminal activity cannot be used at trial and must remain hidden from the public.

And in a clearly abusive practice, Judge Kaplan has allowed Chevron to hide numerous internal company emails that clearly show corruption and bribe attempts in Ecuador .........


To Kaplan, this kind of payment apparently qualifies as “proprietary” business information.

Judge Kaplan also has allowed Chevron to hide embarrassing internal emails demonstrating that ... CENSORED BY CHEVRON. That email – CENSORED BY CHEVRON – is “confidential” under Kaplan’s rules.

It is now part of the public record that Chevron has used roughly 2,000 legal personnel and 60 different law firms to try to win by might what it cannot win on the merits.   Read this blistering critique of Kaplan’s biased rulings by famed San Francisco lawyer John Keker, who used to represent Donziger but left the case because of Kaplan’s mismanagement of the litigation.  Keker once famously said he felt “like a goat tethered to a stake” when litigating before the judge.

Despite Chevron’s overwhelming advantage in resources, Keker pointed out that Judge Kaplan consistently bends over backwards to help the oil giant as if it was an orphan or a widow. Chevron grossed about $250 billion last year and paid its CEO John Watson close to $30 million, while the average annual income of the residents who suffer at the hands of the company’s pollution is about $1,000.

We are looking forward to reading how Judge Kaplan tries to explain his rulings that are both helping Chevron evade a valid judgment and are raising questions worldwide about the fairness of the American judiciary.

(For a summary of the Ecuador court decision see here; for a video about the case see here or this 60 Minutes segment about Chevron’s deliberate contamination of the Amazon rainforest.)

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Thursday, June 6, 2013

Recent Decisions On the $19b Ecuador Judgment Do Little to Decrease Chevron’s Enormous Risk

For indigenous and farmer communities, the fight continues

Supporters of the heroic two-decade effort to hold Chevron accountable for its indisputable toxic dumping and destruction of the Amazon rainforest in Ecuador should not despair over recent court rulings that have slowed the seizing of the oil giant’s assets in Argentina and Canada.

The fight is far from over and overall trend lines still favor the affected rainforest communities, who have suffered from Chevron’s toxic dumping for decades. (For a summary of the evidence, see here; for a video about the case see here or this 60 Minutes segment.)

In Toronto, in an unusual decision without any precedent in Canadian law, a court found that because Chevron operates only through subsidiaries then the case must be stayed.  That decision is now on appeal.  The court decision this week in Argentina to lift a freeze on Chevron’s assets will have little impact on a parallel judgment recognition action which is proceeding.  That action will allow the rainforest communities to seize up to $3.5 billion of assets if successful.

Chevron has roughly $15 billion in assets in Canada and another $4 billion in Brazil that are being targeted in court actions based on the valid Ecuador judgment.  That’s real risk no matter how Chevron’s management team – including its conflicted CEO, John Watson -- try to spin it.

Under oath in court, where company officials are obligated to tell the truth, a Chevron comptroller recently claimed such asset seizure actions will cause the oil giant “irreparable harm” and disrupt its global business operations.  Chevron also operates via its subsidiaries in dozens of countries around the world that could be targeted.

There is also a deeper reality to the reasoning behind the recent Canada and Argentina decisions that should disturb concerned citizens everywhere.  In effect, based on legal technicalities, these courts are flirting with a total grant of impunity to human rights violators like Chevron.

Let us explain.

In Canada, a trial judge ruled that Chevron is a separate company from its local subsidiary even though that subsidiary is 100% owned by Chevron.  Yet Chevron itself operates only through its many subsidiaries around the world.  The company does not even own its own building housing its headquarters near San Francisco.

It was also Chevron officials (operating under the Texaco brand) who made the decision to deliberately dump billions of gallons of toxic waste in Ecuador, decimating indigenous groups and farmer communities.  Chevron itself stripped almost all of its assets from Ecuador in recent years in anticipation of losing the case.  It then refused to pay the judgment.

The upshot is this:  when Chevron wants to increase its profits by dumping toxic waste, it can deliver a high level of fake value to its shareholders by externalizing the costs of pollution to impoverished local residents.  But when it comes time to pay the hefty tab for that dumping, it plays the corporate shell game and hides behind its subsidiaries.

That's Chevron's conception of impunity. The question is whether courts will let the oil giant get away with it.

The cultural mindset that it produces in a large oil company leads to excessive risk-taking and arrogance.  And that explains why Chevron always seems to be dealing with a massive number of environmental problems around the world, including in the U.S. where it is currently under criminal investigation for a recent refinery fire in Richmond, CA.

Courts in most countries would not allow Chevron to get away with this brazen mockery of the rule of the law.  Many of Chevron’s own shareholders are also disturbed enough to have sternly rebuked Watson for mishandling the fallout from the Ecuador judgment.

Knowing it cannot win the Ecuador battle on the merits, Chevron also cleverly tries to exercise improper political influence over governments and courts.  In Argentina, after the freeze order became a viable possibility, Chevron suddenly decided to “invest” $1.5 billion in a large gas field with the local state-owned oil company, YPF.

Chevron also took out full-page advertisements in Argentine newspapers claiming impending national doom if the Ecuador judgment were to be enforced.  Its local representative publicly announced Chevron would only follow through on its investment if the freeze order was lifted.  Suddenly, after some furious behind the scenes lobbying, Argentina’s Attorney General recommended the freeze order be lifted.  Voila!

We think Canada’s appellate court will see Chevron’s rope-a-dope for what it is: a sneaky attempt to play the corporate shell game to escape justice.  Ultimately, we feel Argentina’s courts will see it the same way.

Chevron should not take too much comfort from these latest rulings.

The evidence against Chevron for committing a horrific level of environmental contamination in Ecuador is strong.  It has been documented not only by the company’s internal files and a 220,000-page trial record, but by independent journalists the world over who have visited the disaster zone.

Only in an unjust world can a corporation get away with murder by hiding behind legal fictions created by bean counters.  As this battle rages on, everybody concerned about accountability for corporate human rights abusers should take note and demand that judges stand up for the fundamental principle that polluter pays.

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Wednesday, June 5, 2013

Forget WallyWorld, at Chevron They Live in WatsonWorld

Reposted from Eye on the Amazon, May 31, 2013 

There are many ways to describe the experience of participating in a Chevron Annual Shareholder Meeting. One is often left wondering if those inside are as completely divorced from reality as their words suggest, or if they are just putting on a show for a room full of cardboard cut outs of corporate yes-men. This past Wednesday was no exception. While hundreds protested outside the 2013 Chevron Annual Shareholder Meeting holding the largest "pink slip" you've even seen reading, "Watson: You're Fired!" Chevron CEO John Watson once again demonstrated that he is largely divorced from reality when it comes to the company's $19B liability in Ecuador and its other environmental problems, both local and global. Watson would hate to admit it, but once again the meeting was dominated by his critics and the largest ever shareholder support for Ecuador-related resolutions.

The Chevron Way: We Know Better

Time and again when faced with shareholder resolutions critical of Chevron or the compassionate voices of community members living with the harsh reality of exposure to the company's toxic operations, Watson claimed it was his critics who were "unfamiliar with the facts". Servio Curipoma, who has lived his entire life in the Ecuadorian Amazon surrounded by Chevron waste pits, who lost his parents to cancer caused by Chevron contamination, does not need Watson to tell him what it's "really like" in Ecuador. Yet Watson dismissed his testimony and offered Servio nothing but his "pity" for being "used by US trial lawyers."

Likewise, Dr. Henry Clark of Richmond, CA, whose 15,000 neighbors were sent to the hospital last August after Chevron's refinery blew up into a fire, or Laura Livoti, representing JINN and the Nigerians who suffer from never-ending flaring and a rig fire that burned for six weeks in 2012, do not need Watson to tell THEM their reality. They are living it. Watson told Ms. Livoti that she should consult with some of his executives, who have a greater understanding of what goes on in Nigeria. The grim reality is that due in great part to environmental conditions caused by Chevron's operations, the Nigerians in the area only have a 41-year life expectancy. With that dire statistic, it's conceivable that Chevron execs COULD be there on the ground for longer.

To the community of Richmond, long suffering from Chevron's toxic refinery and its poor safety record (now under criminal investigation, Watson's message was that his refinery actually has a better safety record than others in California. Funny, not a single other refinery in California BLEW UP last year!

Amazon Watch founder and Executive Director Atossa Soltani stood to remind Watson, the board and the other shareholders that she was there BEFORE Chevron bought Texaco with over 800 pages of evidence that Texaco was an enormous liability for what it had done in Ecuador. Watson's "bubble" appeared to weaken as he became visibly disturbed when Ms. Soltani reminded everyone that he himself was head of mergers and acquisitions at the time. What was then estimated to be a minor nuisance by lawyers and investment bankers anxious to close the merger deal for their exorbitant fees has since ballooned into a $19 billion judgment that rises every year with interest. Chevron is already spending an estimated $400 million per year just in legal fees, dwarfing the $40 million it claims it spent on its sham clean-up in Ecuador. Unwilling to even reply to Ms. Soltani, Watson turned on a completely unrelated video clip and then had her removed from the room by four security guards when she attempted to respond. The Watson World bubble remained intact, but only to Watson and the true believers (read: personally conflicted managers) he appears surrounded by on his executive team.

Facts vs Fiction: On WatsonWorld up is down

Real World: Texaco (now Chevron) builds and operates a system designed to pollute and then dumps 16 billion gallons of toxic foundation waters into the rainforest over decades causing a wave of cancers and other deadly illnesses.

In WatsonWorld: the local water shows ZERO signs of toxicity and is totally safe to drink, even though Chevron's own lawyers luxuriated with bottled water imported from Quito during the eight-year trial in the jungle. Furthermore, anyone who complains about it and pushes for a clean-up is a "global conspirator" out to extort billions from good global citizen Chevron.

Real World: Socially responsible investment firms collaborate with human rights and environmental organizations to challenge a company's false assertions and work with shareholders with billions of dollars of assets in Chevron to create reform from within.

In WatsonWorld: every single person involved should be forced to turn over every private communication they've ever made about Chevron because if they are critical they must therefore be part of a massive global conspiracy to defraud the company.

Real World: An offshore rig burns for six weeks off the coast of Nigeria, killing workers, destroying fishing, and sickening communities.

In WatsonWorld: That's called, "no damage to the community."

Real World: Chevron spills over 100,000 gallons of crude oil off the coast of Brazil, resulting in hundreds of millions in fines and billions of dollars of potential liability.

In WatsonWorld: There's no need for greater oversight of Chevron's offshore work because Chevron is "committed to safe operations."

Back to Earth

Outside, hundreds of protesters representing dozens of environmental and human rights organizations, and communities who live in the harsh REAL world of Chevron's operations, reminded Watson and Chevron that no amount of misdirection and factual distortion is going to make them go away. They continue to call for his firing and for true accountability and they pledge to stand up to Chevron until justice is achieved.

Perhaps sweetest of all is the fact that Watson will be forced to testify soon under oath about the Ecuador disaster in a case brought by Chevron itself that is rapidly threatening to bite the company on its own backside. Without his protective WatsonWorld bubble, he's likely to find that in the real world there are penalties for lying about Chevron's actions and misdeeds.

– Paul Paz y Miño

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Tuesday, June 4, 2013

Federal Judge Asked To Stay Case Over $19 Billion Ecuador Judgment

A New York federal judge long accused of bias against Ecuadorian rainforest residents over a $19B pollution case is continuing to allow Chevron to “systematically harass” two victims of its toxic pollution and their long-time New York lawyer, according to new motions filed in recent days.

The lawyer, Steven R. Donziger, asked Judge Lewis A. Kaplan to grant a three-month stay to prevent the case from degenerating into a “mockery” where unrepresented defendants are fighting hundreds of Chevron lawyers and are barred by the court from mounting a basic defense using evidence of Chevron’s pollution and corrupt acts in Ecuador. The motion is available here.

“This is an extraordinary situation where the evidence suggests that a federal judge is allowing a major oil company to crush its critics by denying them a defense and overwhelming them with abusive legal tactics to drive up their costs, making it virtually impossible for them to obtain counsel,” said Donziger.

“Judge Kaplan is now allowing Chevron to pursue litigation over litigation over litigation,” said Donziger. “It’s unprecedented and offensive.”

In the motion seeking the stay, Donziger outlined for Judge Kaplan how he is now litigating alone (pro se) against at least 114 lawyers from Chevron’s lead outside firm in a case with millions of pages of discovery documents, a privilege log that is 15,000 pages long, and close to 1,200 docket entries. Chevron also disclosed that it has well over 100 private investigators working on the case, some of who have conducted secret surveillance of the plaintiffs and their lawyers to intimidate them, said Donziger.

Despite the request for a stay, Judge Kaplan is allowing 14 depositions in three weeks, with the first starting tomorrow and the last – of Chevron’s CEO, John Watson – scheduled for June 27. Kaplan also is allowing Chevron to depose Donziger for another two days on top of the 16 days he already testified in 2010 and 2011.

“This compressed schedule is a per se violation of my due process rights,” said Donziger. “There is simply not enough time to adequately prepare to take depositions, to defend myself in my own deposition, review millions of pages of discovery, and also search for substitute counsel,” he said.

Chevron previously identified roughly 2,000 legal personnel and 60 law firms who have worked on the case. An affidavit from a former FBI agent describing some of the surveillance of Donziger can be found here. Kaplan is also allowing Chevron to hide the identities of three Ecuadorian witnesses against the Ecuadorians and Donziger, a blatant violation of their due process rights that a prior lawyer likened to tactics used by courts in the Spanish Inquisition.

In his papers, Donziger said that he has never tried a federal case and that he needed time to procure a new lawyer in the face of a “concerted effort” by Chevron to interfere with his right to counsel.

He disclosed evidence that Chevron has now filed civil suits against four different law firms and one funder who have supported the Ecuadorians, falsely claiming they are part of a “conspiracy” to extort money. Donziger also took aim at Randy Mastro, Chevron’s lead lawyer from Gibson Dunn, for making false public statements to the media about the case to “scare off” supporters. (For background on how Mastro and Gibson Dunn have committed ethical violations behalf of Chevron, see here.)

Donziger’s former counsel, famed San Francisco-based trial lawyer John Keker, withdrew from the case two weeks ago because Donziger could not pay his fees. On his way out, Keker took the unusual step of publicly criticizing Judge Kaplan for letting the case degenerate into a “Dickensian farce” due to Chevron’s abusive litigation tactics.

“Through scorched earth litigation, executed by its army of hundreds of lawyers, Chevron is using its limitless resources to crush defendants and win this case though might rather than merit,” Keker said in his motion to withdraw. “Encouraged by this court’s implacable hostility toward Donziger, Chevron will file any motion, however meritless, in the hope that the Court will use it to hurt Donziger.”

Keker also said his firm “would be proud” to represent Donziger at trial if it could get the resources. “We are confident that were we to do so, we would prevail,” Keker said.

Donziger also called on Judge Kaplan to allow him and the Ecuadorians sufficient latitude to develop a defense via questioning of key Chevron witnesses, including CEO Watson, Deputy General Counsel Edward Scott, and Rhonda Zyglocki, who used to head Chevron’s lobbying and governmental affairs division. All are scheduled to be deposed this month.

Judge Kaplan also appointed – over the objection of Donziger – his former law partner, Max Gitter, as a Special Master to make rulings during depositions. Gitter, who has a history of bias against the Ecuadorians and Donziger, works at a large corporate law firm in New York City and bills at his standard hourly rates, which include $630 per hour for an associate to assist him.

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