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 .........

THE REST OF THIS SENTENCE HAS BEEN CENSORED AT CHEVRON'S REQUEST. HERE IS CHEVRON LETTER demanding information be removed.

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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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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For U.S. Judge Lewis Kaplan, The Show Trial Must Go On

For a real stinker in the federal judiciary, look no further than how New York federal judge Lewis A. Kaplan is desperately trying to protect Chevron from having to pay its $19 billion environmental liability in Ecuador.  Once again, Kaplan is trying to act as the world’s judicial police from his Manhattan courtroom.



You might remember that Kaplan shocked the legal community in 2011 when he issued an unprecedented “global injunction” that purported to bar Ecuadorian villagers from enforcing an Ecuadorian judgment obtained under Ecuadorian law in any country in the world.



A few months later, the Second Circuit Court of Appeals in New York sharply rebuked Kaplan, vacated his injunction as utterly contrary to the law, and told him in no uncertain terms that he has no business trying to dictate to judges in other countries whether they should or should not enforce a judgment from another country.



After a short pause, Kaplan apparently is now open again for Chevron’s business.



Kaplan recently issued a series of orders designed to bolster Chevron’s ailing legal positions in the case as he readies a slightly different version of the “show trial” that the Second Circuit told him he couldn’t have.  But like any show trial, a peek under the covers reveals the intellectual dishonesty and zealotry behind a process clearly designed to help Chevron evade accountability for its sordid record of toxic dumping.



While the Ecuadorians have struggled mightily for two decades to hold Chevron accountable for the discharge of more than 16billion gallons of cancer-causing oil sludge into rainforest waterways, Kaplan has openly mocked the indigenous villagers in court.  He called their case a “giant game” and asserted that their lawyers were trying to make enough money to be the “next big thing in fixing the balance of payments deficit” of the United States. 



For a summary of the shocking extent of Kaplan’s smears and attacks in the case up to the summer of 2011, read this petition.

What has happened since is even more alarming to those who care about the integrity of our judicial system, particularly in cases where giant corporations try to steamroll their way to victory not on the merits but through procedural gamesmanship and intimidation. Kaplan’s conduct is an embarrassing demonstration of how our courts can be used as a "safe harbor" by entities that want to drown the opposition in paper and “gotcha” maneuvers.  We note this is happening when judges in other countries – including Canada, Brazil, and Argentina -- are starting to preside over enforcement proceedings related to the Ecuador judgment necessitated by Chevron’s refusal to pay what it owes.



Kaplan recently quashed 24 of the 27 third-party subpoenas issued by the Ecuadorians to gather additional evidence proving that the judgment in Ecuador was based on overwhelming scientific evidence, not “fraud” as the oil giant alleges in its trumped-up counter-attacks.   Kaplan quashed these subpoenas without as much as a hearing only six days after Chevron filed a perfunctory four-page motion.  In the meantime, he has done nothing to stop Chevron from serving 102 subpoenas on almost everybody connected to the Ecuadorians -- including their own lawyers, shareholders, journalists, law students, college interns and environmentalists who have had little to do with the litigation. See here.



Kaplan recently allowed Chevron to proceed with 31 additional subpoenas against third parties all but identical to the ones issued by the Ecuadorians that he quashed.  This happened despite a New York Times columnist and report questioning whether Chevron is using Kaplan’s court to abuse the discovery process to intimidate its own shareholders into silence.  (Canadian securities lawyer Graham Erion recently issued a chilling report documenting the company’s many misleading statements about the Ecuador case, which has created a furor in the shareholder community.)



What was Kaplan’s stated reason to allow Chevron massive unfettered discovery while denying all but the most limited discovery to the Ecuadorians?  He ruled it would be “oppressive” for Chevron, the world’s third-largest oil company with annual revenues of roughly $250 billion, to have to litigate each of the subpoenas in different federal courts consistent with normal litigation practice.  Kaplan could cite no legal support for this wildly unbalanced approach.  He ignored the fact that in addition to its subpoenas, Chevron has of its own accord chosen to initiate dozens of highly burdensome lawsuits seeking discovery in at least 18 different federal courts, without doubt one of the most oppressive legal strategies ever undertaken.



Some of Kaplan's decisions of late reflect his deep-seated bias and often make a mockery of the authority of the Second Circuit Court of Appeals, New York’s highest court. Consider:



**Chevron claims it is using the civil RICO and fraud case to seek “emergency relief” to block enforcement of the Ecuador judgment in countries outside the U.S. – precisely the relief the Second Circuit ruled that Chevron was barred from seeking.  Kaplan recently issued a stunning 17-page ruling where he insisted that the fraud case allows him to make findings in the context of pre-trial motions to help Chevron block the enforcement actions overseas.

**For almost two years now, Chevron has vociferously championed the notion that the Ecuador lawsuit is nothing more than “sham litigation” from beginning to end.  Just days ago, Chevron suddenly dropped that allegation at the request of Kaplan.  Why?  Because Kaplan decided he didn’t want the Ecuadorians to take discovery from Chevron’s own scientists that would prove the company itself knew the litigation was based on scientific evidence. Kaplan then barred the Ecuadorians from presenting a defense based on Chevron’s contamination in Ecuador.


** In a move straight out of Kafka, Kaplan is forcing the Ecuadorians to mount defenses they don’t want to use just so he can rule against them and advance Chevron’s case in the process. The denial of these technical defenses (such as res judicata) will afford Kaplan the opportunity to further disparage Ecuador’s judicial system in the context of pre-trial motions, again without so much as an evidentiary hearing.  Chevron in foreign courts to try to convince judges there that the issues were already “decided”. Read this brief for details.



** Kaplan openly disobeys higher courts when it suits his objectives.  In refusing to grant a motion that the “racketeering” case be dismissed against the Ecuadorians, Kaplan chose to disregard the binding authority of the Second Circuit.  He suggested that the appellate judges were wrong to decide as they did in light of an older case from an intermediate level New York state court. He must be the only trial judge in the country who openly seeks to “overrule” the appellate court that supervises him.

**Kaplan also takes great pains to avoid appellate scrutiny of his obvious insubordination.  Since being reversed on the global injunction, Kaplan has carefully crafted his orders to try to make them immune to appeal.  Just last week, the Ecuadorians asked Kaplan to certify for appeal his denial of their motion to dismiss the case for lack of a valid legal claim.  Kaplan refused even though such an appeal could definitively end the case for the Ecuadorians (who own the judgment), leaving only small damages claims against their U.S. counsel.  Since such an appeal would potentially eliminate the raison d’etre of the entire show trial exercise, Kaplan denied it.



**Kaplan regularly suggests that he has issued “factual findings” even though: (1) he has never held so much as an evidentiary hearing; (2) he has only ruled on pre-trial motions disposed as “matters of law,” for which facts are not supposed to be weighed or determined; and (3) he has only reached his findings using procedural tricks which allow him to falsely assert that Chevron’s evidence is “uncontested”.  Of course, the Ecuadorians have vigorously disputed every aspect of Chevron’s make-believe case.  Kaplan justifies his “uncontested” claim by way of finding that the Ecuadorians have “waived” this and that defense, often using unreasonably short deadlines or other tricks.   Chevron, too, uses these so-called “uncontested findings” in foreign courts to argue the issues are settled. 



** Kaplan delights in Chevron’s vexatious litigation practices.  It is estimated that the company has spent well over $1 billion defending the case, or about 20 times more than the paltry $40 million it spent on its woefully inadequate and fraudulent remediation in Ecuador. In addition to allowing the company to issue a massive number of subpoenas, Kaplan allowed Chevron to seek 58 broad categories of documents encompassing millions of pages of material from active litigation counsel at the Patton Boggs law firm. 



Targeting law firms with broadly worded subpoenas is part of the Chevron strategy to scare away professionals from helping the victims of the company’s human rights abuses.

That’s the “service” the oil giant is spending hundreds of millions of dollars to buy from Gibson Dunn & Crutcher, which has at least 60 lawyers working on the case.  In blatant violation of the First Amendment, GDC has dispatched a legal goon squad to sue and subpoena anybody sympathetic to the Ecuadorians – including Google and Yahoo.

Kaplan also has a shameful history of denying due process to Steven Donziger, a long-time human rights lawyer for the Ecuadorians who lives in Manhattan.  Kaplan’s personal vendetta against Donziger, a fellow Harvard Law alum who has worked for almost two decades on the case, is palpable. The great judge seems to regard Donziger’s decision to forego a career in corporate law and work out of his home as some sort of personal affront.  He has called Donziger a “field general” and other nice names, and is certain to deny Donziger’s counterclaims against Chevron which document its history in Ecuador of using lies, bribery, intimidation, and espionage to sabotage the legal case.



In early 2011, Kaplan gave Donziger only eight days to hire a lawyer, read and digest Chevron’s 148-page “fraud” complaint (with 589 exhibits), and file an opposition before he declared the record “closed” and three weeks later entered his illegal injunction purporting to block enforcement of the Ecuador judgment.   Donziger filed a powerful opposition to Chevron within days and submitted it two weeks before Kaplan ruled.  Kaplan refused to consider the opposition.  Waving a magic wand like this is how Kaplan ensures inconvenient facts do not infect the script.



(See here for an earlier brief Donziger filed to successfully appeal Kaplan’s violation of his due process rights and here for a summary of the overwhelming scientific evidence relied on by the Ecuador court to find Chevron liable.)



As noted, Kaplan suffered a humiliating rebuke last year when the Second Circuit unanimously overturned his unprecedented injunction.  Kaplan’s injunction had prompted harsh criticism from international jurists and numerous U.S. scholars who concluded his bizarre notion of U.S. judicial policing would create chaos in the world’s courts and undermine our system of international law. See here and here.  In 2012, Chevron hired the dean of the U.S. Supreme Court bar, Ted Olson, to convince the U.S. Supreme Court to rescue the Kaplan proceeding. The highest court took one look at Chevron’s tale and sent Olson packing.   Its reaction is similar to that from the highest appellate court in Ecuador, which explicitly dismissed Chevron’s “fraud” claims with the note that they “go nowhere without a good dose of imagination.”


At oral argument over the illegal injunction, John Keker (who represents Donziger) asserted that Kaplan was creating a show trial where the Ecuadorian villagers and Donziger would be “tethered to a stake like a goat.”   Chevron’s lawyer, self-described “mob prosecutor” Randy Mastro, was laughed at by most of the gallery when he couldn’t answer the most basic questions about the absence of legal authority for Kaplan’s maneuver.   Mastro then got slammed by an Oregon federal judge for committing ethical violations on Chevron's behalf.



Before the Second Circuit intervened, Kaplan had scheduled an unusual court proceeding for November 2011 where he alone was going to judge whether Ecuador’s entire judicial system was up to international standards.

 (This is the same system where, by the way, Chevron has won many civil cases against Ecuador's state-owned oil company through the years)

After that plan got deep-sixed, Kaplan came up with a different way to try to do the same thing.  He decreed there would be a trial against the Ecuadorians and their counsel this October on Chevron’s “racketeering” charges.   That is, a trial about the trial that already occurred in the courts in Ecuador where Chevron wanted the entire proceeding to take place after it was shifted there on Chevron’s request from New York’s courts – the same court where Kaplan now sits.

If that gives you a headache, you are not alone.



And in case the Ecuadorians might mount a proper opposition in this short time period, Kaplan is doing just about everything in his power to squelch that possibility.  He quashes subpoenas and requires the Ecuadorians to respond to Chevron’s voluminous “summary judgment” motions that in normal cases should be brought near the end of the discovery process, not at the beginning.

A giant game indeed.

It is painfully obvious that Kaplan intends to give Chevron as many of the rulings and “findings” that it wants while the charade continues.  It is equally obvious that his rulings will be of little use to the company in foreign courts, which to this point have been more than happy to thumb their noses at a U.S. judge who appears to be a shining international example of judging gone awry.

Inside Chevron, hope springs eternal.

**



To understand more about how the rainforest communities in Ecuador have suffered at Chevron’s hands, see this photo spread and the gripping personal testimonies put together by longtime Reuters photographer Lou Dematteis and journalist Joan Kruckewitt, as published by the Huffington Post; this video prepared by the plaintiffs that explains the case; and this report from 60 Minutes where Chevron lawyer states that no court in the world should hear the claims of the Ecuadorian villagers.

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Chevron’s Latest “Defense” In Ecuador Case: Hide Assets In Subsidiaries

After a dreadful series of legal setbacks, it sure didn’t take long for Chevron to come up with a new tricked-up defense to evade the $19 billion Ecuador environmental judgment.

Like Chevron’s many other failed defenses in the Ecuador case, this one won’t wash either.

Let’s review how we got here.

The company’s first line of defense in the 1990s was we didn’t really dump billions of gallons of toxic waste into the rainforest.  That lie was put to rest by multiple courts around the world based on overwhelming scientific evidence, as confirmed by numerous independent media outlets such as 60 Minutes.

Then, Chevron tried to claim that the devastated communities in Ecuador sued the wrong party.  According to Chevron, they should have sued Texaco, the company that operated in Ecuador.  That argument was rejected out of hand by appellate courts in Ecuador and the U.S.

Then the company blamed Petroecuador, Ecuador’s state-owned oil company and Texaco’s former partner in Ecuador.  But various courts rejected that defense after evidence surfaced that Chevron’s predecessor company was the exclusive operator of the oil concession in Ecuador.

When that defense failed, Chevron tried to claim Ecuador’s government released it from any clean-up obligations.  But courts found this so-called “release” did not cover the private claims of the rainforest communities, and in any event was a product of fraud.

Left with virtually no options, Chevron then tried to coax New York federal Judge Lewis A. Kaplan to enjoin the villagers from enforcing the Ecuador judgment anywhere in the world.  This unprecedented action caused an international furor, and a U.S. appellate court quickly reversed Kaplan.

When Chevron hired the respected litigator Ted Olson to appeal that setback to the U.S. Supreme Court, the company was rejected yet again.   By this point, nobody seemed to be able to put lipstick on Chevron’s pig.

So what’s left?

Well, now Chevron claims that its 73 revenue-producing subsidiaries around the world should be off-limits to the Ecuadorian villagers as they try to collect on the $19 billion judgment.

Consider the absurdity of Chevron’s latest gambit.  The company discloses in its annual report that almost all of its revenues are generated from subsidiaries around the world which are managed by the parent company from its global headquarters in California.

So according to Chevron, if you win a lawsuit against the parent company it simply won’t pay up.  Yet at the same time, its subsidiaries are off limits because their assets are not really owned by Chevron or connected to its activities in Ecuador.   Chevron already stripped almost all of its assets from Ecuador.

The order by the Argentine court last week to freeze Chevron assets in that country – a shareholder shocker if there ever was one -- was met with an apoplectic response at the company’s headquarters. “The plaintiffs' lawyers have no legal right to embargo subsidiary assets in Argentina," huffed spokesman James Craig.

Yes they do, James.  Hiding behind subsidiaries to avoid paying liabilities is now considered an antiquated notion in the legal world.  It rarely if ever works, particularly when the judgment is out of the country where you wanted the trial held and where you promised to pay up if you lost.

There’s another reason Chevron spokesman Craig is out of sorts.

Chevron discloses that about 80% of its annual revenue comes from subsidiaries outside of the U.S. Chevron’s subsidiaries in Canada and Argentina, two countries where the affected communities have filed seizure actions, produce an annual revenue stream of $2 billion to $3 billion for the parent company.   The rainforest communities can collect the full amount of their judgment in a few years just be diverting those funds to a clean-up.

The arithmetic Chevron-style works like this: when it comes to counting $240 billion in annual revenue collected from subsidiaries around the world, Chevron is as proud as a peacock.  Every penny counts.  But when it comes to paying out its environmental liabilities, there is nothing in the piggy bank.

We now get it. Under Chevron’s twisted logic, after fighting in court for almost two decades, the Ecuadorian who are suffering from cancer and birth defects now have no place to collect their winning judgment.  This is how a large oil company convinces itself that it is entitled to impunity for its human rights crimes.

It is well-documented that Chevron’s management team, led by CEO John Watson and General Counsel R. Hewitt Pate, is mired in conflicts of interest when it comes to Ecuador. Watson gave Pate a 75% raise last year – for a total compensation of $7.8 million -- after he lost the Ecuador case.  The company has admitted under oath that it faces “irreparable harm” from the Ecuador judgment but outside court it claims the risk is no big deal.

Any court in the civilized world that hears this case will not allow Chevron to manipulate the corporate form in this fashion.  The company is acting like a Deadbeat Dad fleeing a jurisdiction to avoid a child support payment.

The day of reckoning for Chevron management is fast approaching.

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U.S. Supreme Court Squelches Chevron Appeal On Ecuador Case

The U.S. Supreme Court today rejected Chevron’s latest attempt to block global enforcement of a historic $19 billion environmental judgment from Ecuador’s courts, removing another hurdle for rainforest indigenous groups as they continue their efforts to seize billions of dollars of Chevron assets around the world.

Chevron's losing petition was prepared and signed by Ted Olson, one of the top Supreme Court litigators in the country and the former Solicitor General of the United States under the last Bush Administration.  Olson works at Gibson Dunn & Crutcher, Chevron's lead outside law firm on the Ecuador matter and itself the subject of judicial rulings that it has committed ethical violations on behalf of the oil giant.

Jim Tyrrell of Patton Boggs and John Keker of Keker & Van Nest signed papers for the Ecuadorian rainforest communities and their counsel.

The Supreme Court decision represents the latest of numerous courtroom setbacks for Chevron as the company tries to evade paying the Ecuador judgment, which was issued in early 2011 after an eight-year trial found that the oil giant deliberately dumped more than 16 billion gallons of toxic waste into the Amazon.  A three-judge appellate panel in Ecuador later affirmed the decision, criticizing Chevron harshly for threatening judges and filing frivolous motions to delay the proceedings.

Several pro-business groups who are funded in part by Chevron, including the U.S. Chamber of Commerce and National Association of Manufacturers, had weighed in on the oil giant’s behalf before the Supreme Court.

When Chevron refused to pay the Ecuador judgment, lawyers for the 30,000 affected villagers this summer hired prominent law firms to file seizure actions targeting billions of dollars of Chevron assets in Canada and Brazil.  They have promised to file more seizure actions soon in other countries, potentially creating significant operational problems for the oil giant, according to Chevron’s own court filings. See here. 

Chevron’s use of substandard operational practices in Ecuador – it operated there from 1964 to 1992 under the Texaco brand -- decimated indigenous groups and caused an outbreak of cancer that has killed or threatens to kill thousands of people, according to findings of the court.  A summary of the evidence against Chevron can be found here, a video about the case can be seen here, while a summary of the cancer deaths can be found here.

Independent journalists, such as 60 Minutes and a prominent Australian news show, also have confirmed Chevron’s extensive pollution in Ecuador.

Chevron had asked the Supreme Court to salvage an unprecedented injunction imposed in March 2011 by New York federal judge Lewis A. Kaplan purporting to bar worldwide enforcement of the Ecuador judgment.  That injunction provoked outrage in much of the legal community and was overturned unanimously in September 2011 by the Second Circuit Court of Appeals, the ruling the Supreme Court declined to review.

Over the last two years, federal courts at every level in the United States – trial courts, intermediate appellate courts, and now the Supreme Court – have now rejected Chevron’s attempts to block or undermine the Ecuador judgment.  The oil giant claims the judgment was procured by fraud, a charge the villagers and their lawyers say is a smokescreen invented by Chevron to cover-up its own criminal behavior in Ecuador as found by various courts.

“Chevron's latest loss before the Supreme Court is an example of the company's increasingly futile battle to avoid paying its legal obligations in Ecuador," said Aaron Marr Page, a lawyer for the Ecuadorians.

"Chevron is running from justice while its toxic dumping continues to create an imminent danger of death to indigenous peoples in Ecuador,” said Page.

Chevron’s losses in U.S. courts on the Ecuador case are mounting fast.

In the last two years, 18 U.S. trial courts and four appellate courts have either rejected or declined to consider Chevron’s campaign to paint the Ecuador judgment as a product of “fraud”, according to an analysis of court data by representatives of the rainforest communities.  That analysis can be read here.


Even Judge Kaplan, who has been subject to withering criticism for his biases against the Ecuadorians, further gutted Chevron’s strategy when he dismissed or stayed three of Chevron’s fraud claims and its unjust enrichment claim against the rainforest communities in a racketeering case pending against them in New York.

In its public relations materials, Chevron continually tried to claim U.S. courts have found “fraud” in the Ecuador proceedings.  In reality, three different Ecuadorian courts have heard Chevron’s allegations and rejected them, while no U.S. court has found fraud on the merits after an evidentiary hearing or trial.

In the handful of courts where judges made such a preliminary finding, it was done in the context of simple discovery proceedings and later was overturned by federal appellate courts.

A panel of federal appellate judges in Philadelphia, for example, blasted Chevron for attacking Ecuador’s courts – calling its comments “disparaging”.  Another federal judge in New Orleans accused the oil giant of using “hyperbole” and trying to make “a mountain out of a molehill.” See here.

This was the second time in the long history of the Ecuador lawsuit that the Supreme Court declined to hear a Chevron petition for review.  In 2009, the court declined to review a decision that denied Chevron’s attempt to force Ecuador’s government into a private arbitration over who should pay for the clean-up in Ecuador.

For that petition, Chevron used high-profile lawyer Paul Clement, another former U.S. Solicitor General.  Clement argued the losing side in the famous case last year over the Obama Administration’s health care law.

Just last week, the Gibson Dunn law firm was criticized for overbilling Chevron by sending 11 lawyers to a relatively minor court hearing.

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