Court Grants Ecuador Villagers First Big Victory Against Chevron Assets

Rainforest villagers from Ecuador scored their first significant collection victory against Chevron’s assets this week in their attempt to enforce the historic $19 billion judgment against the oil giant after it was found to have caused cancers and environmental damage to ancestral lands in the Amazon.

An Ecuador court this week issued an order for the plaintiffs to obtain approximately $200 million in Chevron assets in the South American country – a significant sum given that the oil giant tried to strip all of its assets from the country in anticipation of losing the litigation.   In a statement released in Ecuador’s capital of Quito, the villagers also reiterated their goal of collecting the entire $19.04 billion damages award by seizing Chevron assets in countries around the world.

Among the assets ordered turned over are a $96.3 million debt Ecuador’s government owes Chevron, monies in various bank accounts held in Ecuador by Chevron and its subsidiaries, and licensing fees generated by the use of Chevron trademarks in the country.  The total amount in assets could generate an estimated $200 million for the plaintiffs, who won their case in 2011 after an eight-year trial, said lawyers for the communities.

“This is a huge first step for the rainforest villagers on the road to collecting the entire $19 billion judgment,” said Pablo Fajardo, the lead lawyer for the communities. Fajardo said the assets would be used to begin to fund a clean-up of the ecological disaster left by Chevron, consistent with the mandates laid out by the Ecuador trial court.

“Indigenous people and farmers in Ecuador continue to suffer disease and death because of Chevron’s refusal to respect the rule of law in Ecuador,” said Fajardo.  “This is the first example of how Chevron is losing assets as courts force it to comply with its obligations.”

Chevron trademarks affected by the court order include Texaco, Ursa, Havoline, Doro, Geotex, Meropa, Motex, Multigear, Regal, Toro, Texathern, Thuban, and others.  All are used in Ecuador under licensing arrangements with local distributors, said Fajardo. Also ordered frozen are all bank accounts related to Chevron, Texaco, and any subsidiary in the country.

The $96 million debt stems from an international arbitration award in favor of Chevron related to numerous commercial disputes between the oil giant and Ecuador’s state-owned oil company, Petroecuador.  Those funds will have to be transferred by the government to the rainforest villagers as part of the collection effort, Fajardo said.

Chevron operated in Ecuador from 1964 to 1992 under the Texaco brand.   In February 2011, an Ecuador court found Chevron liable for deliberately dumping billions of gallons of toxic waste into the Amazon, causing an outbreak of cancer and devastating the natural habitat relied on by thousands of villagers.  Numerous independent studies have found thousands of people have died or are likely to die due to Chevron’s pollution.  See here, here, and here.

A video on the case can be seen here; a written summary of the evidence can be read here; and a 60 Minutes segment on the case can be viewed here.

Chevron has the right to oppose the order, which was issued ex parte to prevent Chevron from selling or removing its assets before they could be frozen.   If Chevron opposes the order, the trial has to either modify or ratify his original ruling.  That job is considered largely ministerial given that the judgment from the long-running lawsuit has been affirmed on appeal and Chevron refused to post a security bond preventing enforcement of the judgment, said Fajardo.

Separately, the Ecuadorian villagers in May and June filed seizure actions in Canada and Brazil targeting billions of dollars worth of Chevron assets, including refineries, offshore oil platforms, and oil production facilities.  The Canadian court, located in Ontario, has scheduled an initial hearing for late November.

The environmental trial was held in Ecuador at Chevron’s request after the company filed 14 sworn affidavits in U.S. federal court attesting to the fairness of the nation’s judicial system.

The court order, signed by Judge Wilfrido Erazo in the Sucumbios Provincial Court, continues a downward trend for Chevron in the legal case since it hired the U.S. law firm Gibson Dunn & Crutcher in 2009 to “rescue” it from the impending Ecuador liability.

In recent weeks, the U.S. Supreme Court denied its attempt to block enforcement of the judgment; several shareholders with an estimated $580 billion in assets under management urged the company to settle the case; and, a U.S. Congresswoman and other large shareholders asked the SEC to determine whether Chevron CEO John Watson and General Counsel R. Hewitt Pate are lying about the Ecuador case to investors. See here, here and here.

Chevron also has suffered a series of devastating courtroom setbacks in the U.S. over the last two years. Its own Deputy Comptroller admitted in open court that the seizure actions likely will cause "irreparable harm" to the company’s operations.

The Ecuadorian rainforest villagers plan to file additional seizure actions against Chevron in other countries in the coming weeks, said Fajardo, the recipient of the CNN “Hero” Award for his work on the case.

He added that key Chevron targets are located in countries in Latin America, Africa, and Asia.

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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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Ecuador Government Urges U.S. Judge to Release Documents That Expose Chevron Corruption

A U.S. federal magistrate judge in San Francisco is inexplicably sitting on documents that tie Chevron to attempts to corrupt the Ecuadorian judiciary to evade payment of a $19 billion liability related to the world's worst oil-related ecological disaster.  The magistrate judge, Nathanael Cousins, has provided no good reason why he has waited more than one year to make a decision about whether to release hundreds of explosive documents from Chevron and the Mason Investigative Group.  See the press release below.

U.S. Judge Sits On Documents That Tie Chevron to Corruption In Ecuador

Amazon Defense Coalition, 25 September 2012, Contact: Karen Hinton, 703-798-3109.  Karen@hintoncommunications.com

 San Francisco – A U.S. federal judge in San Francisco is inexplicably delaying the release of documents that would shed light on Chevron’s extensive misconduct in judicial proceedings in Ecuador where it recently was hit with a $19 billion judgment for dumping toxic waste into the Amazon rainforest. 

More than a year has passed since Federal Magistrate Judge Nathanael Cousins was asked by rainforest villagers in Ecuador’s rainforest to force Chevron and the Mason Investigative Group to release hundreds of pages of material related to a scheme to bribe an Ecuadorian judge and undermine the court process there, said Karen Hinton, the U.S. spokesperson for the Ecuadorians.

More recently, the Republic of Ecuador – represented by the U.S. law firm Winston & Strawn – urged Cousins to release the documents, all to no avail.  Cousins heard extensive argument on the issue more than a year ago and the documents have been on his desk for months pending decision. 

“We believe Judge Cousins is sitting on a treasure trove of documents that will shed light on Chevron’s corrupt activities in Ecuador and are highly relevant to ongoing litigation,” said Hinton.  “He should act immediately on these long-overdue requests.”

The government of Ecuador first asked for the documents in March 2011.  That August, Northern California District Judge Charles Breyer ordered Chevron and the Mason Group to produce the documents.

When Chevron and the Mason Group claimed most of the documents were privileged, Judge Cousins was ordered to review them; his ruling has been pending ever since.

   

Documents that the plaintiffs are urging Cousins to release include: 

**The contents of an IPhone from Chevron operative Diego Borja, believed to be held by Robert Mittelstaedt, a lawyer from Chevron law firm Jones Day in San Francisco.   Borja has said the information on the phone proves that Chevron “cooked evidence” during the trial and if released would allow the villagers to win the case “just like that”. See  here. 

**Emails and other materials that prove Borja was paid more than $2 million in hush money from Chevron to maintain his loyalty.   

**Materials related to Wayne Hansen, a convicted felon used by Chevron to help Borja try to bribe a judge in Ecuador.  With the help of the Mason Group, Hansen was moved from California to Peru, apparently to avoid being served with a subpoena.  See this Courthouse News article.

 **Early drafts of an “affidavit” prepared by Borja that will prove that his later affidavit submitted to the court contains false information. 

**Materials and correspondence that shows that Mittelstaedt and his partners managed the intimate details of Borja’s life after he mysteriously moved from Ecuador to the U.S., at Chevron’s expense, to evade an official investigation in his home country. Mittelstaedt, for example, took care of payments for Borja’s cell phone, plane tickets, rent, and furniture. 

Chevron hired several powerhouse law firms to try to persuade Cousins to block release of the documents.    Those firms include Arguedes, Cassman & Headley, Jones Day, and Boies Schiller. 

“Clearly Chevron is willing to spend any amount necessary to prevent or to delay the release of these documents,” said Hinton.  

The Republic of Ecuador, in a letter to Cousins sent in August, said it “is not only being denied the right to review the documents it has been seeking for over a year, but is unable to pursue necessary related discovery” for its arbitration case against Chevron.

Cousins was appointed to the federal judiciary in 2011.  Before joining the Court, he was a federal prosecutor in the antitrust division of the Department of Justice – ironically, the same division that was formerly headed by Chevron’s current General Counsel, R. Hewitt Pate. 

After an eight-year trial, Chevron in 2011 was found liable for deliberately dumping billions of gallons of toxic waste into Amazon waterways and forests to save on production costs.  Evidence before the court showed the contamination caused an outbreak of cancer and decimated indigenous groups.

Having won their judgment, the Ecuadorians have filed asset seizure actions against Chevron in Canada and Brazil to force the company to abide by the Ecuador court ruling.  The trial was held in Ecuador at Chevron’s request after originally being filed in U.S. court.

A video about Chevron’s human rights violations and fraudulent cover-up in the Ecuador can be seen here.  A written summary of the evidence used to find Chevron liable can be seen here.

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