Attorney John Keker’s Blistering Critique of Judge Lewis A. Kaplan

In case you missed it, prominent California Attorney John Keker has unleashed a fusillade of criticism at New York Judge Lewis A. Kaplan for trying to help Chevron conduct a “show trial” as part of its campaign to evade payment of a $19 billion judgment for polluting the rainforest in the South American nation.

An Ecuador court found Chevron guilty in 2011 of deliberately dumping billions of gallons of toxic waste into the rainforest from 1964 to 1992, when it operated under the Texaco brand.  Evidence demonstrates Chevron’s dumping decimated indigenous groups and caused an outbreak of cancer and other oil-related diseases which persist to this day. A summary of the evidence can be viewed here; a video about the case can be viewed here.

Keker, who represents a New York attorney who is the main target of Chevron’s retaliation campaign, already told a federal appellate court that he felt “like a goat tethered to a stake” in Kaplan’s courtroom.  After hearing that comment, the appellate court unanimously overturned Kaplan’s illegal 2011 injunction that purported to block the affected rainforest communities from enforcing their winning judgment against Chevron assets in other countries.

To retaliate against the indigenous communities who won the Ecuador judgment – handed down in the Ecuador court where Chevron fought to have the trial held – the oil giant in 2011 sued New York attorney Steven Donziger and some of his Ecuadorians colleagues before Judge Kaplan.

Keker represents Donziger in the case, but is now seeking to withdraw due to Kaplan’s “implacable hostility” toward Donziger and the Ecuadorians. Donziger also has been unable to keep up with Keker’s fees.

Some highlights from Keker’s motion:

• Kaker asserted that Judge Kaplan has let Chevron’s New York case “degenerate into a Dickensian farce” where “Chevron is using its limitless resources to crush defendants and win this case through might rather than merit.”
• Another excerpt:  “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.”
• Judge Kaplan forced Donziger to sit for an unheard-of 16 days of deposition testimony and allowed Chevron to serve him 1,228 requests for admissions prior to trial.  He recently ordered Donziger to sit for a further three days of depositions, when the federal rules normally allow only one day.
• Judge Kaplan forced Keker to spend “hundreds of thousands of dollars” of attorney time to respond to Chevron’s Motion for Summary Judgment which was filed before discovery in the case was taken -- a highly unusual step designed to exhaust the resources of the Ecuadorians.  Kaplan then denied the motion, but said Chevron could renew it after the close of discovery, which is what Keker had “begged” the court to do at the outset.

For further evidence of Kaplan’s bias, read these extraordinary petitions to get Kaplan off the case filed by the Patton Boggs law firm. They can be seen here and here. The latter petition is now pending before the Second Circuit Court of Appeals, so stay tuned.

For more information about the Keker motion and a similar one filed by the Smyser Kaplan & Veselka law firm in Houston, see this press release from the Ecuadorian communities and this release put out by Donziger’s law firm.

It is well-known that Judge Kaplan takes a dim view of the intelligence of the Ecuadorian people.  The good judge also has mocked Ecuador’s judiciary from the bench, causing a firestorm of international criticism.

The Ecuadorian citizen Pablo Fajardo, the lead lawyer on the case on behalf of the rainforest communities and the winner of the Goldman Environmental Award, has called Judge Kaplan “arrogant, racist, and xenophobic”. See this press release for more detail about Kaplan’s insulting comments directed to Ecuador from the bench.


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U.S. Judge Kaplan "Open To Fair Criticism" For Driving Up Ecuadorians' Court Costs, Legal Blogger Writes

Lawyer blogger Ted Folkman of the law firm Murphy & King had three interesting observations in his latest blog about the motion by Steven Donziger's lawyer and the Ecuadorians' lawyers to withdraw from their defense in Chevron's U.S. effort to block enforcement of the $19 billion Ecuador judgment against the oil giant for massive oil contamination.

They withdrew because they believe U.S. Judge Lewis Kaplan is conducting a "show trial" that has turned into a "Dickensian farce," and their clients can no longer afford them, given the rising cost of the litigation. For example, Kaplan recently appointed two of his friends as magistrate judges to oversee over 40 depositions in May. The judges' fees have to be split between the Ecuadorians/Donziger and Chevron. Total cost for the upcoming October trial could easily reach tens of millions of dollars.

Folkman wrote:

1. Kaplan is "open to fair criticism" of his willingness to allow Chevron to drive up legal costs intentionally and, in effect, make it impossible for the impoverished people of Ecuador and their lawyer to afford to pay their lawyers and for their defense.
2. Kaplan may not allow the lawyers to withdraw. This would further strain their resources and possibly require the Ecuadorians to "sell" even more equity in their judgment in order to raise money from litigation funders -- money that should be used to pay for cleanup of the toxic mess Chevron left in Ecuador and for efforts to provide clean water and health care facilities NOT for lawyers. Note that the only reason the Ecuadorians ever brought in litigation funders was to defend themselves in Kaplan's court.
3. Donziger could be, according to Folkman, "no worse off" without attorneys, given that it is obvious only to the most obtuse that Kaplan will rule against the Ecuadorians and Donziger. Perhaps, he muses, Donziger planned it that way. Folkman doesn't say it, but holding down legal fees during the show trial will save resources for when the real action will take place in an inevitable appeal to the Second Circuit Court of Appeals, which reversed Kaplan on an earlier ruling. Folkman concludes: "Do I have any reason to believe that this is so? Not really. But it would be a fitting next twist in this most twisty of cases."

Full blog is here.

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Statement by Steven R. Donziger Regarding Withdrawal of Counsel from Ecuador Case

Want to understand how Judge Lewis A. Kaplan is still trying to engineer a result in favor of Chevron in the Ecuador case from his New York courtroom? Read this press release here and read the statement from Steven R. Donziger below.

"The historic judgment won by Ecuadorian rainforest communities against Chevron is not about me -- nor is it about the United States.  As Chevron itself recognized two decades ago when it demanded that the trial be heard in Ecuador, the litigation is about contamination in Ecuador, the suffering of the indigenous and farmer communities in Ecuador, and it is now about a judgment rendered against Chevron in Ecuador that has been affirmed on appeal in Ecuador.

Chevron has now openly adopted a strategy of retaliation, suing me and the other lawyers for the Ecuadorians in the United States.  Chevron has harassed us, spied on us, and pressured us so that, in the words of Chevron CEO John Watson, the lawyers "give up."  This strategy has nothing to do with justice or merit.  It is the strategic, cynical use of overwhelming resources to try to crush the opposition.  With precious few exceptions, many in the United States have quietly nodded their heads at this approach, ignoring its moral bankruptcy and the fundamental threat it poses to the rights of all citizens in our democracy who try to hold powerful corporations accountable for their abuses.

The rest of the world, however, will see the moral bankruptcy and cynicism of Chevron’s approach for what it is. Lawsuits targeting billions of dollars in Chevron assets are proceeding around the world and will continue until the full amount of the Ecuador judgment is satisfied. Nothing that happens in Judge Lewis A. Kaplan’s New York court can stop this process. While litigating an eight-year trial in the face of Chevron’s constant efforts to sabotage the proceedings was not easy, the process in Ecuador was fundamentally fair and the Ecuadorian judgment is firmly grounded in multiple corroborating layers of scientific evidence pointing to Chevron's liability. These indisputable facts will drive the enforcement process to conclusion. Chevron's lawsuit against me in New York is a sideshow designed by the oil company to sap the limited resources of the rainforest communities and slow their march to justice.

It is in this context that I admit that Chevron's strategy of resource exhaustion has succeeded in the short-term to the point that I can no longer afford to pay my lawyers at Keker & Van Nest to represent me in the New York proceeding. I thank those at Keker & Van Nest who have fought valiantly to give me a voice in a courtroom run by a judge who regularly maligns me from the bench, has refused to recuse himself, and has not just encouraged but has co-engineered Chevron's strategy to exhaust our limited resources through pointless motion practice, one-sided decisions, and massive discovery obligations.

As my lawyer told the Court of Appeals for the Second Circuit, what Chevron has sought and received in the district court is a show trial, with my role that of a goat tethered to a stake. Although we had no trouble convincing the Second Circuit to vacate the portion of this farce that was then on review, I simply cannot afford the legal costs of doing the same with the remainder of the case. As such, I will now proceed pro se against Chevron with the option of trying to re-hire my lawyers should circumstances change.

In the interests of fundamental fairness, I reiterate my call for Judge Lewis A. Kaplan to step aside and allow this case to be re-assigned to a judge who takes seriously the obligation of courts to be fair and impartial.

I also want to thank the legal team at Smyser Kaplan & Veselka who have represented my Ecuadorian colleagues in this case with great commitment, honor, and tenacity."

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Dumb Chevron Lawyer Tapes Himself Offering A Bribe In Ecuador

Chevron apparently got caught with its hand in the cookie jar again in its long-running campaign to weasel out of its $19 billion legal obligation in Ecuador.

Only this time the company tripped all over itself, producing a tape in federal court made by company lawyer Andres Rivero that can only be described as staggering in its stupidity.

This might keep the fraud division of the U.S. Department of Justice at least a little busy for the next few weeks.

The tape shows that Rivero brought a suitcase full of cash to Quito to pay off an Ecuador judge in exchange for favorable testimony. See this explosive press release here, which is also copied below in full.

We previously reported that in 2011 the oil giant offered a $1 billion bribe to Ecuador’s government to illegally quash the lawsuit. The judgment was based on overwhelming scientific evidence that Chevron deliberately dumped billions of gallons of toxic waste into the rainforest.

We now know that Chevron tried to pay $20,000 to an American journalist to spy on the plaintiffs, has conducted espionage surveillance to intimidate New York lawyer Steven Donziger, has threatened Ecuador judges with jail time, has tried to extort testimony from scientific consultants in the U.S., and has paid more than $2 million to an Ecuadorian operative to try to entrap Ecuadorian judges in a bribery scandal.

Of course, that’s on top of Chevron’s admission that it dumped 16 billion gallons of benzene-laden “water of formation” into the rivers and streams of the Amazon and then lied about the resulting financial risk to its shareholders, which prompted calls for an SEC investigation, which prompted a shareholder revolt last year against CEO John Watson which almost cost him his job.

These guys never seem to learn. Rivero and a Chevron operative named Sam Anson were outed earlier this year by an Ecuadorian newspaper for trying to intimidate and buy off judges in Ecuador. This is happening as the oil company desperately tries to beat back asset seizure actions in Canada, Brazil, and Argentina related to its refusal to pay the Ecuador judgment.

Please delight in reading about the details of this latest Chevron bribery scandal courtesy of Rivero, a Miami-based former prosecutor who, no doubt, has been paid millions by Chevron to risk his career for the company.

Andres, please let us know as soon as possible whether you think this assignment was worth it.

Here is the link to the press release on CSR Wire. A longer version follows below:

Chevron Offered Suitcase Full of Cash to Ecuador Judge In Exchange for Testimony, Documents Reveal

PRESS RELEASE/Fenton Communications
Contact: Bill Hamilton, bill@fenton.com
Phone: 202.641.0350/202.789.7755
Posted: May 1, 2013

New York, New York -- An American lawyer working for Chevron brought a suitcase full of cash to a meeting with a former Ecuador judge in an apparent attempt to bribe him for favorable testimony to help the oil giant evade its $19 billion Ecuador judgment, an explosive new court filing from the oil company reveals.

A Chevron investigator taped the meeting between Chevron lawyer Andres Rivero and Ecuador Judge Alberto Guerra, which took place in Ecuador’s capital of Quito in July of 2012. Chevron recently filed a transcript of the meeting in U.S. federal court as part of the company’s discovery obligations in a related “fraud” case brought by Chevron against the Ecuadorians.

Rivero, a former federal prosecutor, says on tape that he brought to the meeting $20,000 cash in “money that's in the suitcase” to pay Guerra for allegations that the Ecuador plaintiffs were involved in the writing of the judgment in the case. When asked by Rivero if $20,000 was enough, Guerra replied “Couldn’t we add a couple of zeroes to that?”

In an earlier court filing, Chevron admitted it ended up paying Guerra $38,000 for the information plus over $300,000 more for “protection” and “expenses” including relocation to the U.S. – or about ten times the annual salary of a judge in Ecuador and well in excess of Guerra’s $500 per month in expenses he admits to incurring.

Lawyers for the Ecuadorians called the cash offering further proof that Chevron was paying bribes in Ecuador for false testimony and said Chevron should be investigated for violations of the U.S. Foreign Corrupt Practices Act and federal witness tampering statutes. The U.S. Department of Justice previously fined Chevron after finding it violated the FCPA in Iraq.

“We’ve always known that Chevron can only bully and bribe its way to favorable testimony but now we have even more undisputed evidence of this malfeasance,” added Pablo Fajardo, lead counsel for the plaintiffs in Ecuador. “Ethical corporations don’t send their people to meetings carrying suitcases stuffed with cash.”

Worse still for Chevron, Guerra admitted in the transcript that he recently had been made sick by drinking water from a well “polluted with oil” from areas of Ecuador’s Amazon that Chevron has refused to properly remediate.

Chevron’s transcript also corroborates a recent affidavit from Ecuador Judge Nicolas Zambrano, who authored the judgment against Chevron. Judge Zambrano declared under oath that Chevron had used Guerra as a conduit to offer him a $1 million bribe to lie and testify against the rainforest communities.

In the transcript, a person identified as Chevron “Investigator #5” told Guerra “you get yours when a deal is reached with Zambrano”. The operative also admitted he offered to fly Zambrano out of the country to meet “a very high ranking person from Chevron” if he could come up with sufficiently damaging information to help undermine the judgment.

“Guerra is Chevron’s kind of witness,” said Craig Smyser of Houston, attorney for the Ecuadorians in the New York case. “The kind whose only question to the company is: how much will you pay me?”
“Chevron’s lies are coming back to haunt them,” said Fajardo. “This rogue company thinks it can bribe anyone in Ecuador to avoid paying for cleaning up our land but we will hold them accountable for the mess they left behind.”

Rivero himself has been under fire for serving as Chevron’s point person in a far-reaching espionage campaign organized by the private investigations service Kroll and exposed by a Quito-based newspaper, El Telegrafo. The El Telegrafo articles found that Chevron is using Rivero, a Kroll operative named Sam Anson, and an investigator named Yohi Ackerman "as secret agents" in Ecuador to "intimidate" former judges, government officials, and technical workers who were either involved in the eight-year Ecuador trial or are in a position to lie about the extent of oil contamination in the Amazon region.

Rivero was deposed about these and other issues last week under federal court order, but it is unclear if Chevron will make the transcript available or if the company will move to seal it from public scrutiny.

These latest revelations are not the first evidence of Chevron’s bribery attempts in Ecuador. Information surfaced in late 2011 in The Huffington Post that Chevron offered $1 billion to an Ecuadorian government official in exchange for an agreement that the environmental case would be quashed before a final judgment was reached. Sam Anson, featured in the El Telegrafo expose, was previously caught offering a $20,000 bribe to an American journalist to spy on lawyers for the plaintiffs, according to a report in The Atlantic.

“Chevron’s lies are coming back to haunt them,” claimed Javier Piaguaje, one of the Ecuadorian plaintiffs who is contesting Chevron’s fraud claims in Federal Court in New York. “This rogue company thinks it can bribe anyone in Ecuador to avoid paying for cleaning up our ancestral lands.”

“No matter how Chevron tries to spin this, law-abiding corporations simply don’t send their lawyers to meet with former judges carrying suitcases full of cash,” added Graham Erion, a US-trained corporate attorney who advises the rainforest communities in Ecuador on shareholder issues. “This transcript is just another embarrassing revelation for Chevron’s management team that is already facing the threat of strategic asset seizures in Brazil, Argentina and Canada.

“Chevron’s current management team is dragging the company’s brand through Ecuador’s oil-soaked mud, and lying about it to shareholders,” he added.


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Stratus Settlement Results From Chevron's Corporate Thuggery

Below is a post written by Karen Hinton, former U.S. spokesperson for the Ecuadorians suing Chevron for payment of a $19 billion Ecuador judgment for the massive contamination of the Amazon rainforest.

On Oil Disasters: BP Took Responsibility; Chevron Hired Lawyers To Escape Justice 

There’s nothing like watching unadulterated corporate thuggery disguised as respectable lawyering.

Take the case of how Chevron is trying to block enforcement of its $19 billion liability in Ecuador.

When I read the affidavit of my friend Douglas Beltman -- who has been one of the scientists who spoke out against Chevron’s deliberate toxic dumping in Ecuador’s Amazon – I knew his testimony about the pollution and its impact had been coerced by Chevron.

For one, his denial of the contamination was so over the top that only people who stand to benefit from it could believe it, and even they know better.

After almost four years of fighting ruthless attacks, threats and duress at the hands of some of the corporate law firms that Chevron regularly employs, Doug threw in the towel. He also put his integrity on the line by stating, in effect, he had seen no evidence of contamination in Ecuador that could be attributed to Chevron – a statement completely contrary to everything he had said in the past.

By doing so, Doug saved himself and his small Boulder consulting firm, Stratus, from bankruptcy. He saved Stratus from the crushing weight of legal bills that included not only a defense against false fraud charges leveled by Chevron, but also a counterclaim filed by Stratus to try to stop repeated libelous attacks from Chevron lawyers who urged the firm’s clients to abandon it.

Chevron has filed Doug’s affidavit as “evidence” in a legal assault against the Ecuadorians and their lawyers in a U.S. court, where the oil giant is trying to block enforcement of the Ecuador judgment. Seeking almost $60 billion in damages, Chevron agreed to drop fraud charges against Doug and Stratus in exchange for his testimony as part of a settlement agreement.

Doug is a smart, articulate, warm and friendly man who once worked for the U.S. Environmental Protection Agency. Federal agencies such as the U.S. Department of Justice and the U.S. Fish and Wildlife Service have hired Doug for his expertise and his stellar reputation. As the former U.S. spokesperson for the Ecuadorians, I spent long days with Doug and reporters in the hot and sticky Ecuadorian jungle learning about the contamination.

I spent hours with Doug in meetings and on the phone, dissecting documents and reports that detailed how Texaco, later purchased by Chevron, deliberately dumped billions of gallons of pure crude and toxic chemicals into the waterways and soil of the rainforest for one reason only -- to reduce its costs and further inflate its profits. In 2009, during a 60 Minutes segment on the contamination, Doug told the world Chevron treated the rainforest like a “trash heap.”

Today Doug says he got it all wrong. Did he? The facts about the contamination (discussed later) say otherwise.

Simply put, Doug succumbed to Chevron’s pressure campaign:

• Chevron lobbied the U.S. government to disbar Stratus from obtaining federal contracts, alleging the environmental firm had committed fraud, along with the Ecuadorians and their lawyers. September 2009 emails obtained from court discovery revealed Chevron lawyer Tim Cullen of Jones Day asked for a meeting with Department of Justice lawyers Hank Walther, Mark Mendelsohn and Charles Durros to discuss the fraud. (See emails here- scroll down to second page.) It should come as no surprise to anyone knowledgeable about how business gets done inside the Beltway that Walther is now a lawyer for Jones Day.

• Chevron lawyer Andrea Neumann of Gibson Dunn lectured Doug during a deposition, reminding him that he and his firm could be disbarred from obtaining any federal contracts.

• Chevron spent enormous sums of money to produce a slick video and documents maligning Stratus and Doug personally. The video, posted on the internet, accused Stratus of being part of a “criminal conspiracy”. The story was circulated them to federal agencies and companies that had hired or might hire Stratus. Chevron also put the video and materials on its web site and urged reporters to write about Stratus’ “criminal” behavior. As part of the settlement agreement, Chevron removed the materials from its web site.

• Chevron also lobbied the Oregon Harbor Trustee Council to fire Stratus, preventing the firm from assisting in a cleanup of a toxic site created, in part, by Chevron. The Council members refused to do so because they argued Stratus had not been found guilty of any charges. As part of the settlement with Chevron, Stratus agreed not to work on the second phase of the project.

• The most recent blow was perhaps the most devastating. Chevron intervened in a litigation between Stratus and its insurance company over payment of legal fees so it could defend itself. Chevron filed an amicus brief, detailing its alleged criminal conspiracy. A Colorado court ruled in favor of the insurance company even though no trial has been conducted to determine the validity of Chevron’s charges. See page 15 of Stratus’ counterclaims.

Stratus described the pressure campaign in its December 2012 counterclaims, four months before the settlement:

“(Chevron has) embarked on an extrajudicial campaign of malicious defamation and deliberate interference with Stratus' business to tortuously destroy Stratus (and the livelihood of its employees) and to prevent Status from being able to successfully defend itself at trial. Chevron’s scheme … consists … of widely and publicly disseminating lurid allegations against Stratus concocted from lies and inappropriate manipulation … (of) evidence; publishing defamatory written statements directly to Stratus’ clients and others, falsely and maliciously telling clients that (courts) have entered conclusive findings confirming Chevron’s allegations …; in direct and indirect communications explicitly and repeatedly requesting that Stratus’ clients fire Stratus or not engage Stratus as a technical consultant….”

No wonder Doug caved.

But, the facts in the record and on the ground reveal the true story:

• Scarring Ecuador’s rainforest are about 900 Olympic-sized, unlined oil pits full of pure crude and toxic chemicals– all of them built by Texaco only in the 1970s and 1980s. Doug told me that each pit was the equivalent of one U.S. Superfund site (a major environmental disaster) that would cost at least $20 to $40 million each to remediate. In other words, billions of dollars of costs.
  Chevron now says that 900 is an exaggeration, but we know, for a fact, that Texaco drilled 343 well sites during its three decades of oil exploration in Ecuador. We know that Texaco built an average of two to five pits for each well site. Chevron has never produced a master list of its oil pits, but the number of pits comes from a combination of on-site inspections and aerial photographs.

• Texaco published an ad in an Ecuador newspaper admitting to dumping 16 billion gallons of untreated and scalding-hot production water directly into the streams and rivers that local people use for drinking water and to bathe and cook. Production water is composed of cancer-causing chemicals, such as benzene, toluene, xylene and Polynuclear Aromatic Hydrocarbons (PAHs). It also has a saline content ten times higher than ocean water.

• Texaco conducted two internal audits in the early 1990s (see here and here) – both part of the massive quantum of evidence against the company -- describing the contamination this way:
  
  
  • “No protection of water resources”
  • “Limited environmental protection measurements taken”
  • “Produced water disposed of into the jungle river”
  • “No treatment of wastewater conducted prior to discharge”
  • “Toxic wastes not treated”
  • “No recycling of wastes or waste reduction”

• The majority of Chevron’s chemical sampling results taken during the trial show high and illegal levels of toxins in the soil. See of soil contamination samples taken from a court document filed in Ecuador.

A careful reading of Doug’s affidavit also gives him away.

For example, he says he knows of no groundwater contamination resulting from Texaco’s operations. But Doug and I also discussed that a tight budget prevented the Ecuadorians from gathering many samples of groundwater contamination except under the company’s waste pits. And, as Doug told me on more than one occasion, if the soil is contaminated the groundwater is contaminated.

Most troubling, Doug testified in Chevron’s coerced affidavit that he had seen no evidence of harm to people.

I know that must have been very difficult for him to say. He and I spoke often of the need for a comprehensive plan to deal with the health problems created by Chevron’s contamination in the region – including high rates of cancer as confirmed by independent peer-reviewed health evaluations.

Doug would often counter that in the U.S. we don’t wait for a study to tell us that oil contamination is harmful to people and the environment. We clean it up immediately, as we required BP to do after the Gulf of Mexico spill that created an estimated $60 billion liability for the company.

One difference between the BP disaster and the Chevron disaster is that the British oil company accidentally took the lives of 11 people; the American oil company intentionally used substandard drilling and exploration practices that resulted in illnesses and deaths of untold numbers and the destruction of the environment and a whole way of life for many of the indigenous groups.

The other difference is that BP took responsibility. Chevron, on the other hand, hired lawyers to engage in a pressure campaign to extort testimony and attempt a desperate effort to avoid paying the $19 billion judgment.

With seizure actions filed by the rainforest communities against Chevron assets in three countries – Canada, Brazil, and Argentina – the risk the oil giant faces only continues to grow. In the meantime, a good man named Doug Beltman bites the dust when it comes to calling out environmental injustice.

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The Ugly Truth Behind the Burford-Chevron Settlement

It is becoming increasingly clear that Chevron’s so-called “settlement” with Burford Capital, a publicly-traded litigation hedge fund that had helped to finance the historic Ecuador environmental case, is beset by serious ethical problems. Just like the Stratus “settlement” that preceded it, this latest gambit by the oil giant will not diminish in the least its growing risk from the $19 billion adverse judgment.

We already explained the vicious pressure campaign waged by Chevron to extort a settlement from Stratus Consulting, a small Colorado-based technical firm. Stratus literally faced bankruptcy due to Chevron’s efforts to drive away its clients and impose enormous legal liability after it had the temerity to work on behalf of the Ecuador communities.

The good people at Stratus caved in the face of Chevron pressure, with two of its scientists agreeing to sign highly misleading affidavits contradicting earlier sworn testimony that the oil giant caused massive toxic contamination in Ecuador. Stratus essentially chose a near-death event (signing false affidavits) over a certain death event (continuing to fight Chevron).

Chevron’s settlement with Burford, announced with great fanfare on April 15, suffers from similar credibility problems and also appears to be the product of intimidation and threats.

Given that it is a public entity backed by prominent institutional investors, Burford could not afford to embroil itself in Chevron’s threatened litigation sideshow. Chevron’s approach threatened to dry up investment money for Burford. It also raised the prospect of forcing the fund to spend millions to defend itself -- something that would be very bad for business.

To avoid this Chevron-engineered unpleasantness, Burford CEO Christopher Bogart signed an affidavit that has the odor of being designed by Chevron’s own lawyers. Bogart claims in the affidavit that he had had been “misled” by lawyers for the rainforest communities about a wholly irrelevant technical report on damages (called the Cabrera Report). The Ecuador court did not even consider this report when finding Chevron liable.

(The Ecuador court did rely on evidence in more than 100 other technical reports that contained 64,000 chemical sampling results, most showing massive and life-threatening contamination due to Chevron’s deliberate toxic dumping in Ecuador. For a summary of the overwhelming evidence against Chevron, see here)

For the Ecuadorians, Burford’s settlement changes very little.

Burford already had refused to fund the case further in 2011 after Chevron filed a racketeering case against the communities that named the hedge fund as a “non-party co-conspirator” – a wholly invented designation used by Chevron to instill fear in the heart of any person or entity that wished to help the victims of the oil company’s toxic dumping.

But what does matter are the details behind Burford’s own descent into darkness. This is where it begins to get interesting.

What Bogart does not disclose is that when Burford ceased funding the case, it was hiding a flagrant conflict of interest from the Ecuadorians as well as its own investors. In late 2010, shortly after Burford had funded the claims of the Ecuadorians, the firm agreed to bring in as a principal partner former litigation lawyer Ernest J. Getto.

Getto had previously generated enormous fees at Latham & Watkins as one of Chevron’s lead outside lawyers. He worked for Chevron on a number of high-profile cases, including a toxic tort class action involving allegations of pollution and cancer deaths among students, faculty and alumni at Beverly Hills High School. (That case involved Chevron’s use of many of the same subterfuges it employed during the Ecuador trial to undermine the proceedings. You can read about it an excellent book by Joy Horowitz, Parts Per Million.)

In effect, a lawyer extremely close to Chevron had infiltrated the key funding entity of Chevron’s litigation adversary in a high-stakes case. Burford had a contractual right to access information from the rainforest communities, including information related to their strategy. There is no evidence – and Bogart has never asserted -- that Burford built a firewall between Getto and the case. Burford also never informed the Ecuadorians about the conflict.

Obviously aware of and embarrassed by this conflict of interest, Burford took the extraordinary step of censoring from its own website any reference to Chevron as one of Getto’s “major” clients during his tenure at Latham & Watkins. But one need only go to Latham’s directory of its retired partners – which we did just the other day -- to find this extraordinary claim:

“Mr. Getto, representing Chevron, also led a Latham team that won all 12 motions for summary judgment in the highly publicized Beverly Hills High School toxic tort litigation.”

That’s what you call a real whopper.

Bogart does Chevron’s bidding by claiming in his affidavit he was “misled” about the Cabrera report, but this has scant credibility. Bogart admits he had multiple discussions about this report with counsel for the Ecuadorians. He admits he was given a detailed memo on the case by the Patton Boggs law firm that included an analysis of the issue. He also had access to thousands of court documents filed by Chevron related to its concocted “fraud” narrative.

Again, trial and appellate courts in Ecuador rejected Chevron’s arguments about the Cabrera report. The court ruled against Chevron in the underlying case, finding it liable for causing massive toxic damage to the ecosystem. The side Burford funded won. You would think Bogart would be happy.

Which brings us to the next startling detail.

Bogart also does not fully explain in his affidavit the details around Burford's sale to a third party of its interest from its $4 million investment in the Ecuador case. Yet as part of its recent “settlement” with Chevron, Burford said it would give up on any monies it might still be owed from any recovery by the rainforest communities.

That’s at least mildly misleading, don’t you think?

If Bogart really believes what he says – that the Ecuador case is a “fraud” even though courts in Ecuador have ruled otherwise – then Burford surely must disgorge the monies it made when it sold its interest to a third party. That Burford refuses to do so is all you need to know about how the company really views the Ecuador case.

Curiously, nowhere in the “settlement” does Burford say it has freely entered into its terms with no monetary compensation, which is typical language in civil litigation.

Bogart’s affidavit is designed to get rid of a major litigation and business risk for Burford. For Chevron, the affidavit provides a fleeting public relations score that it will use to try to beat back the company’s angry shareholders in the lead up to the annual meeting in late May.

In last year’s annual meeting, Chevron CEO John Watson was pummeled openly for his mishandling of the Ecuador case. This year, he faces votes on two resolutions related to Ecuador that likely will lead to further embarrassment.

But the “settlement” also creates a nagging headache for Burford which will not easily go away. As Burford aspires to be an industry leader in the nascent field of litigation finance, it will always be known as the firm that caved to pressure from an aggressive oil company hell bent on destroying the legal claims of vulnerable indigenous communities.

In his declaration, Bogart presents his motives as high-minded. He said in settling with Chevron he is trying to maintain Burford’s “highly ethical approach to its business”. In light of the undisclosed facts and conflicts of interest that Bogart omitted from his affidavit, one can reasonably question what ethical compass is guiding this man.

In the meantime, while Chevron tries to focus attention on dubious and irrelevant affidavits, an Argentine court has embargoed $2 billion in company assets that could be used to satisfy the Ecuador judgment. Similar seizure actions are proceeding against Chevron assets in Canada and Brazil.

Yet Burford's new dance partners at Chevron headquarters refuse to disclose these real and enormous risks to shareholders, prompting multiple complaints to the Securities and Exchange Commission.


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Note to Chevron: Your Trial Lawyers At Gibson Dunn Need Some Serious Help

It is becoming increasingly clear that Chevron’s high-priced legal team in the $19 billion Ecuador case lacks basic trial skills.
 
One of the most intriguing sights in the three-day hearing last week in New York on a discovery dispute related to the case was not the fact Chevron trucked in about 35 lawyers for the event.
 
It was that with 35 lawyers backing them up, the lead lawyers for Chevron --  Randy Mastro and Andrea Neumann – seemed so disorganized and out of sorts.
  
They looked like what they are: corporate lawyers representing a big oil company trying to crush its indigenous victims and their lawyers.
   
That can't be good for Chevron.
 
Judge Lewis A. Kaplan will no doubt use the hearing to further script the RICO trial in Chevron’s favor by prohibiting the use of almost all evidence that makes Chevron look bad. Judge Kaplan, who was unanimously reversed once in the case, already ruled that the extensive evidence of Chevron’s contamination in Ecuador – evidence that proves the case was decidedly not a fraud -- cannot be discussed in court.
 
Judge Kaplan is now well on the way to throwing out counterclaims from Steven Donziger (a longtime lawyer for the Ecuadorians) that outline a chilling tale of Chevron’s environmental crimes in Ecuador, fraud, lies, espionage, and cover-up. Again, Judge Kaplan apparently does not have the guts to let the truth come out.
  
But even show trials don’t always go according to plan.
   
Both Mastro and Neumann seemed to fall over themselves in court, at times infuriating Judge Kaplan.
  
Mastro repeatedly made speeches before he asked his questions, prompting Kaplan to repeatedly sustain objections. Mastro would then try to reframe his questions, but had trouble figuring out how.
 
After one of his speeches, Judge Kaplan asked Mastro: “Sir, is there a part of that treatise from which you want to ask a question?”
 
Neumann appeared as charming as the class nerd who takes notes and regurgitates them back on the next multiple choice test. She read her questions from a thick binder, imposing a form of slow torture on the court by going page by page without adjusting depending on what the witness said or how the court reacted.
 
Kaplan repeatedly asked her to stop wasting the court’s time.
 
Neumann began her examination of one witness by reading from a sworn declaration signed by the witness. But she forgot to have a copy of the document available for the witness.
 
When Neumann had to interrupt her examination to ask her 35-person legal team to find another copy, it took a mind-numbing five minutes of frantic searching until one was discovered. In the meantime, Judge Kaplan fumed.
 
When Neumann gave another document to the witness, he mentioned that it had some writing in the margins from Chevron’s own lawyers. The Chevron team then scrambled for a clean copy while about two dozen associates did nothing.
 
Judge Kaplan said: “Please Ms. Neumann, now really…  I really don’t expect to see this from lawyers of your caliber.”
 
While the Gibson Dunn army (at least 114 lawyers from the firm are on the case) tries to drown the plaintiffs in motions, only one lawyer can talk at a time in open court. That neutralizes Chevron’s huge resource advantage when Mastro and Neumann are at the helm.
  
John Keker, the lawyer for Donziger, is a former Marine known for prosecuting and convicting Oliver North in the Iran contra scandal. Nobody on Chevron’s team can come close to him in terms of intelligence, presence, and persuasiveness.
 
Judge Kaplan, not surprisingly, often tried to shut down Keker by calling him up for “sidebar” conversations that take place in whispers in front of the bench – a bizarre move indeed given that there was no jury around. It underscores just how much Kaplan plays to the gallery.
 
Judge Kaplan’s challenge is to figure out how to keep Keker from getting his client a fair trial before a jury. That would be very risky bet for Chevron under any circumstances, but particularly with this duo running the show.
 
Mastro’s bigger problem is that he has better political connections than trial skills. He served as Deputy Mayor to Rudy Guliani when the Mayor carried out a racially divisive political strategy, which Mastro helped him implement with evident gusto. His friends suggest he sees the Ecuador case as the pinnacle of his career.
 
Also of note is that Mastro’s new star hire, former New York federal prosecutor Reed Brodsky, seems to be working as a junior law clerk on the Chevron trial team. In 2011, Brodsky used his formidable trial skills to win a conviction against hedge fund titan Raj Rajaratnam and parlayed that into a lucrative job under Mastro.
 
During the hearing, Brodsky was sitting next to Mastro and Neumann so he could pass notes and whisper in their ear. He never stood up to ask a question.

Ouch.

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Harvard University Hosts Representatives of Ecuadorians With $19 Billion Judgment Against Chevron

Harvard University's Carr Center for Human Rights Policy is hosting representatives of the Ecuadorian indigenous groups who sued for and won a $19 billion judgment in Ecuador against Chevron for massive oil contamination.

They will discuss their two-decade effort to force Chevron to pay the judgment. Chevron has refused, defying the Ecuador courts even though Chevron promised to accept Ecuadorian jurisdiction when a U.S. federal judge and the 2nd Circuit Court of Appeals transferred the lawsuit to Ecuador in 2001.

The Ecuadorians are aggressively seeking to seize Chevron's assets in three countries: Brazil, Argentina and Canada. Lawsuits have been filed in the three countries, and Argentina has frozen about $2 billion of Chevron's assets already.

Andres Snaider, a consultant to the Ecuadorians, and Chris Jocknick, director of the Private Sector Department for Oxfam America, will discuss the historic lawsuit and bring guests up to date on what is happening with the litigation.

Attendance is free. A flyer can be viewed here. Below are more details.

Wednesday April 24, 2013; 4-6 pm; Carr Center Conference Room, Rubenstein 219, Harvard Kennedy School of Government

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The Truth Behind The Stratus Affidavits

Scientific Evidence Against Oil Giant Remains Overwhelming

The Stratus affidavits did not change anything for Chevron's perilous legal position in the Ecuador environmental case where it faces a $19 billion liability, as well as asset seizure actions in Canada, Brazil, and Argentina.

In a classic misdirection move designed to distract attention from its liability, Chevron last week unveiled affidavits from two scientsts from Stratus Consulting who used to work for the Amazon communities that for almost 50 years have been victimized by the company’s pollution. Chevron claimed the consultants, Douglas Beltman and Ann Maest, “disavowed” their involvement in the Ecuador litigation as well as the findings in a technical assessment known as the Cabrera Report that the Ecuador court did not even consider when finding the company liable.

These affidavits show just how limited the options for Chevron have become as it spends more and more money in an increasingly futile quest to escape accountability for its toxic dumping in the Amazon.

Chevron’s fundamental problem is that Beltman and Maest are not telling the truth about the science behind the Ecuador case.
 
As background, Chevron aimed a figurative gun at the head of Stratus, where  Beltman is a partner.  The company faced bankruptcy just by having to defend itself against Chevron’s 114-lawyer army at Gibson Dunn, which had named Stratus as a defendant in a highly questionable RICO case in New York.

Chevron had also waged a vicioius campaign to persuade clients of Stratus to fire the company based on false allegations that the company had committed "fraud" in Ecuador.  As part of the settlement it extorted, Chevron forced Beltman and Maest to abide by a gag order and agree not to work on projects involving Chevron for two decades.

The problem Beltman and Maest (and Chevron) now have is that the recent affidavits clearly contradict their earlier sworn testimony (available here and here) that concluded Chevron was responsible for massive pollution in Ecuador.  A chart of how Beltman and Maest have flagrantly changed their testimony in the face of Chevron’s threats can be found here.

Just weeks ago, in a legal filing, Stratus itself described the shakedown it was experiencing, saying Chevron has engaged in “an extrajudicial campaign of malicious defamation and deliberate interference with Stratus' business to tortuously destroy Stratus (and the livelihood of its employees).” Stratus made it clear in its court filings that it believed the Ecuador case was legitimate and based on valid scientific evidence. (See Stratus' Counterclaim against Chevron here)

Chevron is also trying to spin the affidavits to convince courts that the Amazon communities have “lost” the main source of their scientific data supporting the Ecuador judgment. Nothing could be further from the truth.  Stratus played a major role in preparing materials for one technical report that the court threw out.

Stratus had nothing to do with any of the more than 100 other expert reports submitted as evidence that were relied on to find liability.

Stratus never produced a single one of the 64,000 chemical sampling results presented by the parties to the court that documented extensive pollution at 100% of Chevron's well sites in Ecuador.  This data was produced by 23 court-appointed experts nominated by the parties that did not include Stratus.

The trial judge also pegged the majority of the remediation cleanup valuation figures to the work of Gerardo Barros, a court appointed expert who had been designated by Chevron.  Chevron’s argument that the process was “tainted” has not been accepted by any court in Ecuador, but as a practical matter the issue of what Stratus did in Ecuador with the Cabrera report is a nullity.

Apart from the prior sworn testimony of Beltman and Maest that proves the contentions of the communities, there is overwhelming scientific and testimonial evidence that documents Chevron’s environmental abuses in Ecuador, where it operated from 1964 to 1992 under the Texaco brand.
 
For example:

• Chevron’s own internal audits, produced in the early 1990s as it was winding down its operations in Ecuador, documented pollution at each one of its drilling sites.  They also found the company exercised no environmental controls in the 25 years it operated in Ecuador. (See the audits here and here)

• During the trial, Chevron’s own chemical sampling results (see this comparison chart compiled with data from the Ecuador trial) proved the claims of the plaintiffs.

• Stratus itself documented the pollution in a devastating power point presentation that concluded 100% of the Chevron well sites in Ecuador tested during the trial had levels of toxicity that violated legal norms in the U.S.

Beltman said it best in a deposition taken by the Amazon communities on Sept. 9, 2011, on a date well before the effects of Chevron’s extortion effort had fully kicked in.  Beltman testified that the way Chevron operated in Ecuador was “substandard” and that “groundwater, streams, rainforest, wells and stations” were “all contaminated” by the company’s operations.

Also on that day, again under oath, Beltman concluded that Chevron’s claims that its “remediation” in Ecuador was effective are “false” and that he believes that “exposure to carcinogens caused by Texaco operations at least contributed to the higher rates of cancer.”

If Beltman and Maest testify consistent with the recently extorted affidavits, they will look like liars.  If a jury hears the earlier testimony under oath, which is corroborated by extensive evidence at trial, Chevron will (as it should) look terrible.

The bigger picture is that what Chevron does in a New York court has virtually no significance.

Courts in other countries being asked to enforce the judgment against Chevron assets, if anything, will recoil when asked to abide by any decision coming from a clearly biasd judge trying to give the oil giant a home court advantage.  For an understanding of just how biased, read these mandamus petitions (here and here) asking for the reassignment of Judge Lewis A. Kaplan.

The Second Circuit Court of Appeals has set a date in May to consider that issue yet again, so it is unclear if the RICO trial will even get off the ground or if Chevron will blink when it comes time for a jury to hear even some of the awful facts relating to its criminal activity in Ecuador -- which includes attempted bribes of Ecuador's government to quash the case.

If anything, the New York proceeding before Judge Kaplan – like much else in this case – could easily boomerang against Chevron.  Ditto for Beltman and Maest, who now have lost all credibility in the face of Chevron's pressure campaign that threatened their ability to earn a livelihood.

Stay tuned.

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