[ From ]

In a Canadian court, Chevron is trying to block submission of a legal brief over how the company’s attempt to evade paying a $9.5 billion environmental judgment in Ecuador violates both Canadian and international law regarding the rights of indigenous peoples.

In a submission before the Ontario Court of Appeal in Toronto, Ecuadorian rainforest communities cite the United Nations Declaration on the Rights of Indigenous Peoples in support of their lawsuit to collect the Chevron debt in Canada. The judgment against Chevron was affirmed unanimously in 2013 by Ecuador’s highest court.

A hearing over Chevron’s attempt to block the new argument is scheduled for January 16 before the Ontario Court of Appeal in Toronto. If the submission is allowed, the Ecuadorians plan to use the U.N. Declaration during a critically important appellate hearing scheduled for April that will help determine whether they can seize the assets of a Chevron subsidiary in Canada to force the company to comply with the Ecuador judgment.

“Chevron’s attempt to deny the latest legal petition concerning indigenous rights from being heard is gutless and a sign of the company’s increasing desperation,” said Patricio Salazar, the lead Ecuadorian lawyer for the affected communities.

“The arguments that Chevron is trying to suppress outline in clear terms the numerous ways in which the company has violated international law by polluting indigenous ancestral lands and then deliberately obstructed legitimate efforts to seek compensation through the courts,” said Salazar.

In the legal brief, the Ecuadorian communities cite several provisions of the United Nations Declaration to support their lawsuit to seize Chevron assets in Canada. These include “the right to … prompt decisions through just and fair procedures for the resolution of conflicts” and “fair and equitable compensation” for their territories that have been damaged by oil extraction and other environmental harms.

The U.N. General Assembly approved the Declaration On The Rights of Indigenous Peoples in 2007 by the overwhelming vote of 144-4. The document since has been adopted as domestic law by both Canada and Ecuador, but it obviously did not exist for several years after the litigation against Chevron began in 1993.

Chevron, which sold its assets in Ecuador during the trial, recently had its General Counsel threaten the Ecuadorian communities with a “lifetime of litigation” if they persist in pursing their claims. The case has lasted a whopping 24 years largely because of Chevron’s forum shopping and use of at least 60 law firms and 2,000 legal personnel to file thousands of procedural motions to delay the process at almost every important juncture.

Chevron’s attempt to deny the Ecuadorians the right to file arguments based on indigenous rights – as distinct from simply filing its own legal brief to oppose it – is unusually aggressive, although not surprising given the company’s long record of trying to undermine the claims of the communities. Chevron was found guilty by three layers of courts of Ecuador of having deliberately dumped billions of gallons of toxic oil waste as a cost-saving measure, causing a spike in cancer rates and creating a public health catastrophe. Conditions are so bad that locals call the area the “Amazon Chernobyl”.

For more than two decades, Chevron has tried to block the Ecuadorian communities who live in the Amazon from pressing their claims. The latest Chevron maneuver is to assert that its assets in Canada are immune from collection because they are held by a wholly-owned subsidiary. The communities won the judgment after a hard-fought trial that lasted from 2003 to 2011 and produced 105 technical evidentiary reports relied on by the court to confirm Chevron’s responsibility for the dumping […]

The “Vengeance Phase” of Chevron’s RICO Strategy: Human Rights Supporters Must Speak Out

[ Also up on HuffPost ]

With news that Chevron is aggressively pursuing a $32 million claim against human rights attorney and activist Steven Donziger, it appears we are entering perhaps the ugliest phase of the ugliest corporate countersuit in recent memory—a “vengeance phase” that the company has long been preparing for. The claim is being made in the Chevron RICO case, the oil company’s abusive “SLAPP” lawsuit against Donziger and the victims of its own massive pollution of the Ecuadorian Amazon.

I am also part of the team battling Chevron and have written about the case before, but as quick background: in 2011, Chevron lost an exhaustive 8-year environmental litigation in Ecuador arising on its horrendous operations practices in the country in decades past, and was hit with a $9 billion clean-up liability judgment. In response, it threatened the Ecuadorian indigenous people who had sued it with a “lifetime of collateral litigation” and made good on that promise by bringing a civil RICO or “racketeering” suit against them, falsely claiming the whole environmental case was a “sham.” (You can see pictures and read descriptions of this so-called “sham” hereherehereherehere…)

But the RICO case wasn’t fundamentally against the Ecuadorian contamination victims, who, the company knew, were and are too sympathetic to carry the full weight of the attacks that Chevron needs to support its ultimate goal of simply not paying an environmental judgment that has now been unanimously affirmed by Ecuador’s Supreme Court. Instead Chevron focused its firepower on Donziger.

Why? Donziger has worked in the trenches of global social justice movements and domestic criminal justice reform his entire career, and he is on the record with some “pointed” views about the intersection of law and power politics. More importantly for Chevron strategists, Donziger was an American and had a personal style that they realized they could use to paint the entire environmental case as being led—or “masterminded, in Chevron’s attack-speak—by the “plaintiffs’ lawyer” bogeyman that decades of propaganda by the U.S. Chamber of Commerce and the Koch bothers’ network have now trained the U.S. public to resent on sight.

An internal Chevron email from 2009 neatly sums up what the author, a leading Chevron strategist, calls the company’s “long-term strategy” for the Ecuador case: “demonize Donziger.”

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Will the Supreme Court to Strike Down Chevron’s Facially Corrupt RICO Case?

[ Also up on HuffPost ]

Okay folks, the briefs are in. (And online, except Chevron’s opposition, which I’ve seen but which Chevron seems to be hiding from the internet.) Our side will still file a reply, but nonetheless it’s go time on the petition to the Supreme Court to review the shameful U.S. lower court judgments in Chevron’s unapologetically corrupt RICO attack on its Ecuadorian contamination victims and their lawyer, Steven Donziger.

The Donziger/Ecuadorian brief is here. Necessarily, its arguments are limited to the narrow legal grounds that justify the Supreme Court’s discretionary intervention at this point. (The Supreme Court receives around 8,000 petitions each year and agrees to hear on 60-80 of them, or less than 1%). Nonetheless, it sets out two strong reasons for review: (1) the disturbing implications of allowing a losing party in foreign litigation like Chevron to use the RICO statute to launch a collateral attack in its “chosen forum,” i.e. its home-country courts, and (2) of allowing a party to sue in RICO solely for “injunctive” relief. This latter argument is significant because a party can demand injunctive relief without having to present its case to a jury. In this case, Chevron dropped all its money damages claims on the eve of trial so that only Judge Kaplan (the notoriously biased district court judge who stated on the record that Chevron was “a company of considerable importance to our economy” and that the Ecuador case was the product of the “imagination” of “American lawyers”) would have the power to decide the case, not a jury.

Subsequently, a variety of scholars and civil society groups filed briefs outlining broader and yet more disturbing implications of allowing Chevron’s collateral attack to stand. For example, one group of leading organizations such as Friends of the Earth stated:

[We] regularly engage in First Amendment-protected activities similar to those that were found to be predicate acts under RICO in this case. [If the case is allowed to go forward, our] exercise of [our] First Amendment rights of free speech, association, and petitioning government will be severely chilled by the very real possibility that [we] will have to mount costly defenses to retaliatory litigation brought by deep-pocketed corporations whose conduct Amici publicly oppose.

Another group of organizations took a closer look at the deeply corrupt nature of the “evidence” that Chevron used to support its core claims in the case, such as the claim that there was a bribery agreement–a claim solely supported by the testimony of a “fact” witness, Alberto Guerra, to whom Chevron directed over $2 million in cash and benefits. (Paying fact witnesses for their testimony is illegal.) See more here, here, here, and here.

The Republic of Ecuador also filed a brief condemning the process of U.S. courts, in particular highlighting how U.S. courts repeatedly (but not surprisingly) misunderstood Ecuadorian law and procedure. In his 500-page opinion, the U.S. trial judge went on and on about how this or that was a “fraud” on the Ecuadorian court, under Ecuadorian law, that required the heroic efforts of a U.S. judge to step in and save the day. Please. Ecuador’s Supreme Court, the real expert in Ecuadorian law, considered the exact same allegations and summed up the reality of the situation:

[Chevron] never demonstrated fraud, which it has been claiming without any legal support. We reiterate that it has not proven any omission or violation of procedure that would give rise to the nullity sought. [Chevron’s] incessant harping in this regard departs from procedural good faith.

Just as important as all the briefs is the recent release of a damning new Report highlighting the corrupt foundations of Chevron’s RICO case (e.g., its reliance on Guerra despite sign after sign of his corruption and falsity), and providing detailed responses to all the various secondary smears and allegations in the demonization” campaign (Chevron’s own words) that Chevron used to drive hysteria and momentum in order to get the case over the finish line.

The report paints an ugly picture of U.S. courts embracing, tacitly adopting, or even just tolerating extreme corruption and foul play by a U.S. company in its blatantly self-serving and out-of-bounds legal attack against an historic human rights case. Why would U.S. courts do this? There are surely some long and complicated answers to this question, but also some simple ones. Consider this quote by the district judge (Lewis A. Kaplan, effectively chosen by Chevron to hear the case), stated out loud from the bench in the opening days of the RICO case:

[W]e are dealing here with a company of considerable importance to our economy that employs thousands all over the world, that supplies a group of commodities, gasoline, heating oil, other fuels and lubricants on which every one of us depends every single day. I don’t think there is anybody in this courtroom who wants to pull his car into a gas station to fill up and finds that there isn’t any gas there because these folks [the Ecuadorians] have attached it in Singapore or wherever else [as part of enforcing their judgment].

It’s just dumbfounding how biased this is–and just ridiculous. That the judge’s desire to protect Chevron could be driven to such levels of ridiculousness speaks to the depth of the bias. Or consider this quote, also from the bench in a related proceeding before the RICO case even began:

The imagination of American lawyers is just without parallel in the world. It is our one absolutely overwhelming comparative advantage against the rest of the world, apart from medicine. You know, we used to do a lot of other things. Now we cure people and we kill them with interrogatories. It’s a sad pass. But that’s where we are. And Mr. Donziger [with the Ecuador judgment] is trying to become the next big thing in fixing the balance of payments deficit. I got it from the beginning.

Boy, you couldn’t see where this case was going, could you?

Where it went was a place just as ugly as these quotes suggest–in fact, uglier, because as detailed in the amicus and in the new report, Chevron sunk to new depths by paying Guerra massive sums of money to invent a “bribery” claim, and Judge Kaplan bought it.

What we are left with is a patently disgraceful picture of a swaggering U.S. company which (1) engineered a dismissal of environmental claims to Ecuador, (2) didn’t like the result it got in Ecuador, (3) came running back to its home country courts for protection; and (4) despite a mountain of international and domestic legal principles that should have prevented it, got the U.S. courts to jump to its aid. Specifically, it got a “freestanding determination of the facts” (Chevron’s words) that is unconnected from any specific legal relief but that gives Chevron a new weapon to wave around in enforcement jurisdictions (as the Ecuadorians, as they should and must, go about enforcing their judgment in various countries around the world).

Ultimately, the RICO judgment should not stop any of these enforcement actions, because those non-U.S. courts are perfectly capable of coming to their own views on Chevron’s bogus “fraud” claims and are not going to roll over to corrupt/paid evidence the way U.S. courts did. But it will certainly give Chevron yet more delay, in a case which has already gone on for nearly 25 years while each year more and more victims die and new generations of children are poisoned

The Supreme Court has one last chance to stop Chevron’s self-serving legal circus from becoming law of the land and a stain on U.S. legal history. It has a chance to do something to help the underlying human tragedy.

The odds are overwhelmingly against review as a general matter, but we must still hope.

New OECD complaint against ING Bank for financing coal plants etc.

Fascinating new OECD complaint by four Dutch NGOs against ING Bank for its financing of new coals plants and other projects extremely adverse to global greenhouse gas emissions reduction efforts. The neat thing about the complaint it how it translates the OECD’s requirement for companies to report on their “targets for improved environmental performance” (including specifically climate change) into a demand that ING both “publish its total carbon footprint (including indirect emissions as a result of INGs loans and investments)” and “publish ambitious, concrete and measurable emission reduction targets for its loans and investments.”

The complaint reflects the larger debate in BHR re direct/indirect impacts as applied to financial companies, and highlights how bank involvement can feel simultaneously more remote from impacts (because banks are not the operational actor) and more immediate, at least with respect to mitigation. Here the demand of “targets” for improved performance seems quite close to the targeted result, i.e. adjustment of ING’s portfolio, which is entirely within its control.

ING would surely dispute this and point to the complications and difficulties involved both in withdrawing from existing contractual obligations and refraining from new undertakings (competitiveness; jurisdiction-specific energy needs). The situation seems more similar than different re the choice of a retailer in whether to purchase or not from a known problematic manufacturer, yet perhaps more different than similar to other lack-of-control claims with respect to impacts, such as references to local laws, practices of the national army or police force, etc.

Anyway, the English summary of the complaint is here and as follows:

On 8 May 2017, 4 NGOs based in The Netherlands, have sent a formal complaint against ING Bank to the (Dutch) National Contact Point OECD-Guidelines (NCP). Oxfam Novib, Greenpeace, BankTrack and Milieudefensie (Friends of the Earth Netherlands) accuse ING Bank of violating the OECD Guidelines for Multinational Enterprises regarding climate change and the environment. According to research of the Fair Finance Guide (FFGI) ING invests 8 times more in fossil industries compared with INGs loans to sustainable energy companies (US$ 24.5 billion in 5 years). ING plans to finance 4 new coal power plants in for example Indonesia and the Dominican Republic. The NGOs argue that ING is violating several articles of the OECD guidelines. For example, the OECD Guidelines ask for ‘measurable objectives’ and ‘targets for improved environmental performance’. The Guidelines also ‘encourage (…) disclosure (…) greenhouse gas emissions (…) to cover direct and indirect, current and future, corporate and product emissions.’ Although ING reports about its own, direct, greenhouse gas emissions, it does not report about its indirect, product emissions. The NGOs hope that the NCP will encourage ING to fully comply with the OECD Guidelines. Procedures at NCPs usually take 6-12 months to get finalized. In their formal complaint, the NGOs request ING to publish its total carbon footprint (including indirect emissions as a result of INGs loans and investments) and publish ambitious, concrete and measurable emission reduction targets for its loans and investments. Both in 2018 at the latest.

Can Chevron avoid paying clean-up costs by hiding behind shell companies?

[ Re-posted from The Huffington Post ]

Everybody knows that you bury a bad news story by putting it out late on Friday afternoon. If it’s really bad, you might look for a Friday afternoon that is also drowning in other news stories — like, say, the inauguration of a reality-TV star as U.S. president.

The news that came out Friday from the Superior Court of Ontario, where Ecuadorian communities are trying to enforce an Ecuadorian environmental judgment against fleeing polluter Chevron Corp., was actually a mix of good and bad. But the bad part was ugly. In the decision, Judge Glenn Hainey excused Chevron’s Canadian subsidiary (Chevron Canada) from the action, holding that it even though it is wholly-owned and controlled by Chevron (through a chain of wholly-owned, non-operational shell companies), it was not an “exigible” asset of Chevron that could be taken to satisfy Chevron’s debt to the Ecuadorians. In what is perhaps the latest flourish in the corporate personhood movement that brought us Citizens United, the court held: “Chevron Canada is not an asset of Chevron. It is a separate legal person. It is not an asset of any other person including its own parent.”

Judge Hainey essentially ruled that a multinational fleeing a valid court judgment that hides its assets in a maze of paper subsidiaries can completely insulate itself from paying its obligations, while losing nothing in terms of profit or control. While the Ecuadorian communities who have battled Chevron for 24 years can be trusted to push past this nonsense and find ways to ensure full collection of their judgment, the decision stands as a dangerous precedent for the many other corporate accountability claims that are currently underway in Canadian and other courts. It says to those claims that even if you prevail at the jurisdiction and the merits/liability stages, and even if you sustain your victory on appeal, here is yet another barrier that could prevent you from merely collecting on a successful judgment. The chill this could cast more broadly on efforts to enforce human rights norms is obvious.

The Ecuadorians are in Canada, remember, because Chevron pulled all its assets out of Ecuador when it realized it was going to lose after a robust, eight-year environmental damages proceeding. (It lost because the evidence against it was overwhelming: hundreds upon hundreds of open-air oil waste pits that, Chevron cannot deny, were built by its predecessor Texaco as the operator of a concession, and were literally designed to overflow into local waterways and drinking water sources, expressly rejecting along the way common sense environmental measures that, for a few million dollars, would have protected the lives of tens of thousands of people.) Even before the judgment against it was affirmed on appeal and by Ecuador’s Supreme Court, Chevron declared it would never pay (which by itself is illegal and contrary to the rule of law, we should not forget) and instead, with an army of literally thousands of lawyers and operatives, launched a massive demonization campaign to recast of the global public narrative about the case, framing the life-long social justice activists who led the case as a greedy and villainous fraudsters, the affected communities themselves as either “irrelevant” (as Chevron has described them) or criminally complicit, and Chevron itself as the true victim of the whole situation. Sadly, but perhaps not surprisingly, U.S. courts, and the legal media, ate it all up.

So the Ecuadorians wind up in Canada, in exercise of their fundamental right to enforce their judgment wherever they choose. (Disabusing Americans and their institutions of the deeply-held belief that a favorite son like Chevron can do no wrong is not water the Ecuadorians have any obligation to carry.) In Canada, the Ecuadorians are not arguing liability—that was already decided in Ecuador. They are simply seeking enforcement against Chevron’s assets in the jurisdiction, namely Chevron Canada. The issue in this context is not the more well-known doctrine of “piercing the corporate veil.” The issue is simply debt collection. Canada has a statute designed to speed the execution of final money judgments, which broadly allows the court “to seize and sell any equitable or other right, property, interest or equity of redemption in or in respect of any goods, chattels, or personal property.” The Supreme Court of Canada has been clear that the law must be interpreted broadly to empower the courts to “facilitate the collection of a debt within the jurisdiction”; the law “calls for assistance, not barriers.” The Supreme Court—in this very case, which already took a trip up there on appeal on almost the same issue—held that a legitimate and “core” aspect of the communities’ case “is for the enforcement of Chevron’s obligation to pay the foreign judgment using the shares and assets of Chevron Canada to satisfy its parent corporation’s debt obligation.” None of the requirements of the corporate veil-piercing doctrine (exercise of dominion and control, abuse such as undercapitalization) are even relevant; the question of what the corporate subsidiary did or didn’t do doesn’t even get asked. The subsidiary is simply an asset of the parent, held (or beneficially owned) by the parent and thus available to satisfy a debt owed by that parent.

There isn’t much wiggle-room here, but somehow Judge Hainey avoids what should have been an easy decision in the Ecuadorians’ favor. How exactly he does this is a bit confusing. While he makes the extraordinary claim quoted above, suggesting that subsidiary corporations are not assets even of their direct corporate parents, he never returns to this notion. Ultimately, he appears to rely on the chain of wholly-owned shell companies in various jurisdictions around the world that technically lie between Chevron and Chevron Canada. These are truly paper-only shells without employees, offices, operations, or any other substance; as memorably described by Chevron’s expert witness on its own operations, Chevron’s subsidiary structure “varies literally on a daily basis. . . . we create and dissolve companies constantly.” The law looks past such pass-through forms to the real “beneficial owner” of assets all the time, in countless contexts. And Chevron doesn’t deny that it is the exclusive “beneficial owner” of 100% of Chevron Canada.

Hainey throws up a lot of smoke to avoid saying outright that he is embracing Chevron’s use of these unapologetically substance-less shells as a defense to beneficial ownership. He cites a Canadian case for the proposition that a corporation’s “shares confer no right to its underlying assets”—but this is beside the point, because the communities were seeking the shares themselves as the property. It repeats many times that “the Execution Act, which is a procedural statute, does not create any rights in property” and “does not give Chevron any interest, beneficial or otherwise, in the shares or assets of Chevron Canada.” But no statute need give Chevron anything—it already owns (beneficially) the shares; the procedure provided by the Act is all that is needed. Hainey then cites three cases that he claims made findings similar to his: two are completely inapposite, involving either a normal veil-piercing analysis or involving substantive, non-shell companies; the third appears to be an outlier, in which the court in its discretion declined to seize certain subsidiary company accounts, but certainly never laid down any rule saying courts could not do so.

The court weakly tries to distinguish the multiple cases cited by the communities where Canadian courts have looked past shell-company formalities to beneficial ownership, finding irrelevant differences or dismissing them based on circular or conclusory reasoning. For example, one case was accurately described by the court as “involv[ing] the enforcement of a recognition order against bank accounts and real property [which was not just held by a shell company, but by an operating charitable foundation] that were determined by the court to be beneficially owned by the judgment-debtor.” But Judge Hainey’s response, in its entirety, is that the case “does not support the plaintiffs’ position that the Execution Act creates substantive property rights.” As just noted, that’s not the plaintiffs’ position. Hainey studiously ignores the fact that the case is directly on-point with respect to beneficial ownership (indeed makes its beneficial ownership finding with citation to the Execution Act). Hainey claims another case is distinguishable because the debtor in that case “had a legally recognized residual interest in the shares,” whereas “Chevron has no legally recognized interest in Chevron Canada’s assets.” This either misleadingly focuses on Chevron Canada assets as opposed to Chevron Canada itself, as already discussed, or is once again conclusory, simply ignoring Chevron’s clear beneficial ownership interest in Chevron Canada itself.

It’s a lot of effort to get to a bizarre, unfair, and dangerous result. If companies can completely insulate themselves from having to pay their debts simply by holding assets in meaningless shell companies, then, in the era of Mossack Fonseca, we might as well drop the idea of debt collection entirely, at least for strategically organized multinational corporations. Remember, we are not talking about arguably difficult and policy-laden questions regarding the responsibility of parents for the conduct of their subsidiaries, as we are in the context of liability. Here liability is established; we are just talking about how to enforce as a practical matter what the justice system has already ordered.

And why all this Herculean effort by the court to drop Chevron Canada? This question is particularly pressing given that the court appears to recognize that it can’t toss the case entirely after the Canadian Supreme Court expressly said the case can and should proceed. So Hainey allowed the case to proceed against Chevron, the U.S. parent that doesn’t have any assets in Canada (aside from Chevron Canada, of course). As news of the decision goes around, I keep getting the question: what’s the point? Why recognize a foreign judgment if there are no assets to enforce against?

This is where the not-so-bad and even good part of the decision comes in. The Supreme Court of Canada has already answered the what’s-the-point question and has said, basically, it’s none of our business. If the communities want to recognize the judgment in Canada, that’s their right. There is a lot of wisdom in this position. First of all, the Ontario court’s obsequious embrace of Chevron’s shell-company strategy might well be overturned, in which case Chevron Canada returns to the picture as an “exigible” asset. Even if this were not to happen, there might be other discoverable assets of Chevron in Canada, and there may be opportunities available through reciprocal procedures with other countries. Moreover, recognition of the judgment by Canada could provide a critical counterweight to the shameful interference in the process by U.S. courts, which famously—and conveniently in favor of “a company of considerable importance to our economy” (in the words of the presiding district court judge)—accepted jurisdiction in a collateral “civil racketeering” or RICO lawsuit against the Ecuadorians and their lawyers, accepted paid-for “fact” testimony from Chevron, denied the defendants a jury after Chevron dropped all money damages in the case, and then went ahead anyway and declared the Ecuadorian judgment to be fraudulent.

For these reasons, the affected communities who won the judgment are actually celebrating the Ontario decision for its basic affirmance of their right to enforce their judgment in Canada, no matter how long that might take. “The bottom line is that we are now one big step closer to our goal in Canada of forcing Chevron to comply with the rule of law and be held accountable for its environmental crimes in Ecuador,” said Carlos Guaman, the leader of the Amazon Defense Coalition, the grass roots organization that brought the Ecuadorian lawsuit and is responsible for collecting on the judgment and implementing a court-ordered remediation of the pollution.

The affected communities have spent 24 years fighting through initial dismissals, forum transfers, a strenuous eight-year trial on the merits, multiple layers of appeal in Ecuador, and a multiple layers of appeal on preliminary issues in Canada. And while these 24 years have required much sacrifice, they have also seen great victories: the communities have a final $12 billion judgment, they have been celebrated by the Goldman Environmental Foundation and many others, and Chevron’s pollution has been exposed in almost every leading media outlet in the world. Indeed, the communities themselves have only grown stronger over the many years of struggle.

The communities apparently still have a road to travel to recover on their judgment in Canada, but they are getting ever closer.