Second Circuit Response, Part I

Second Circuit Decision in Chevron Corp. v Donziger et al.:

PART I: Rubber-Stamping Biased Findings Designed to Intimidate Foreign Courts and Protect an “Important” U.S. Company

[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, as part of their efforts to enforce their environmental judgment] have attached it in Singapore or wherever else.

—U.S. federal judge Lewis A. Kaplan, Feb. 18, 2011

The Second Circuit opinion in the Chevron Corp. v Donziger et al. case has been a disappointment for those who (try to) think that U.S. federal courts are “above the fray” of ideological politics and corporate interests. The opinion is a blatant “hatchet job” on Steven Donziger, the New York-based human rights lawyer who for the last 20 years has teamed up with Ecuadorian indigenous nationalities and Amazon farmers to press an historic environmental lawsuit against Chevron, and who Chevron considered so dangerous that in 2009 its top strategists crafted “long-term strategy” to avoid the environmental liability, a strategy that they succinctly summarized, in internal emails, in two words: “demonize Donziger.”

The central product of this strategy was a “racketeering” or RICO suit against Donziger—and against Chevron’s own Ecuadorian pollution victims—that Chevron filed in 2011 and arranged to be heard by New York Judge Lewis A. Kaplan. Judge Kaplan’s 500-page, vitriolic judgment against Donziger issued in March 2014 (“Kaplan Decision”) came as no surprise[1]; Kaplan never made much secret of his hostility toward Donziger and his protective instincts toward Chevron, as evident from the quote above and many, many more.[2] But it was hoped that the Second Circuit’s loyalty would be with its own voluminous RICO precedent, which bars Chevron’s RICO arguments for at least a dozen separate reasons.

The Second Circuit’s August 2016 opinion (“the Opinion”) shattered such hopes, and not just because it went in favor of Chevron. The tone and structure of the Opinion leaves no doubt that its mission is, following Chevron and Kaplan, one of “demonization.” Whereas a typical appellate decision may devote a few paragraphs or pages to summarizing the facts of the case, the Opinion devotes the first 70 pages to gratuitously reciting “facts” from the Kaplan Decision—a clear attempt to shock the reader to justify the radical departures from settled law that the court subsequently makes. Yet the Opinion ignores the most relevant “facts” about the Kaplan Decision: namely, that its core has all but melted away, as Chevron’s star witness, Alberto Guerra (the only witness who testified that there was a “bribe” scheme in the Ecuadorian environmental trial) not only admitted that he knowingly lied under oath during Kaplan’s RICO trial but was also completely disproven by a digital forensic analysis requested by Chevron in another proceeding. (For more details, see Annex A to this document.)

Another revealing aspect of the Opinion is the extent to which is seizes on one of Chevron’s most disingenuous tactics by claiming at various points that Donziger and the Ecuadorian defendants “did not challenge” Judge Kaplan’s factual findings. Nothing could be further from the truth. Donziger spent 65 pages of his opening appellate brief challenging Chevron’s allegations as a whole and detailing his challenges with respect to the most important of Judge Kaplan’s hundreds of false findings. The only thing Donziger did not do is ask the Second Circuit to reverse explicitly on factual grounds as opposed to legal and jurisdictional grounds. Anyone with a modicum of legal sophistication understands this as unexceptional: not only is the “standard of review” for factual challenges much stricter than for legal challenges, but a successful challenge to the law or the court’s jurisdiction potentially eliminates the case entirely, whereas a successful challenge on the facts would have sent the case back to the Judge Kaplan for more biased proceedings. Because Donziger had overwhelmingly strong legal and jurisdictional grounds to appeal, it was pointless to urge a reversal on factual grounds. For the Second Circuit—which, of course, has plenty of legal sophistication—to cast this decision as conceding the truth of Chevron’s allegations is disingenuous to the extreme.

For Chevron, the “demonize Donziger” strategy is obviously self-interested. But what interest would New York courts have in joining in the attack? Especially where the result is a series of decisions that wreaks havoc on established precedent that has long provided responsible limits on private-party use of the RICO statute? It is a difficult question. Part of the answer may be that the appellate judges were offended by highly-manipulated video outtakes disseminated by Chevron that showed Donziger expressing the view that judges are (or can be) “political actors” responsive to a range of concerns beyond legal doctrine, including their own self-interest. They might also have been impressed that Chevron put its money where its mouth was, reportedly spending in excess of a billion dollars in legal fees and other expenses on its private RICO prosecution. But most disturbingly, while the Opinion is all but impossible to square with legal precedent, it squares perfectly with a sentiment about the Ecuador litigation that a Chevron representative famously expressed to Newsweek’s Michael Isikoff in 2008: “We can’t let little countries screw around with big companies like this.” That is, the reach of the Opinion goes beyond its obvious attempt to demonize Donziger and seems to send a message to foreign courts that significant liability on U.S. companies will not be tolerated.

Yet because the goal of Chevron’s “demonize” strategy is to influence foreign courts considering enforcing the Ecuadorian judgment, the basely nationalistic character of the Second Circuit Opinion severely undermines its own usefulness for Chevron. The fact that it ignores the most important developments regarding Chevron’s allegations—the meltdown of Alberto Guerra’s “bribe” testimony—renders the Opinion even more obsolete. Indeed, a striking and telling fact is that the bulk of the Opinion’s gratuitous recitation of Kaplan’s facts not only ignores the latest regarding Guerra, but focuses on allegations of procedural impropriety in the Ecuador trial that pre-date issuance of the Ecuador trial judgment, appellate judgments, and confirmation by Ecuador’s Supreme Court. The Ecuadorian trial court and all these layers of appeal heard Chevron on each of these allegations and, as explained below, largely rejected them. Judge Kaplan (and, through its affirmance, the Second Circuit) rejected the conclusions of Ecuadorian courts as to issues of Ecuadorian law and made his own findings in favor of Chevron. This posture should and likely will be seen as outrageous by Canadian and other courts, which have already expressed their powerful inclination to defer to Ecuadorian courts and avoid “re-litigation” as much as possible.

While Chevron’s trial process allegations are likely dead-on-arrival in Canada, they nonetheless have continued to be an important part of Chevron’s PR strategy. This document thus aims to respond to these allegations notwithstanding their legal irrelevancy. The responses provided below are under section headings taken verbatim from the Opinion’s first eleven “fact” section headings. Because the allegations themselves are endless and designed to be distracting, the responses here will be necessarily brief and illustrative, providing links in most cases to more in-depth rebuttals that have already been provided in other forms: Donziger’s trial testimony, a series of briefs and annexes drafted by Winston & Strawn (legal team for the Republic of Ecuador [ROE] in a related arbitration), a detailed Law360 article, and other sources. Countless contemporaneous emails and others documents are available support each point—most of which were presented to Judge Kaplan, but, of course, ignored.

Similarly comprehensive responses will be forthcoming on other aspects of the Opinion, including:

  • The Opinion’s failure to acknowledge or address the
  • The Opinion’s radical departures from established requirements of constitutional and RICO “standing,” RICO damages, and international “comity” or respect, and its trampling of important First Amendment safeguards.
  • The Opinion’s failure to acknowledge or address an egregious list of procedural errors that made Judge Kaplan’s RICO proceeding little more than a “show trial.”

Table of Contents

[ Headings taken from the Second Circuit Opinion in Chevron v. Donziger, pp. 10-42 ]

1. “Donziger Attempts To Intimidate Chevron Into Settling by Trumpeting a Huge Remediation Cost Estimate Based Only on ‘SWAG’” 5

2. “Donziger Causes a Change to Less Probative Tests When the LAPs’ Experts Find Pollution that Likely Was Not Caused by Texaco” 5

3. “Donziger Knowingly Submits to the Court Reports that Falsify a LAPs’ Expert’s Conclusions” 6

4. “Donziger Secretly Hires Industry Experts To Offer Their Supposedly Neutral Monitoring Services to the Court, But To Disagree With Any Pro-Chevron Findings” 7

5. “Donziger, Anticipating Additional Pro-Chevron Testing Results, Coerces then-Presiding Judge Yánez To Cancel Most of the Remaining Site Inspections” 8

6. “Donziger Coerces Judge Yánez To Appoint a ‘Global’ Expert—Cabrera—Who ‘[W]ould [T]otally [P]lay [B]all [W]ith’ the LAPs” 9

7. “Donziger and the LAPs Plan the Cabrera Report and Begin To Pay Him Secretly” 10

8. “Donziger and the LAPs’ Team Control Cabrera’s ‘Work,’ While Denying Any Contact or Involvement” 10

9. “The LAPs’ Consultant, Stratus, Writes Cabrera’s Report” 12

10. “Donziger Has Stratus Fabricate Objections To Be Submitted By the LAPs to the Cabrera Report that Stratus Wrote For the LAPs” 12

11. “When ‘Crude’ Is Released and Chevron Gets Discovery Revealing the LAPs-Cabrera Collaboration, Donziger Hires New Consultants To ‘Cleanse’ the Cabrera Report” 13

 


1. “Donziger Attempts To Intimidate Chevron Into Settling by Trumpeting a Huge Remediation Cost Estimate Based Only on ‘SWAG’”

“SWAG,” as Chevron, Kaplan, and the Second Circuit gleefully reveal, stands for “Scientific Wild-Ass Guess,” and was used by one of the first field experts retained by the Ecuadorian legal team to describe a preliminary assessment he prepared of the extent of damage in the case, and that the Ecuadorian plaintiffs subsequently used in public relations work on the case. Even if this allegation were true in some sense (which it is not), consider its implication: that a party or lawyer can be privately prosecuted for “trumpeting” a favorable view of the damages in an early stage of litigation, when, typically, both sides are “trumpeting” and positioning themselves for settlement (which resolves 99% of cases). At the time, Chevron was “trumpeting” its view that there was “no” environmental harm in its former operations areas, a preposterous position it has since backed away from. To thus criminalize speech of this sort would put a severe chill on any lawyer who might think of acting in ways that powerful corporate defendants might later smear as irresponsible.

More importantly, the allegation is false as to Donziger and the Ecuador litigation. The so-called “SWAG” estimate was only thus characterized by the expert after he was terminated and his fees weren’t paid and after he unethically started offering his services to Chevron. Donziger and others had a plenty strong basis to believe (as contemporaneous documents show they did believe) that the estimate (which was always openly characterized as “preliminary”) was valid. Later, it became clear from other, more robust studies that the so-called “SWAG” estimate was, in fact, extremely low. Among other sources, Winston & Strawn team hired a team of experts to fully re-assess the evidence presented in the Ecuadorian environmental case and conduct dozens of additional field examinations to assess whether that evidence was reproduced or otherwise held up. As described at pages 80-108 of this legal brief, all the field data—including Chevron’s own data—supports both the liability and extent of damages findings of Ecuadorian courts in the case. A less technical summary of these multiple layers of scientific evidence can be found in this Huffington Post blog.

2. “Donziger Causes a Change to Less Probative Tests When the LAPs’ Experts Find Pollution that Likely Was Not Caused by Texaco”

The allegation is that Donziger directed the technical team not to use tests (for BTEX compounds) that could have produced evidence allegedly favorable to Chevron, i.e. evidence that some of the contamination was of such recent vintage that it could not have been caused by Chevron. Once again, before turning to the substance of the allegation, attention needs to be paid to the nature of the allegation itself. The Ecuador trial was an adversarial proceeding. Chevron was responsible for producing evidence favorable to its own defense. Chevron was an active defendant, fully resourced and capable of producing the allegedly favorable evidence (presence of BTEX) through its own experts. And, in fact, it did so. The idea of criminalizing one party’s decision not to adduce evidence in favor of the other party, because a (biased) reviewing court’s view that the real “truth” lay in that evidence, is absurd. If this were really the rule, it would eviscerate the concept of the adversarial process, where both sides produce advocacy-driven versions of the evidence.

In any event, the allegation completely falls apart on closer analysis. In reality, BTEX can survive in anaerobic environment for decades, so its presence inside the many oil waste pits in Ecuador that were abandoned by Chevron — which are quickly sealed with a nearly-hard cap of rubbery sludge and were often covered over with dirt — would not be surprising. BTEX is hardly conclusive; for any contaminated waste site, there are numerous pieces of evidence as to when and who caused the contamination, including documentary and live testimony and environmental site features, which all must be taken together. Moreover, testing for BTEX could cut both ways: while its existence might signal more recent contamination, its absence would indicate older contamination attributable to Chevron. The BTEX values reported by the Ecuadorian experts at the very beginning of the inspection process, before the allegedly wrongful decision to abandon the test, were below detectable levels and thus helpful to the Ecuadorians’ case. Thus the only rationale for abandoning the BTEX test at that point in time was the one candidly explained by Donziger in his testimony in the RICO case: BTEX was an expensive test, whereas testing for Total Petroleum Hydrocarbons (TPH) was both cheaper and “more useful because it was the same measurement regulated by Ecuadorian laws and most comparative international laws.” (Donziger testimony at ¶113.) The focus on TPH thus makes perfect sense. No wild conspiracy theory is required, and Kaplan’s and the Second Circuit’s leap to conclusion shows both a shocking ignorance of the science and a desperation to find fault.

3. “Donziger Knowingly Submits to the Court Reports that Falsify a LAPs’ Expert’s Conclusions”

The expert referenced here is Charles Calmbacher, anAmerican engineer who was hired by the plaintiffs’ legal team to write two of the dozens of technical reports that were used to prove the plaintiffs’ claims. Calmbacher immediately failed to perform adequately, was terminated, and subsequently sued the plaintiffs for non-payment and sent a series of irate emails to Donziger and others, making profane threats of physical violence and retaliation, for example:

Please simply pay up. Don’t start a war. Wars have no rules and people can suffer irreparable professional, psychological and physical damage as a result. You don’t want that.

Calmbacher was and is patently unstable and unreliable. In 2010, he was deposed ex parte by Chevron: no one was in the room except Calmbacher and Chevron’s team of lawyers. Predictably, he was urged to attack and did attack Donziger and the whole Ecuador trial, but his testimony is riddled with basic errors, even as to points such as when he was and wasn’t in Ecuador. He testified that he never authorized the plaintiffs in Ecuador to sign his reports for him, yet emails show him very clearly making that authorization. Knowing he would fall apart on the stand, Chevron did not produce Calmbacher for the RICO trial. Instead, the company filed Calmbacher’s ridiculously unreliable ex parte deposition transcript, which Judge Kaplan accepted as if it were given subject to cross-examination at trial. The deposition testimony is the only evidence offered in support of this allegation. As the ROE summarized, “[u]nsupported allegations by a terminated consultant with both an economic interest and a demonstrated animus toward the Plaintiffs cannot establish misconduct by the Plaintiffs, especially in light of Dr. Calmbacher’s multiple misrepresentations while under oath.” Again, the Second Circuit rubber-stamped Chevron’s bogus interpretation of Calmbacher’s testimony, completely unbothered by the weakness of the exidence and the lack of cross-examination.

4. “Donziger Secretly Hires Industry Experts To Offer Their Supposedly Neutral Monitoring Services to the Court, But To Disagree With Any Pro-Chevron Findings”

This allegation begins to speak to the utterly disingenuous nature of the attack on Donziger and the Ecuadorians for using so-called “independent” experts to advocate for the Ecuadorian side. Such use of experts is, of course, this is a fact of life in U.S. litigation—experts are paid by one party, yet they (claim to) exercise “independent” judgment in reaching their conclusions. The obvious tension here is particularly pronounced in Ecuadorian practice, where more openly partisan experts are traditionally not allowed by law; instead each side is allowed to request and then “nominate” experts that are technically beholden to the court, but who are understood to work with each side to develop the evidence or positions of the side that pays them. Some experts were generally considered to be more authentically independent than others, but there were no clear rules on this—other than the rule of practice, i.e. how both sides acted, which was to cooperate with, and expect cooperation from, requested and nominated experts.

The experts referenced in this allegation were not even formally part of the process. They were “established” by no more than the announcement by the Ecuadorian team; their intended role was indeed one of vigilance to protect the right of the communities to a fair trial and to give the Ecuadorian court, which was always in danger of being corrupted by Chevron, a sense that “the world was watching,” such that corruption attempts from Chevron would not be tolerated.

There are two striking facts about this allegedly “criminal” act of self-appointing these experts, one of which is obliquely mentioned in the Second Circuit decision, the other of which is ignored entirely. First, the Ecuadorian court declined the plaintiffs’ request that they be appointed or even recognized. Thus there is no substance to the allegation; it cannot be pretended to have affected the trial. Second, Chevron played the exact same game:

  • Consider these “announcements” (here and here) by Chevron of its own “independent international observer” to “monitor” the process, obviously paid by Chevron, yet no mention of that in the announcement. That is, Chevron did exactly the same thing as the plaintiffs, yet claims that when the plaintiffs did it, it was criminal.
  • Consider this filing by a Chevron lawyer introducing a report prepared by three experts paid by Chevron. These experts worked for Chevron for years to advocate the company’s bogus environmental positions (often despite their “serious” professional “doubts” about the assertions in Chevron’s advocacy), yet the Chevron lawyer calls the experts “independent,” and the experts repeatedly refer to themselves and their conclusions as “independent” in their report.
  • Another expert put forward by Chevron was John Connor, an American environmental consultant who, in another case, admitted to working for Chevron for 30 years and never once finding the company liable. Connor was a classic paid expert, whose role is to use the evidence to advocate for the best interpretation of the evidence for his party, yet he was repeatedly presented to the court as “independent.”

There are many more examples. And critically, the full extent of Chevron’s collaboration with its experts remains hidden, protected from disclosure by Chevron’s refusal to comply with discovery requests or its hiding of legitimately discoverable information behind abusive claims of privilege and confidentiality. In any event, the blatant hypocrisy of Chevron trying to criminalize conduct that it itself engaged in was presented to Judge Kaplan and simply ignored—in the nearly 500 pages of the Kaplan Judgment, there is no mention of Chevron’s similar practices whatsoever. Then, this head-in-the-sand approach was rubber-stamped by the Second Circuit.

It is important to note that reference to Chevron’s own practice is not an argument of “two wrongs make a right.” Rather it reveals the content of the legitimate impressions and expectations of both parties regarding the practice in the case at the time. Indeed, Chevron was always the vastly more sophisticated party, with a small army of lawyers from the country’s most elite law firms and universities at its disposal. The plaintiffs were entirely reasonable in relying on Chevron’s own conduct as a signal that the conduct was legal and not forbidden by Ecuadorian law (and indeed, Chevron has never cited specific Ecuadorian law to back up its claims of impropriety).

5. “Donziger, Anticipating Additional Pro-Chevron Testing Results, Coerces then-Presiding Judge Yánez To Cancel Most of the Remaining Site Inspections”

Again, there are many layers of rebuttal here, which were summarized by Donziger in his testimony (¶122), in the ROE briefs (pages 109-112 of this brief, pages 46-51 of this Annex, and others) and elsewhere. The plaintiffs clearly had the right to cancel the inspections they had requested on the first day of trial in 2004. The Second Circuit neglects to mention that all the inspections Chevron requested were performed. The cancellations were the equivalent of a party in U.S. litigation no calling every witness on its witness list, something that happens in virtually every trial. The plaintiffs decided they had met their burden of proof and were facing severe financial constraints (as abundantly documented in the same source relied on by Kaplan, Donziger’s memoir notes, which state at the time: “Big remaining issue: have inspections or wait and conserve resources. The money is issue is killing us. Debts at 114,000, people waiting to get paid, they have families, not a good dynamic – moral in the office seems low . . .”). The fact that the judge was even considering not accepting the cancellation was an indication of the pressure that Chevron was putting on him, as the company had realized that by forcing the plaintiffs to expend money on unnecessary inspections, they could abusively force them to run out of money. (Again, from Donziger’s notes: “The bottom line is that Chevron deeply fears that the judge will grant our motion to withdraw the rest of our inspections, thereby accelerating the case. They are constantly hounding him in his office, trying to pressure him. It’s crazy and it’s heated.”).

At the time, the plaintiffs had written a complaint to be filed against the judge based on evidence that he was acting partially towards Chevron, with the failure to let the villagers cancel the redundant inspections they had asked for being a key example. Preparation and submission of the complaint was entirely within the plaintiff’s rights and is how advocacy works. In Donziger’s memoir notes, he suggests that the judge’s awareness of the complaint was linked to the judge’s ultimate decision to “rule correctly” and to grant the request

This is hardly “coercion.” The plaintiffs had a right to file the complaint for what they perceived was a flagrantly improper decision favoring Chevron’s abusive litigation strategy. To the extent the complaint and the judge’s decision on the cancellation issue were linked, it may be that the judge recognized that the decision was unsupportable and left him vulnerable to such a complaint, and thus “rule[d] correctly.” The unfiled complaint was not secret, but discussed repeatedly on the record. The cancellation issue itself was argued back and forth by the parties for months. The fact the villagers won this rather pedestrian issue illustrates they were more persuasive than Chevron, not that they “coerced” the judge by telling him about the drafting of a perfectly legitimate complaint about his failure to comply with his duties.

Even to suggest that the Ecuadorian judge could be “coerced” in this way is condescending, if not outright racist. A U.S. judge would be presumed to be acting pursuant to his own volition in light of the facts and law; an Ecuadorian judge is presumed to so easily cowed by the prospect of a merits-based complaint against him that he is somehow “coerced” into action. Feeding these kinds of prejudices, both in court and in the media, is an explicit part of Chevron’s strategy. In 2009, its lead strategist produced a series of proposals to Chevron’s top executives advocating that the company step up its attacks on the Ecuador judgment by way of “relentless[] use of the blogosphere,” think tanks, and “elected/regulatory leaders” to push “themes” including positioning Ecuador as “the next major threat to America” and “the next Cuban missile crisis in the making,” as well as upping the demonization of Donziger to characterize him as “the most powerful man in Ecuador,” “pulling the strings of an emerging banana republic.” Judge Kaplan, of course, ate it up, calling Donziger a “field general” and a “master mind,” suggesting that enforcement of the Ecuador judgment would leave local gas stations without fuel, openly mocking the Ecuadorian judiciary in hearings and ultimately ruling as a matter of law that Ecuador’s judiciary was incapable of providing due process to litigants despite the fact that Chevron has numerous cases in Ecuadorian courts over the years, including recently. All this is so egregiously parochial and partisan that it would be comical—if it weren’t now a perspective fully endorsed by the Second Circuit.

6. “Donziger Coerces Judge Yánez To Appoint a ‘Global’ Expert—Cabrera—Who ‘[W]ould [T]otally [P]lay [B]all [W]ith’ the LAPs”

Part of the real context here is discussed above: experts, on both sides, were expected (just as in the United States) to cooperate with the parties that nominated them and paid them. The distinction indicated by the reference to a “‘global’ expert” is not significant; like other experts, “global” experts were requested and paid by a single party, the difference being that there was not an obviously corresponding expert for the other party, as there was for sit-inspection experts. (That said, the work of many global experts was designed to respond and rebut to other global experts.) Chevron requested, nominated, paid, met ex parte with, and controlled the work of plenty of its own “global” experts, who quite clearly “played ball” with Chevron in the process. Kaplan’s attempt to characterize the Cabrera process as somehow radically different than the process followed by both parties with respect to other global experts is distorted and disingenuous. In so attempting, Kaplan blithely ignores the fact that Ecuadorian courts—the courts with obvious competence on the lawfulness and propriety of Ecuadorian procedure—looked at Chevron’s allegations on this point and did not credit them. The fact that Judge Kaplan would feel so unconstrained by the pronouncements of Ecuadorian courts illustrates the profound arrogance at the heart of the U.S. court system’s embrace of Chevron’s RICO strategy.

Further, a close read of the Second Circuit decision reveals that the referenced “play ball” quote is not even used by Donziger in reference to the mentioned expert, Cabrera. Rather, he uses it in reference to another expert who was never appointed by the court.

7. “Donziger and the LAPs Plan the Cabrera Report and Begin To Pay Him Secretly”

Again, Judge Kaplan’s findings completely distort the reality of Ecuadorian legal practice. In light of the established practice, the plaintiffs of course worked with Cabrera. Kaplan and the Second Circuit also lean on the fact that Cabrera was paid by the plaintiffs as suggestive of wrongdoing; Kaplan even found it to be a violation of U.S. law. But the plaintiffs were required by the Ecuadorian court to pay Cabrera. The issue of a “secret” payment is totally manufactured: during one of the periods when Chevron had paralyzed the Ecuador court with complaints against the judge, Cabrera needed funds to continue work (and not lay off staff who potentially could not be re-hired), so the plaintiffs paid him directly rather than submitting the payment through the court clerk’s office. What Kaplan and the Second Circuit ignore is that at the time there was no requirement that experts be paid through the court process, and that while the parties did so for some experts, it appears both parties did not for other experts. There is certainly nothing improper, much less criminal, in a party to a litigation in Ecuador paying an expert they were required to pay.

8. “Donziger and the LAPs’ Team Control Cabrera’s ‘Work,’ While Denying Any Contact or Involvement”

For the most part, this allegation (and the ones immediately below) can best be understood by the context described above: the Cabrera work was requested by the plaintiffs, the expert was paid by the plaintiffs, and the plaintiffs understood they had a right and a responsibility under Ecuadorian law and practice to be involved in the preparation and submission of the work. Indeed, Donziger noted in his sworn testimony, Chevron’s primary paid expert in the Ecuador litigation, the American John Connor (described above), was proposed by the company to do the same work as Cabrera, reflecting Chevron’s own understanding of the nature of the appointment. Donziger also testified that although the plaintiffs worked extensively behind the scenes with Cabrera, the plan and practice was to prepare work within parameters he had indicated were acceptable and ultimately leave Cabrera with a veto power over the final work product, thus rendering the final work a product of Cabrera’s exercise of his independent judgment. The fact that much of his report was drafted by the highly reputable American-based firm Stratus Consulting, which worked closely with Cabrera, fundamentally speaks to the scientific credibility to the report.

At the same time, the Ecuadorian plaintiffs have long acknowledged that by fully indulging in the allowable practice of working with experts while publicly noting their independence, other observers of the case not familiar with the idiosyncrasies of Ecuadorian practice could have been misled. Certainly Chevron was never misled. Nor, it seems, was the Ecuador trial court, which considered Chevron’s arguments on the Cabrera issue and stated:

[A] review of the case file shows that there have been no defects in the appointment of expert Cabrera, or in the delivery of his report. There are no legal grounds whatsoever for quashing either his appointment or his expert report. It should be stressed that this issue has been resolved on several prior occasions, and no new evidence has been submitted that would suggest the existence of any grounds for quashing that appointment or expert opinion.

At the same time, the Ecuador court may have recognized that the practice of allowing such cooperation with independent experts, while lawful at the time it was engaged in, did not necessarily reflect international best practice, or even Ecuadorian law at the time the judgment issued, since the rules had been amended and significantly tightened in mid-2009. In its submissions to the trial court, Chevron’s overblown allegations of impropriety regarding the Cabrera process were also an obvious preview of the sort of arguments it would use on appeal, and in resistance to enforcement of the judgment in foreign court systems that would not be familiar with practice in Ecuador and in civil law systems generally. (Experts are treated the same way in Brazil, Argentina, and throughout the court systems of Latin America.) Accordingly, the Ecuador trial court struck the Cabrera report entirely to “safeguard[] the integrity of the proceeding and the administration of justice,” and later emphasized that “the report had NO bearing on the decision.” The trial court observed there was plenty of other evidence in the record to justify its imposition of liability on Chevron and its of specific damages figures (for which it often turned to Chevron’s own experts).

In other words, the court took appropriate steps to address any perceived injustice related to Cabrera in order to “safeguard” the investment of party and judicial resources in eight years of expensive litigation. The approach was recognized as appropriate on appeal and by Ecuador’s Supreme Court, which confirmed that the trial judgment “did not take [Cabrera] into account” (and noted in passing that Chevron had never even “indicate[d] which law [it thought was] violated” by the Cabrera process). In no normal world would this step seem remotely unusual or problematic. But without the Cabrera issue, Chevron’s efforts to taint Donziger and the Ecuador judgment quickly run out of steam, so in addition to trying to bolster its case by paying for Alberto Guerra’s false testimony (see below), Chevron has desperately sought to keep Cabrera “in play.”. Chevron (and Kaplan) do this by simply asserting that the Ecuador trial court lied about about striking the Cabrera report; that it actually continued to rely on it. At most, Chevron pointed to parts of the trial judgment that it claimed necessarily derived from Cabrera, but each of these was shown at trial to have a basis independent of the Cabrera report. The Second Circuit, again without independent analysis, adopted, Judge Kaplan’s view that the trial court simply lied about not relying on the Cabrera report. The degree of condescension and insult to foreign judicial officers required for this move is staggering.

For courts less willing to impugn the integrity of foreign courts on the basis of no more than self-interested speculation, the Cabrera issue is not legitimately “in play.”. It was a small (and unsubstantiated) due process claim that was considered, rejected, and yet addressed by the trial court and all layers of appeal in Ecuador. The Second Circuit’s endorsement of Chevron’s baseless effort to keep the issue in play only reveals the extent to which the Second Circuit is after demonization, rather than a true understanding of the relevant facts.

9. “The LAPs’ Consultant, Stratus, Writes Cabrera’s Report”

This claim is an unsurprising consequence of the context discussed above: the plaintiffs were working with Cabrera and provided resources to support the summation of the vast data in evidence, which included more than 64,000 chemical sampling results from the parties. As mentioned, the affected communities commissioned one of the best environmental firms in the U.S., Stratus Consulting, to draft the Cabrera report and a series of annexes that would fully explain the devastating environmental and human consequences of all of the evidence adduced by the eight-year trial in Ecuador.

As noted, both Chevron and the plaintiffs took full advantage of the practice in place allowing them to direct and then prepare an expert’s work (for his approval) while referencing his ultimate “independence”. Again, this may have led to misunderstandings within the expert team and to a (small) extent explains subsequent disavowals of the process (though not the work) by some of those experts at Stratus Consulting, whom Chevron sued and threatened with bankruptcy. As detailed in Stratus’ counterclaims against Chevron, and elsewhere, Chevron threatened Stratus and its professionals for years with its “lifetime of litigation” strategy, including intervening in an insurance dispute to make sure the experts would have to bear the full cost of the litigation, as well as aggressively interfering with the experts’ other business relationships. Once the experts supposedly disavowed Cabrera report, Chevron promised they would appear to testify in the RICO proceeding, but ultimately, as in the Calmbacher case, never called them, likely because while they would not have disavowed the substance of the report and the extent of devastating contamination caused by Chevron.

10. “Donziger Has Stratus Fabricate Objections To Be Submitted By the LAPs to the Cabrera Report that Stratus Wrote For the LAPs”

This claim once again basically reflects the reality of the Ecuadorian legal practice that both sides engaged in at the time. Chevron was constant touting its paid experts (Alvarez, Mackay, Hinchee, Marquez, Muñoz, John Connor, and others, for those following closely) as “independent” experts, with the plaintiffs doing the same for Cabrera. Chevron has clung so desperately to Cabrera as a basis for its campaign to demonize Donziger and taint the Ecuador judgment because the practice admittedly appears unusual to those unfamiliar with Ecuadorian law and practice. But the ultimate facts are clear: as regards Donziger and RICO proceeding, Chevron never produced evidence showing that the practice involving Cabrera violated Ecuadorian law (and as noted, actual authorities on Ecuadorian law who have examined the situation, most notably the Ecuadorian courts, have concluded that no law was violated). And as regards the Ecuador judgment, the matter was addressed by the court and affirmed on appeal, as millions of issues or errors or allegations of wrongdoing are addressed by courts every day, without abandoning the entire proceeding, in order to keep the wheels of justice turning. The Second Circuit ignored this inconvenient fact. Canadian courts, making a truly impartial assessment of the process in Ecuador, are unlikely to do the same.

11. “When ‘Crude’ Is Released and Chevron Gets Discovery Revealing the LAPs-Cabrera Collaboration, Donziger Hires New Consultants To ‘Cleanse’ the Cabrera Report”

The only “new” fact here is that once the Ecuador trial court announced that it was considering striking the Cabrera report, both sides were invited to comment on this procedure and to submit alternative damages reports if they so desired. Again, this is an eminently practical step. The plaintiffs did submit additional reports, although they were hastily prepared in the limited time allowed by the court. Chevron, in keeping with its obstructionist approach, refused to submit supplemental reports while claiming it was liable for nothing in damages. As noted above, the Ecuador trial court ultimately found that once it had made its liability finding, it could reach specific damages figures by relying on per unit clean-up cost figures contained in reports by Chevron’s own experts. It thus ended up basing its damages numbers on neither Cabrera nor the supplemental experts submitted by the plaintiffs. Chevron has no legitimate objection to this pragmatic approach, so instead it attacks with cheap rhetoric alone, leaning on an implicit taint in the notion of evidence being used to “cleanse” a problem in the record. In fact, evidence is used in just this manner in every trial, every day. The rhetoric means nothing. The Second Circuit’s embrace of this rhetoric-only attack is once again only revealing of its political approach to the case.


Footnotes

  1. The only genuine surprise in Judge Kaplan’s RICO proceeding came when he decided, on the eve of trial, that he alone would decide the case, not a jury (as Donziger had been expecting). He did this by allowing Chevron to drop all monetary damages claims, yet allowing the case to go forward, despite the fact that no court had ever before allowed a RICO case to proceed on anything other than “out-of-pocket” money damages.
  2. For example, in the opening days of a precursor lawsuit by Chevron against Donziger, Kaplan explained his predetermined view of Donziger and the environmental case against Chevron with disturbing frankness:

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 is trying to become the next big thing in fixing the balance of payments deficit. I got it from the beginning.

Hon. Lewis A. Kaplan, Sept. 23, 2010 hearing, In re Application of Chevron, 10-MC-00002 (LAK) (S.D.N.Y.).