Later, Wells Fargo Bank, N.A., sued Robinson and others in the San Diego Superior Court for payment of a defaulted loan. The court, at Wells Fargo’s request, appointed a receiver for Robinson. Wells Fargo also brought an action against Robinson in Mexico, and the Mexican court imposed a lien in Wells Fargo’s favor on real property held in trust for the benefit of Robinson.

Landstar, evidently aware that Wells Fargo had put itself at the head of the line by chasing Robinson’s assets in Mexico, asked the San Diego court to issue a letter rogatory under the Inter-American Convention requesting that the Mexican court recognize the California judgment liens and assign the right to receive the proceeds of the sale of the property in trust to Landstar, and also sought a restraining order enjoining Robinson from transferring its rights to the Mexican property. The lower court granted all of the relief sought, and Robinson appealed. The issuance of the letter rogatory (but not the restraining order) was stayed pending the appeal. It turned out that the restraining order was improper as a matter of California law (though leaving aside any California-specific issues, it seems proper to me to issue an order in personam restraining a judgment debtor from transferring its property anywhere in the world). So I don’t consider the restraining order further here. Instead, let’s focus on the question whether it was proper to issue a letter rogatory in the first place.

The court correctly concluded that the Inter-American Convention did not authorize the letter rogatory. Article 2 of the Convention provides:

This Convention shall apply to letters rogatory, issued in conjunction with proceedings in civil and commercial matters held before the appropriate judicial or other adjudicatory authority of one of the States Parties to this Convention, that have as their purpose:
a. The performance of procedural acts of a merely formal nature, such as service of process, summonses or subpoenas abroad;
b. The taking of evidence and the obtaining of information abroad, unless a reservation is made in this respect.

The court construed the phrase “procedural acts of a merely formal nature.” a “Procedural act” is a step “taken according to rules that prescribe the manner of conducting litigation or other judicial business, as opposed to rules that define parties’ substantive rights and obligations.” “Formal,” according to the court, here means “adhering to accepted forms, conventions, or regulations,” such as the “special or stipulated solemnities or formalities required for an act to become effective.” Thus the Convention extends to “customary or conventional steps that are taken to provide a person with a legally sufficient notice of a proceeding or of a document filed or issued in a proceeding, but that do not alter the person’s substantive rights or obligations.” The obvious conclusion: the Convention does not authorize a letter rogatory aimed at obtaining a substantive remedy such as an attachment or recognition of a California judgment liens.

Does this mean that the California court was forbidden to send a letter rogatory seeking such relief? I don’t know of any reason why the California court couldn’t send such a request, even if it is not authorized by the Convention. How a Mexican court would treat such a request is really a question of Mexican law, to which I don’t know the answer. If Mexico grants substantive relief on a foreign judgment without first recognizing the judgment, then it seems to me that Mexico is an outlier.

Original article: Case of the Day: Landstar Global Logistics v. Robinson & Robinson. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

Overview of the Holding

What was yesterday’s decision about? It was not about the merits of the LAPs’ claim that the Ecuadoran judgment is entitled to recognition and enforcement under Canadian law. Nor was it about the merits of the LAPs’ claim that Chevron should be liable for environmental torts in Ecuador. Yesterday’s decision was about two things: the court’s personal jurisdiction over Chevron Corp. and Chevron Canada Ltd., ² and whether the case should be stayed even if the court had jurisdiction. The basic holding was that the court did have jurisdiction, but that the case should be stayed, perhaps permanently.

Personal Jurisdiction

In an earlier post on the case, I noted that I had previously been critical, in US cases, of the application of ordinary rules of personal jurisdiction to recognition and enforcement cases. Why? Leaving doctrine aside, if I sue you in the Canada and win a judgment for damages, and if you have assets in the United States, and if a US court decides that it lacks personal jurisdiction over you when I bring an action for recognition and enforcement of the Canadian judgment, then you have effectively found a way to shield your assets from your creditors, which is contrary, in my opinion, to public policy. The merits of the case have already been decided; I am simply trying to collect what a court has found I am owed. In my view, a judgment creditor should be able to seek recognition and enforcement in any country where the judgment debtor has assets, whether or not the judgment debtor would be subject to personal jurisdiction in another kind of case. As a doctrinal matter, I would point (as I have in the past) to this dictum from Shaffer v. Heitner 433 U.S. 186 (1977):

The primary rationale for treating the presence of property as a sufficient basis for jurisdiction to adjudicate claims over which the State would not have jurisdiction if International Shoe applied is that a wrongdoer should not be able to avoid payment of his obligations by the expedient of removing his assets to a place where he is not subject to an in personam suit.” This justification, however, does not explain why jurisdiction should be recognized without regard to whether the property is present in the State because of an effort to avoid the owner’s obligations. Nor does it support jurisdiction to adjudicate the underlying claim. At most, it suggests that a State in which property is located should have jurisdiction to attach that property, by use of proper procedures, as security for a judgment being sought in a forum where the litigation can be maintained consistently with International Shoe. Moreover, we know of nothing to justify the assumption that a debtor can avoid paying his obligations by removing his property to a State in which his creditor cannot obtain personal jurisdiction over him. The Full Faith and Credit Clause, after all, makes the valid in personam judgment of one State enforceable in all other States. (citations omitted)

Unfortunately, there are many American judges who plainly are not reading Letters Blogatory and who decide this issue in what I think is the wrong way. ³ But the Ontario judge got the issue just right: ⁴

For several reasons, I am not persuaded by the defendants that, at common law, an Ontario court lacks the jurisdiction to entertian an action to recognize and enforce a final judgment of a foreign state absent a showing that the judgment debtor defendant has some real and substantial connection with Ontario ⁵ either through its presence in the jurisdiction or the presence of its assets in the jurisdiction …

The court goes on to explain its rationale with reference to the Canadian precedents. I leave the details to the Canadians. The important point here is that the judge sided with the Lago Agrio plaintiffs and held that even if Chevron had no connection with Ontario and no assets there (as the judge found), it would not be improper to exercise jurisdiction. ⁶

Reverse Veil Piercing

I just noted the judge’s finding that Chevron had no assets in Ontario. Wait a minute … what about the assets of its indirect subsidiary, Chevron Canada Ltd.? The LAPs argued that Chevron Canada’s assets should be available to it for satisfaction of the Ecuadoran judgment. The judge rejected this argument in light of BCE Inc. v. 1976 Debentureholders, [2008] 3 S.C.R. 560, which held, in the judge’s paraphrase, that “under Canadian law, a shareholder in a corporation does not possess a legal or equitable interest in the assets of the company.” The LAPs tried a “reverse veil piercing” theory on for size, but the judge rejected it because the LAPs had not shown any of the factual bases that could support application of a veil piercing theory. Again, I do not want to delve too deeply into the details of the Canadian law on this.

Staying the Case

So far, then, here is the situation: the court has jurisdiction to hear the claim for recognition and enforcement of the Ecuadoran judgment against Chevron and Chevron Canada Ltd. But Chevron itself has no assets in Ontario, and the assets of Chevron Canada Ltd. cannot be attributed to Chevron itself in a way that would help the LAPs. Nor do the LAPs have any independent claim against Chevron Canada Ltd. The judge, apparently as an exercise of discretion, decided that in the circumstances it was best to stay the case unless and until the LAPs could make a showing that Chevron itself had assets in Ontario. On the one hand, I think the judge could permissibly have proceeded to decide the merits of the case, in light of what I wrote above about jurisdiction. But on the other hand, the judge probably found strong prudential reasons not to proceed. If it had proceeded, “a bitter, protracted and expensive recognition fight would ensue consuming significant time and judicial resources of the court.” I leave it to Canadian lawyers to opine on whether this was an appropriate exercise of discretion. The judge’s decision seems to me to be open to question insofar as Chevron has spent an enormous amount of time and money seeking to litigate the validity of the Ecuadoran judgment in New York even though the LAPs have not sought recognition and enforcement there. On the other hand, I think the judge was likely worried more about the burden on the court itself than the burden on the parties.

Where Do We Go From Here?

Alan Lenczner, QC, the LAPs’ lawyer, promises an appeal

Questions for Canadian Readers

Canadian lawyers, please chime in on the following questions. First, what are the LAPs’ appellate options, and what will be the standard of appellate review? Second, assuming (contrary to fact, in this case) that the judgment debtor held shares of stock in a Canadian corporation, are those shares the kind of property that can be taken on execution, and if so, where can a judgment creditor seek that remedy? Just by way of comparison, in Massachusetts shares of stock cannot be taken on execution, but we have developed equitable and statutory “reach and apply” remedies that allow creditors to reach shares.

Photo credits: Caroline Bennett / Rainforest Action Network, Lenczner Slaght

Original article: Lago Agrio: A First Look At The Ontario Decision In Yaiguaje. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

This just in from Jeff Gray of the Globe and Mail:

Ontario judge stays move by plaintiffs to collect on Ecuadorean $19B pollution judgment against Chevron. #Chevron #law Story coming soon.

— Jeff Gray (@jeffreybgray) May 1, 2013

More to come as soon as it’s available.

Original article: BREAKING: Ontario Judge Stays Ecuadoran Plaintiffs’ Recognition and Enforcement Action Against Chevron. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

On appeal, the court reversed. It held that under California’s statute on recognition and enforcement of foreign court judgments, Hyundai was required to proceed by an ordinary civil action. If it wanted a summary decision, it could seek judgment on the pleadings or a summary judgment, but it could not proceed by petition, as though prosecuting a special proceeding such as a petition to confirm an arbitral award.

This seems to be a purely formal decision, since as the court recognized, there are methods for summary adjudication built into ordinary civil actions. If, on the face of the pleadings, Hyundai turned out to be entitled to judgment, it could seek judgment on the pleadings. If on the undisputed material facts Hyundai turned out to be entitled to judgment, it could seek a summary judgment. However, these technicalities matter to courts, so pay attention, California lawyers!

Original article: Case of the Day: Hyundai Securities Co. v. Lee. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

El Greco, The Agony In The Garden

In 2010, several members of the Herzog family sued Hungary and several Hungarian museums in the District of Columbia, asserting various common law claims. The primary claim was that the museums were bailees ¹ and had a duty to return the collection to the Herzogs on demand.

Hungary moved to dismiss, citing the FSIA and, among other things, claiming that the Hungarian judgment was entitled to recognition. ² (This, by the way, is the point that I will be focused on). The district court granted the motion in part, holding that Hungary was entitled to dismissal as to all of the artworks that had been at issue in the Hungarian litigation, but otherwise denying the motion. The district court certified its decision for interlocutory appeal, and Hungary appealed the partial denial of the motion. The heirs cross-appealed the decision to grant comity to the Hungarian judgment.

The DC Circuit’s decision covers all of the arguments (FSIA, the treaty questions, forum non conveniens, etc.), and I recommend it to readers. I want to focus on the heirs’ cross-appeal and the treatment the lower court gave to the Hungarian judgment. The court reversed the decision on this point on procedural grounds.

The Herzog heirs had urged two grounds for denying recognition to the Hungarian judgment. First, they claimed the judgment was contrary to US public policy because it misconstrued the executive agreement between the two countries. Second, they claimed they had been denied due process in the Hungarian proceedings. The court rejected their first argument on the grounds that it was “precisely the kind of mere assertion by a party that a foreign judgment was erroneous in law or in fact that the Supreme Court has held may not be grounds for declining to respect the results of foreign judgments.” But the court held that because it would be Hungary’s burden to prove that the Hungarian proceedings had afforded the heirs due process (since it is up to the proponent of a foreign judgment to show that the judgment is deserving of recognition), the heirs’ failure at the pleading stage to allege facts that would show that they were denied due process in Hungary was not fatal; in general there is no requirement that a plaintiff “plead around” affirmative defenses that the defendant will have the burden to plead and prove.

This aspect of the decision seems correct on all points. I would like to compare it for a moment with the Second Circuit’s decision in Naranjo, which, recall, holds that a party cannot sue a judgment creditor and seek a declaration that a foreign money judgment is unenforceable under the UFMJRA until the judgment creditor seeks recognition under the statute. I’ve disagreed with the basic thrust of Naranjo (while agreeing with the outcome on the grounds that it seems to me there was no real case or controversy sufficient to support a declaratory judgment action). But both cases involve the idea of ripeness. Naranjo says, rightly or wrongly, that you can’t ask a court to reject a foreign money judgment that your opponent means to use offensively until someone else asks the court to recognize the judgment. De Csepel says that when there is an argument of a denial of due process in a foreign case, you can’t assert that a claim fails because it is precluded by the foreign judgment until you have shown that it is entitled to recognition; it is not enough that your opponent has failed to show that the judgment is not entitled to recognition.

Original article: Case of the Day: de Csepel v. Hungary. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

According to the complaint, Sea Search Armada had an agreement with the government of Colombia for salvage of the treasure of the San Jose,a Spanish ship carrying $4 to $17 billion of coins and bullion. In 1708, when Britain really ruled the waves, the British navy sank the San Jose, and the ship came to rest off the coast of what is now Colombia. In 1980, the Colombian government authorized the Glocca Mora Co. to explore the continental shelf for shipwrecks, and the next year GMC discovered the wreck of the San Jose. GMC and Colombia agreed that GMC would be entitled to receive 35% of the treasure recovered. GMC assigned its rights to Sea Search Armada, and in 1984, Colombia agreed that SSA would be entitled to GMC’s 35% share, but it refused to enter a written contract with SSA and refused SSA permission to conduct full salvage operations at the shipwreck site. The Colombia parliament then passed a law giving the state the right to all of the treasure, leaving SSA with a 5% finder’s fee, which was to be taxed at 45% to boot!

SSA sued Colombia in its own courts in 1989. The Colombia Constitutional Court struck down the law at issue as unconstitutional in 1994. Later, the Circuit Court of Baranquilla held that SSA and Colombia each owned 50% of the San Jose treasure, although the source of the 50% figure is mysterious given that the original agreement called for a 65/35 split.

As we saw in the earlier post, SSA sued Colombia for recognition and enforcement of the Colombian judgment in the District of Columbia in 2010. SSA also sought damages in the amount of $17 billion. The judge dismissed the claim for recognition and enforcement on the grounds that the Colombian judgment was not one for damages but was merely declaratory and thus was not entitled to recognition UFMJRA, ¹ which as its name suggests deals only with money judgments. ²

The DC Circuit has now summarily affirmed, just two weeks after oral argument. It adopted the district court’s reasoning in full.

The statute of limitations analysis seems correct. The courts are also correct to conclude that there is no claim here under the UFMJRA, but I still do not understand why there might not be an action for recognition of the Colombian judgment at common law rather than under the statute. Neither the UFMJRA nor the UFCMJRA precludes recognition of judgments not within the scope of the statute. See, e.g., DC Code § 15-371 (” This subchapter does not prevent the recognition under principles of comity or otherwise of a foreign-country judgment not within the scope of this subchapter”). But unfortunately, SSA’s brief does not really make this point, or does not make it clearly, ³ and so it is perhaps not surprising that the court missed it.

The case is not over: SSA has filed a petition against Colombia with the Inter-American Commission on Human Rights, alleging violations of Articles 21 and 25 of the Inter-American Convention on Human Rights.

Photo credit: Yellow Cat

Original article: Case of the Day: Sea Search Armada v. Colombia. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

I had a nice post scheduled for next week explaining the recent settlement between Chevron and Stratus Consulting, and in particular to speculate on the importance of the cooperation clauses in the settlement agreement: Stratus agreed to make its witnesses available to Chevron “to testify in person, by deposition or by written statement, under oath, in any stage of the RICO Action, the BIT Arbitration, or the Related Actions, at the request of Chevron upon reasonable notice,” and to “[take] steps to obtain and produce to Chevron the complete, unredacted Stratus materials currently possessed by Stratus’s counsel at Silver & DeBosky.” Stratus also agreed to de-designate any discovery materials it had previously designated as confidential and not to assert any privilege in response to a discovery request from Chevron. “Interesting!” I thought. “I wonder what Chevron has up its sleeve.”

Et tu, Calmbacher Reyes the Huaorani people Burford Capital Stratus Consulting?

Chevron’s lawsuit alleged racketeering and fraud claims against Steven Donziger, the Lago Agrio plaintiffs, Stratus, and others relating to the long-running environmental trial against Chevron in Lago Agrio, Ecuador. That trial resulted in an approximately $19 billion judgment against Chevron. Prior to the judgment, Stratus had been retained by Donziger, on behalf of the Lago Agrio plaintiffs, to serve as an environmental consultant. Stratus’s environmental consulting work for Donziger was used in a report submitted to the Ecuadorian court by the supposedly “independent” court expert Richard Cabrera as part of a process that Stratus has learned was tainted by Donziger and the Lago Agrio plaintiffs representatives’ “behind the scenes activities.”

Stratus believes that the damages assessment in the Cabrera Report and the entire Cabrera process were fatally tainted and are not reliable. Stratus disavows the Cabrera Report, has agreed to cooperate fully and to provide testimony about the Ecuador litigation.

Stratus deeply regrets its involvement in the Ecuador litigation. We are delighted to have this matter behind us.

Wow!

This is another feather in the Maestro’s cap. I cannot remember a case where one side has so effectively co-opted the other side’s experts and allies and even (in the case of the Huaorani) gotten to sit back and watch as some of its opponents turned on their own lawyers.

What is the significance of Stratus’s defection? Well, we have to wait and see whether Stratus really delivers the goods to Chevron, and it will be interesting to compare what Stratus says now with positions it or its witnesses took before. Along these lines, here is a statement from Craig Smyser, one of the LAPs’ attorneys:

Chevron gets testimony two ways: they pay for it or they intimidate people until they give in. Here, we are sorry to say, Chevron bullied Stratus until Stratus had no choice but to succumb: the firm was faced with financial extinction after Chevron engaged in the defamation of Stratus to agencies Stratus did business with – all of which is set out in Stratus’ suit against Chevron.

Stratus has testified, in this court, that it backs its science detailing the pollution and contamination of the Ecuadorian rain forest. Although the settlement agreement Chevron extracted from Stratus prohibits Stratus for a period of 20 years from any environmental consulting that might even involve Chevron and imposes a gag order on Stratus with respect to public statements about “the factual or scientific validity or accuracy of all or any part of the Cabrera report”, we are confident Stratus will testify truthfully about these topics.

Less than three months ago, Stratus filed papers in court that said in no uncertain terms that justice was done in the Ecuadorian litigation:

Chevron knows that based on scientific data collected during the Lago Agrio litigation, including data collected by Chevron, Stratus actually found that contamination was present at every single well site and station that was sampled, and that the areas contaminated by oilfield operations requiring cleanup included over 900 oilfield pits, 356 well sites, 22 oil processing stations, and additional areas of spilled oil-a huge amount of environmental damage costing immense sums to remediate.

We are confident Stratus will stand by the statements it made in court and to the public, including those on CBS’ 60 Minutes, detailing the science of Chevron’s pollution in the Ecuadorian rain forest.

But fundamentally, the material about Stratus goes to the question of whether the Lago Agrio plaintiffs committed fraud in Ecuador, not to the question of whether Ecuador’s courts were inadequate. On the one hand, this means it is possible to take the view (regular readers will know that I am inclined to this view) that the question of whether there was a fraud on the Ecuadoran court should be for the Ecuadoran court to decide, absent a showing that it is for some reason incompetent to decide it, particularly in light of the forum non conveniens dismissal early in the case. On the other hand, I can imagine that the new Stratus evidence, if sufficiently juicy, could be just the sort of thing that Chevron could take to the Ecuadoran court, perhaps with some chance of success. Or it could be sufficiently bad for the LAPs that one would want to say that it would be inequitable to estop Chevron from asserting a fraud Ecuadoran court, because it would show unclean hands. We will have to wait and see.

Photo credits: Marie-Lan Nguyen, The Ohio State University Radio Observatory and the North American AstroPhysical Observatory (NAAPO)

Original article: Lago Agrio: Stratus Consulting Turns On Donziger. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

In 2012, Sabeniano sued Citibank in New York. She alleged that in 2002, the Philippine Supreme Court had entered a judgment awarding her more than $13 million, and she sought recognition and enforcement. She claimed that she became aware of the judgment in March 2011—before the judgment was supposedly issued—and that she asked the Supreme Court to authenticate it. She submitted a certificate authenticating the judgment, but it was issued by the Philippine court of appeals, not the Supreme Court. Citibank asserted that the judgment was inauthentic and a forgery. It asked the Philippine Supreme Court to verify the judgment. The court issued a notice stating that it had not entered a decision on the date of the supposed 2002 judgment and ordered Sabeniano to show cause why she should not be cited for contempt of court.

The parties cross-moved for summary judgment. The key issue was the authenticity of the 2002 judgment. The judge properly denied Sabeniano’s motion for summary judgment on the grounds that her evidence was not credible. This requires a little explanation. You can’t grant a summary judgment that relies on making determinations about which side’s evidence is more credible, since questions of fact are to be determined at trial. But it’s proper to deny a motion for summary judgment if the movant’s evidence seems incredible, a point I made in a discussion of one of Judge Kaplan’s decisions in the Lago Agrio case.

Citibank’s motion did not rest on the lack of credibility of the plaintiff’s evidence, and rightly so. It would have been improper, I think, for the court to decide, on summary judgment, that the judgment proffered by Sabeniano was inauthentic. Instead, Citibank argued that the 2006 judgment, which came years after the supposed 2002 judgment, should be recognized, and that once recognized, it was res judicata.

The judge found that the 2006 judgment was entitled to recognition under the UFMJRA. Not only did Sabeniano fail to make any arguments against recognition; she herself was seeking recognition for a Philippine judgment and thus could hardly argue, for example, that the Philippine courts were not impartial, etc. Once he recognized the judgment, the judge held, again apparently correctly, that the 2006 judgment was res judicata.

Original article: Case of the Day: Sabeniano v. Citibank. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

The wife made the first two payments, but then ceased making payments and appealed to the Kaunas Area Court, seeking to be excused from making the payments. The appellate court rejected her appeal.

The wife then brought a dissolution action in Connecticut. Her petition alleged on its face that the parties had entered into an agreement that had been accepted by the Lithuanian court, but it claimed that the agreement was “in contravention of Connecticut public policy and is invalid as obtained by gross misrepresentations of facts by the defendant; duress by the defendant; and mistakes in interpreting [United States] law committed by the Lithuanian court.” She sought dissolution of the marriage, an equitable division of property, and temporary and permanent alimony. The husband moved to dismiss. The trial court granted the motion. It granted comity to the Lithuanian divorce decree and then held that since there was no existing marriage, it lacked jurisdiction. The wife appealed.

The case for comity here seemed very strong, since there was no question that the wife was a bona fide domiciliary of Lithuania, and thus the Lithuanian court had jurisdiction to enter a divorce decree. But the wife argued that it was an abuse of discretion to grant comity in light of her allegation of fraud. But it was the wife’s burden to prove fraud. I don’t know anything about Connecticut procedure, let alone Connecticut procedure in family law cases. But it does seem to me that in the abstract it might be premature to make a decision on comity on a motion to dismiss, since ordinarily motions to dismiss are decided on the pleadings, not on the evidence. (On the other hand, a plaintiff ordinarily has an obligation to plead fraud with particularity, and it doesn’t seem the wife did so here). But here the husband submitted affidavits explaining exactly what had happened in Lithuania, and pointing in particular to the extensive negotiations, the parties’ representation to the court in Lithuania that they understood the agreement and were entering into it freely, etc. The wife filed her own affidavits, but she did not contradict any of this evidence. So essentially, the lower court granted a summary judgment, and the appellate court found no reason to overturn it. The court also pointed to the inequity of the wife’s position (her challenge to the judgment in the Lithuanian appellate court rested on different grounds than her present challenge) and held that she should be estopped to seek a dissolution in Connecticut.

Original article: Case of the Day: Zitkene v. Zitkus. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

In particular, they point to the judge’s treatment of the Lago Agrio Plaintiffs’ affirmative defense of res judicata and collateral estoppel, which I have covered fairly extensively. The LAPs had argued that Chevron’s claims were barred by those doctrines, which could only be true, in my view, if the court were to recognize the Ecuadoran judgment. I noted the defense in March 2012, opined that Chevron had the better argument in June 2012, and reported on Judge Kaplan’s decision denying Chevron’s motion for summary judgment. On this front, the LAPs are seeking an order requiring Judge Kaplan to vacate his July 31, 2012, order—the order that denied Chevron’s motion for summary judgment—as well as the order of November 27, 2012, which I discussed in a post on December 5, 2012, and an order of February 20, 2013, which I don’t think I previously discussed, and which granted Chevron’s motion to strike amended answers that omitted the collateral estoppel defense on procedural grounds. ² On this point, I think Chevron has the better of the argument, because if the LAPs weren’t asking the judge to recognize the Ecuadoran judgment when they asserted res judicata and collateral estoppel as a defense, then I don’t know what they were doing, and the decision not to allow them to withdraw the defense is hardly a violation of the kind of non-discretionary duty for which mandamus lies—or so it seems to me, without having the benefit of the LAPs opposition to the petition.

The LAPs also sought an order requiring Judge Kaplan to vacate his January 7, 2013 order, which denied the LAP’s motion for leave to appeal from his earlier order denying their motion for judgment on the pleadings. The key question the LAPs wanted to appeal was whether “a foreign judgment debtor may bring an affirmative common-law fraud claim in New York against a judgment creditor based on alleged fraud in obtaining the foreign judgment.” The judge’s overall conclusion—that an appeal should not be allowed because it would not advance the ultimate termination of the litigation—is probably defensible, but his handling of the LAPs’ more particular point was, in my view, less than satisfactory. The judge’s point was that the LAPs had asked the wrong question. It’s not whether a judgment debtor can bring an action at common law to obtain damages, but rather whether a judgment debtor can bring such an action in equity. The judge said, rightly, that equity provides relief from a judgment obtained by fraud and that a judgment debtor can obtain damages as an incidental remedy in such an equitable suit. I am not sure why the judge was so particularly focused on the question whether the claim arose at law or in equity, but in any event, his discussion has caused the LAPs to assert that the judge was writing into Chevron’s complaint a new claim—an equitable claim to set aside the Lago Agrio judgment—that Chevron itself had not asserted. I don’t know what to make of this or how the Second Circuit will react to it, but insofar as the judge’s observations on judicial economy were probably sufficient to justify his denial of leave to appeal, it’s not clear that the LAPs will be able to make much of this point.

The big-picture question is whether Judge Kaplan, with the orders the LAPs are challenging, has violated the spirit if not the letter of the Second Circuit’s mandate. This seems like a long shot to me. The main question is how to construe the LAPs’ own affirmative defense of res judicata and collateral estoppel. I understand it as an attempt to give the Ecuadoran judgment some preclusive effect. I don’t see that the LAPs can really complain about Chevron’s motion for summary judgment on that defense, since it is, after all, their defense. As my earlier posts indicate, it doesn’t seem to me that later claims that the defense doesn’t mean what it seems to mean are not very convincing. On the other hand, Chevron is clearly engaged in some clever procedural maneuvering here, and it’s possible, I suppose, that the Second Circuit will regard Chevron’s summary judgment motion as too clever.

Last, the LAPs sought to have the case reassigned to a different judge. Anyone who has been following along will understand the motivation for this request. Given Judge Kaplan’s hostility to their case, I suppose the LAPs felt they had nothing to lose.

Original article: BREAKING: The Lago Agrio Plaintiffs Petition The Second Circuit for a Writ of Mandamus. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.