Case of the Day: In re Chevron Corp.

Our case of the day, In re Chevron Corp. (3d Cir. 2011), is the Third Circuit’s contribution to the dozens of Lago Agrio-related judicial assistance proceedings around the country. I won’t rehash the background to the Lago Agrio case again, except to say that the Third Circuit evidentally shares my sense of the irony involved in Chevron’s course of action:

Chevron’s responses to what it plainly regarded as unpalatable proceedings in Ecuador did not stop with it taking steps in that country, as it obviously, and ironically in view of its contentions on its forum non conveniens application that resulted in the dismissal of the Southern District of New York litigation, had lost faith in the Ecuadorian courts.

The case involved Chevron’s efforts to obtain discovery from UBR, a New Jersey environmental firm that the Ecuadoran plaintiffs had hired. UBR allegedly employed one of the consultants who participated in the creation of the court-appointed expert’s report in the Ecuadoran litigation, and documents with the UBR logo appeared in the court-appointed expert’s report. Chevron argued that this was evidence of the court-appointed expert’s bias.

The Ecuadoran plaintiffs made an interesting argument of statutory construction. The statute permits discovery “for use in a proceeding” in a foreign tribunal. Since the purpose of the discovery was to attack the proceedings in the foreign tribunal and indeed to attack the foreign tribunal’s impartiality itself, the discovery was not “for use in a proceeding.” But this argument foundered when it ran up against Chevron’s stated intention to use the evidence it obtained to show, in the Lago Agrio proceeding, that the plaintiffs had committed a fraud on the Ecuadoran court. And of course the use of the evidence in the BIT arbitration to show that the Lago Agrio lawsuit was fraudulent would come within the scope of the statute.

The court found that the Intel factors favored Chevron. UBR was not a party to the proceedings in Ecuador; the Ecuadoran plaintiffs had not shown that the tribunals in Ecuador would not be receptive to the evidence (merely arguing that the Ecuadoran court would not allow the same discovery to be taken under its own aegis is not the same as arguing that the Ecuadoran court would not consider the evidence if obtained by other means, such as the judicial assistance statute); and there was no evidence of undue burdensomeness or intrusiveness.

Finally, the court held that any privilege or work-product protection was waived when UBR submitted documents to the court-appointed expert. It was clear from the affidavit of UBR’s own lawyer that there was no expectation of confidentiality once documents were produced, and under ordinary principles, disclosure of the documents waived the privilege that might otherwise have been applicable. The court did, however, vacate the district court’s decision to the extent it found that the crime-fraud exception to the privilege applied to require disclosure of communications between the UBR consultant that the Ecuador plaintiffs employed and the court-appointed expert or the plaintiffs’ lawyer. The apparent conflict of interest was sufficient to require the lower court to conduct an in camera review of the documents, but insufficient, without more, to establish that the exception to the privilege applied.

2 responses to “Case of the Day: In re Chevron Corp.”

  1. […] here is an excerpt from a recent Third Circuit decision in the Lago Agrio case: Chevron’s responses to […]

  2. […] returns to Lago Agrio in today’s case of the day, In re Chevron Corp. (3d Cir. 2011); previously the court had approved Chevron’s request for judicial assistance to obtain discovery from […]

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