From the Lago Agrio Desk

We have two developments to report in the Lago Agrio case: a new preliminary injunction barring the Lago Agrio plaintiffs from seeking to enforce their judgment; and yet another application for U.S. judicial assistance in the gathering of evidence, though this time by the Ecuadorans rather than by Chevron.

First, Judge Kaplan has granted Chevron’s motion for a preliminary injunction enjoining the Ecuadoran plaintiffs from seeking to enforce the judgment. His 131-page opinion is here. Judge Kaplan’s basic conclusion was that the plaintiffs intended to move aggressively in various forums to enforce the judgment not as a legitimate way of collecting the amount due–Chevron would ultimately be “good for the money”, in Judge Kaplan’s view–but to coerce a settlement. Equity favors injunctions to prevent a multiplicity of suits. He also noted the failure of the plaintiffs or their lawyer, Donziger, to deny the videotaped and evidence of their supposed misconduct. In particular, Judge Kaplan found that Chevron had met its burden to show that Ecuador does not provide impartial tribunals or due process, such that the judgments of its courts should not be entitled to recognition and enforcement under the Uniform Recognition of Foreign Court Money Judgments Act. He also found Chevron had provided “ample evidence” of fraud in the Ecuadoran proceedings, another ground for refusal of recognition and enforcement.

I have harped fairly consistently on Chevron’s lawyers for their encomiums to the impartiality and competence of the Ecuadoran courts back when they were trying to have the original New York litigation dismissed on forum non conveniens grounds. Therefore, it is only fair to note that Judge Kaplan takes a more balanced view:

[T]here has been a great deal of posturing on both sides. Chevron, for example, complains of the Ecuadorian legal system and judiciary while the LAPs [the Lago Agrio plaintiffs] attempt to make much of the fact that Texaco, years ago, successfully obtained a forum non conveniens dismissal of the first of these cases, arguing among other things that the courts of Ecuador would be an adequate forum. Fair enough. But before rising to the bait on either side, however, it is well to bear in mind that the positions of both sides have changed 180 degrees since the predecessor litigation in New York. Chevron then touted the adequacy of the Ecuadorian judiciary, while the plaintiffs – in briefs bearing Donziger’s name as counsel – argued that Ecuador could not provide an adequate forum and that its judiciary was corrupt. Similarly, the LAP Representatives argue that the LAPs are poor, indigenous people of the rain forest who cannot properly be sued in New York. In doing so, however, they utterly ignore the fact that they previously have sued both Texaco and Chevron here, voluntarily participated in still other cases in this Court, are voluntarily litigating in other federal courts around the country, and for years used Donziger and his New York office to mount public relations, political and fund raising efforts in support of their Ecuadorian efforts. So a good deal of the rhetoric and argument in this case on these and other issues must be viewed with a critical eye.

On the judicial assistance front, we have In re Republic of Ecuador (N.D. Cal. 2011). After the dramatic developments in the last few weeks–the Ecuadoran judgment against Chevron, the injunctions issued by Judge Kaplan and the arbitral tribunal–the gathering of evidence in the United States seems less central to the case than it did before. This latest case is of interest, though, because here the shoe is on the other foot: the Republic of Ecuador itself, and the Ecuadorian plaintiffs, rather than Chevron are the parties seeking U.S. discovery.

The court had previously granted Ecuador’s motion for issuance of a subpoena directed to Diego Fernando Borja Sanchez, the source of the video apparently showing a meeting between the court-appointed neutral expert and the Ecuadorian plaintiffs’ lawyers, which was central to Chevron’s claim that the expert’s report was fraudulent. Borja then moved to quash the subpoena, and the court allowed his motion in part and denied it in part. In the newest case, Borja sought reconsideration of the court’s decision. He argued that newly discovered evidence showed that attorneys for the Lago Agrio plaintiffs had coordinated with the Ecuadorian government in connection with the application for judicial assistance, and thus that the evidence was not really sought for use in the BIT arbitration, to which Ecuador itself was an “interested person”, but instead for use in the Lago Agrio litigation, in which Ecuador was not an “interested person”, as required by the judicial assistance statute. Borja also claimed that the evidence would be used by Ecuador to harass him and perhaps prosecute him criminally. The court rejected Borja’s argument on the grounds that the evidence was relevant to the BIT arbitration even if it might also be relevant to or used in the Lago Agrio case. Accordingly, the court also granted Ecuador’s motion to compel. The court reserved decision on whether Borja had waived any claim of privilege by failing to comply with the subpoena.

The court also considered the Lago Agrio plaintiffs’ new application for issuance of a subpoena in the Lago Agrio case itself, which was aimed at Borja’s alleged involvement in a scheme to bribe Judge Nuñez, who had formerly presided over the case in Ecuador. The only point of interest with respect to the court’s authority to issue the subpoena was whether the recent final judgment in the underlying case had any effect. The court held that because the time to appeal in Ecuador had not expired and because an appeal was in fact to be filed, there was still a foreign proceeding that served as an adequate predicate for the application.

Chevron argued, amusingly, that because the Lago Agrio plaintiffs had previously argued that the Ecuadorian courts would not be receptive to evidence gathered in the U.S. pursuant to the statute, they should be estopped to invoke the statute now. But as the court pointed out, Chevron had been generally successful in its applications for U.S. judicial assistance, and thus no estoppel was appropriate. Leaving estoppel aside, the court declined to find, on the merits, that the Ecuadorian courts would not be receptive to the evidence sought.

The court found no undue burden to the extent the new application was duplicative of the evidence Ecuador itself sought to obtain from Borja, but the court did find that a deposition of Sara Portilla, as there was no showing that she was likely to have relevant information.

As a matter of discretion, the court considered Chevron’s arguments of bad faith. The court found no bad faith or violation of any law in the agreement between Ecuador and the Lago Agrio plaintiffs to cooperate in seeking judicial assistance. While Chevron made claims that Borja and others feared that they would be prosecuted and had left the country on account of their concerns, the court found that these claims were speculative, though it did direct the parties to meet and confer on the issue of an appropriate protective order to prevent misuse of information obtained in discovery.

Finally, the court rejected Chevron’s request for “reciprocal discovery”. It noted that Chevron’s broad request was untimely and unnecessary to achieve parity. Moreover, it noted potential sovereign immunity issues (is the Republic of Ecuador a “person” within the meaning of the judicial assistance statute? See Fayed v. CIA, 229 F.3d 272 (D.C. Cir. 2000) and the availability of the information using Ecuador’s discovery procedures, which led the court to a concern about possible circumvention of foreign proof-gathering restrictions.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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