Case of the Day: Chevron Corp. v. Donziger

The case of the day is Chevron Corp. v. Donziger (S.D.N.Y. 2012). As we know, Chevron waged a discovery campaign across the United States that led to a lot of juicy evidence that Chevron has used in its battles with Steven Donziger and the Lago Agrio plaintiffs. The LAPs have also sought US discovery. In today’s case of the day, which is part of the RICO case in Judge Kaplan’s court, they served subpoenas duces tecum on twenty-six third parties—Chevron technical expert witnesses, consultants, investigators and PR consultants, and the US Chamber of Commerce to boot. Chevron asked Judge Kaplan to enter a protective order as to the subpoenas directed to its expert witnesses.

The first issue was the court’s jurisdiction. Under FRCP 45(c)(3), it is for the court that issued the subpoena, not the court where the action is pending, that hears motions to quash or modify a subpoena. These subpoenas were issued by courts around the country because the third parties lived around the country. 1 However, “the principle that only the court that issues a subpoena has the power to quash or modify it does not alter the broader concept that the district court in which an action is pending has the right and responsibility to control the broad outline of discovery.” So the judge held, correctly, that he had the authority to rule on Chevron’s motions.

The first aim of the subpoenas directed to the experts was, according to the LAPs, to “demonstrate the existence of the pervasive pollution of the Oriente region of Ecuador and its devastating impact on the environment and people of the Oriente.” But Judge Kaplan pointed out that “whether and why there is pollution in the Oriente region … simply have nothing to do with the case.” Moreover, “until this, their latest, volte face, that has been the LAPs position.

Just last year, in litigating Count 9 of this Complaint [the count for a declaration that the Ecuadoran judgment is unenforceable], the LAP Representatives sought to preclude Chevron from calling certain expert witnesses. They argued that Chevron’s proposed experts, “many of which concern irrelevant subjects such as the scientific evidence presented in the Ecuadoran proceedings or the history of Texaco’s business in Ecuador—make clear that Chevron is attempting to relitigate the entirety of its failed defense to the Ecuadorian case.” … In other words, they argued that relitigation of the merits of the Ecuadorian lawsuit—including whether the region is polluted and, if so, who is responsible for it—was not appropriate in that case.

You can see where this is going. What’s sauce for the goose is sauce for the gander, in Judge Kaplan’s view. He forbade the discovery on the grounds that it exceeded the bounds of relevance and was contrary to the positions the LAPs had taken earlier in the action.

It is not clear to me, though, that Judge Kaplan was right either in the first ruling or in this one. One of Chevron’s main contentions of fraud relates to the Cabrera report, the report on environmental matters whose impartiality Chevron has challenged. I don’t immediately see why it shouldn’t be open to the LAPs to argue that the Cabrera report accurately reflected the environmental problems in the relevant region. Even if the authorship of the report is problematic, as Chevron has argued, if the report’s conclusions are basically accurate than much of the sting of Chevron’s fraud argument is lost, at least to the extent the argument turns on the report. Similarly, I don’t immediately see why it shouldn’t have been open to Chevron to argue that the Cabrera report (which was the report of a supposedly neutral court-appointed expert) was fraudulent in substance as well as in form.

There was, however, another, better basis—at least a partial basis—for the judge’s ruling. Under FRCP 26(a)(2) and the judge’s earlier rulings, the LAPs are entitled to expert discovery, but only with regard to experts who will testify at trial, and then only when permitted by the judge’s schedule.

The judge ended with remarks suggesting that he thinks the subpoenas were issued in bad faith. He points out that the LAPs waited to the last day of the discovery period to serve the subpoenas, and he found circumstantial reasons to think that the LAP’s purpose was “to delay the resolution of this case.

The LAPs are proceeding abroad with efforts to enforce the Ecuadorian judgment in at least three other countries and threaten to commence proceedings in still more. Although the Count 9 action has been dismissed, this action holds the potential for findings and determinations that, if adverse to them, could be prejudicial to those efforts. Thus, delay of this action would be in their interest.

Ouch!

Notes:

  1. Under FRCP 45(a)(3), an attorney of record in an action pending in one district can issue subpoenas as an officer of any district court.

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 2012), 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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