Maestro Mastro: Chevron’s Legal Team Hits A Home Run

Randy Mastro
Lawyer of the Year?
Earlier today, Chevron filed a Declaration by Alberto Guerra Bastidas, an Ecuadoran judge, that tells a seriously juicy story of judicial corruption in Ecuador. By his own admission, Judge Guerra allowed the claim against Chevron to go forward in 2003 and 2004 because of “public pressure brought to bear by the representatives of the Plaintiffs.” Judge Guerra claims he was dismissed from the bench in 2008 because of his opposition to a kickback scheme in which other judges asked expert witnesses for 25% of their fees in return for court appointments. The fist real blockbuster is Judge Guerra’s description of his interactions with Judge Nicolás Zambrano, who formerly oversaw the Chevron case. Before Zambrano became a judge, he was a prosecutor, and he and Guerra had a deal by which Guerra would dismiss cases as a favor to Zambrano, knowing that Zambrano was receiving a bribe to have the case dismissed.

Pastel De Manzana
Honey & Honey’s Pastel De Manzana
According to Guerra, once Zambrano was appointed to the bench, and after Guerra’s dismissal, he (Guerra) would “help him by writing writs and rulings which Mr. Zambrano had to issue as judge in civil cases assigned to him randomly, in exchange for compensation or payment of USD $1,000 per month, approximately, for this work.” In other words, Guerra admits that he acted as Zambrano’s illegal ghostwriter. Things get really juicy when Judge Zambrano got involved in the Chevron case. Zambrano asked Guerra, through intermediaries, “to get in touch with the attorneys for Chevron in order to negotiate an agreement by which the company would pay Mr. Zambrano and me for issuing the final judgment in Chevron’s favor. Chevron would have much more money than the Plaintiffs for this agreement, and therefore we could get a better deal and greater profit for ourselves.” According to the declaration, Chevron rejected the overture. Guerra then met with Pablo Fajardo, one of the LAPs lawyers, where they agreed that Guerra would “make the case move quickly,” that “Chevron’s procedural options would be limited by not granting their motions on alleged essential errors in rulings I was to write,” and that the plaintiffs’ representatives would pay Guerra $1,000 per month for ghostwriting Zambrano’s decisions. There was a second meeting with Fajardo and Steven Donziger at the “Honey & Honey” restaurant. After sealing the deal, Guerra says he ruled in favor of the plaintiffs as agreed, sometimes writing rulings in favor of Chevron “to avoid suspicion.” He also says he had ex parte discussions with Fajardo, and at some of their meetings Fajardo gave him money.

The declaration goes on like this for a while, but gets interesting again when Guerra claims that after again trying and failing to make a deal with Chevron, he learned that Zambrano had made a deal for a $500,000 stake in the judgment in return for “allowing them [the plaintiffs’ team] to write the judgment in the Plaintiffs’ favor.” Zambrano promised to share some of the money with Guerra.

As almost an afterthought, Guerra says that he has been paid $38,000 by Chevron “for my time and expenses in collecting documentary evidence” and for his personal computer, various flash drives and cell phones, email passwords, etc., which may contain evidence corroborating his claims.

Now, my first reaction to reading all of this is that I don’t trust anything Guerra says. 1 He’s seriously corrupt. And he admits receiving $38,000 from Chevron for payment of his “expenses.” And some of his story seems incredible. Why, for example, would he agree to the plaintiffs’ supposed offer to pay $1,000 per month, when Zambrano was already paying him that much?

But then I realized the beauty of this declaration as a matter of litigation strategy. Guerra’s truthfulness may be important to the strength of Chevron’s RICO claim against Donziger and others. But the RICO claim, remember, is really a sideshow to Chevron’s attempts to prevent recognition and enforcement of the Ecuadoran judgment in another country. On that score, it hardly matters whether Guerra is credible. In some sense, the less credible he is the better, since the overarching point is to show that the courts of Sucumbios, if not of Ecuador as a whole, were such a cesspool of corruption that their judgments aren’t worth the paper they’re printed on. That doesn’t mean I think Chevron wins on the recognition and enforcement issue. As I’ve written before, I think the strongest argument against Chevron is that when it spent a decade getting the case dismissed from the SDNY on forum non conveniens grounds in favor of litigation in Ecuador, it knew what it was doing and what it was getting in to. The courts of Ecuador were no great shakes before the Correa government came to power. I think there is a good case to be made that Chevron assumed the risk, rolled the dice, you get the idea. But Chevron has done a very good job of making the Ecuadoran courts out to be corrupt and unworthy to have their judgments enforced, and that’s why I have the picture of Randy Mastro with the “Lawyer of the Year” caption.

It’s important to note that the plaintiffs’ representatives have issued a press release asserting that Chevron has induced Judge Guerra to cooperate with money and other benefits. But the press release itself contains no evidence to support that allegation, and I have not heard back from the plaintiffs’ PR representatives in response to my request for evidence. That being said, the $38,000 payment from Chevron is plainly a concern, and if Chevron’s case counted on us believing Judge Guerra, then I think Chevron would not have accomplished much here. But as I say, I think that the less credible Judge Guerra is, the better for Chevron in some sense, particularly if documentary evidence (e.g., bank records, some of which are attached to the declaration) or computer forensic evidence ultimately back up key points of his story.

Update: Roger Parloff reports that Chevron did not just pay Judge Guerra $38,000; it also “made a two-year commitment to pay Guerra’s family a total of $10,000 per month for living expenses and $2,000 per month for housing, plus health insurance and legal fees.” This doesn’t do much for Guerra’s credibility, I think. The key will be corroboration.

Photo credits: Gibson, Dunn & Crutcher LLP; Vivi (used by permission from Foodspotting)

Notes:

  1. More technically, given the internal evidence of lack of trustworthiness, I would not regard this declaration as competent to support Chevron’s motion for summary judgment. I am a fan of Judge Frank’s approach in these matters. See 10A Wright & Miller § 2726.

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.

22 thoughts on “Maestro Mastro: Chevron’s Legal Team Hits A Home Run

  1. As I’ve commented here before, I think this case is a gross injustice, precisely because of the estoppel / forum non conveniens issue. You can’t talk about how wonderful forum A is and how oppressive forum B is then, when you lose in forum A, return to forum B to complain about how oppressive forum A was. Chevron may have been the victim of a total fraud, but the last place in the world they can complain about it is SDNY.

    I agree with your analysis that, whether you believe him or not, it looks bad for the rule of law there. That said, to play Devil’s Advocate for a moment, doesn’t it also prove that Chevron is more than capable of acquiring adequate information about the fairness and impartiality of tribunals in Ecuador? If they’re able to get a former judge to admit to bribery, shouldn’t it be assumed that, back when they were lobbying hard for the United States courts to decline to hear the case in favor of Ecuador, they had a similar ability to discover fraud, and, as those proceedings progressed, that same ability to discover and address fraud within that system?

    1. Max, I think the majority view, from what I’ve seen, is that Chevron can mount a challenge to the Ecuadoran judiciary if there was a relevant change in the judiciary between the time of the FNC dismiss and the time of the judgment. Chevron has good arguments on this, but I’ve argued, as I think you would, that since the courts probably weren’t so good before the change, Chevron should be held to have assumed the risk. One other point to bear in mind is that The US court accepted Chevron’s stipulation as part of the FNC dismissal, and the stipulation expressly reserved the right to make arguments for nonrecognition. I hope US courts will require more stringent stipulations in the future!

      Also, we have to note that there are two kinds of problems in Ecuador–the apparent systematic inadequacy of the Ecuadoran courts, and the plaintiffs’ supposed active fraud and corruption, if you believe the declaration. My view is that case-specific issues, such as misconduct by a party, should be left to the foreign court if that court is adequate. But here, that’s really what’s at issue. So it’s complicated.

      1. I know that’s the argument, but it’s baloney. Parties complain about changes all the time. “I wouldn’t have agreed to arbitration if I had known you were going to breach the contract.” “I wouldn’t have filed in this state if I had known they would pass tort reform.” “I wouldn’t have filed in this district if I knew the judge would retire.”

        To me, simple thought experiments eliminate the viability of Chevron’s position. If they had prevailed, would they have agreed that the plaintiffs could have re-filed and re-litigated their claims in SDNY? After all, Chevron’s res judicata defense would have been dependent upon a valid final judgment, and the plaintiffs could just claim fraud in the judiciary and keep going forward.

        The stipulation was indeed faulty, but I don’t think that cures the problems of estoppel, which would be present without any stipulation. This was a strategic litigation decision, no different from a plaintiff picking among a variety of potential venues and being held to that decision. I’d love to re-file any case I lose somewhere else, but this obviously can’t be the policy.

  2. Max’s point is apposite: if Chevron won and sought recognition of an Ecuadorean judgment dismissing the action in the SDNY, then res judicata and cause of action estoppel would operate in its favour. Instead, Chevron lost and opposes enforcement because of alleged systemic judicial and political corruption.

    Chevron was forum shopping. It chose to buy goods at Ecuador ‘r Us. Now it wants a refund for the defective judgment. Volenti non fit injuria.

    What a hot mess. The parties should settle or this case will make the Hundred Years’ War seem like a vacation.

    1. But if they settled, what would I write about?

      Also, bear in mind that res judicata would operate in Chevron’s favor unless the Lago Agrio plaintiffs sought to show that the Ecuadoran judgment was not entitled to recognition and enforcement.

      1. Res judicata operates both ways; ‘recognition’ applies to the foreign judgment against the plaintiff its claim in the foreign court, while ‘enforcement’ applies to the foreign judgment against the defendant granting the plaintiff’s claim in the foreign court.

        You can always write about #Borealis ;-)

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