Lago Agrio: Judge Kaplan Orders Patton Boggs To Produce Documents

Judge Kaplan has issued a significant decision in the RICO case against Steven Donziger and the Lago Agrio plaintiffs. The decision orders the Ecuadorans’ US law firm, Patton Boggs, to produce documents in response to a subpoena, subject to privilege claims much narrower than the claims Patton Boggs argued it was entitled to make.

The decision goes into a fair amount of detail about the history of the Lago Agrio case and the reasons for thinking that there was fraud in the Ecuadoran proceedings, focusing particularly on the Cabrera report, the Calmbacher report, and the evidence of corruption from Judge Guerra’s declaration.1 It also explains the “cleansing reports,” which we haven’t really covered in detail here but which Doug Cassel mentioned in his contribution to the Letters Blogatory Symposium on forum non conveniens and recognition and enforcement of judgments.2 Here is Judge Kaplan’s summation of the evidence:

This record establishes probable cause to suspect, taking the matters essentially in chronological order, that (1) the LAPs wrote the Calmbacher reports that were filed with the Lago Agrio court and attached Calmbacher’s signatures to them, knowing that the reports did not reflect his views, (2) the judicial inspection process was terminated, the global expert proposal adopted, and Cabrera selected as the global expert as a result of the LAPs’ threat that they would file a misconduct complaint against the judge if he did not accede to their wishes that he take these actions, (3) the LAPs secretly planned and wrote all or at least the great majority of Cabrera’s report, were complicit in its presentation to the Lago Agrio court as Cabrera’s independent work, and took other steps to bolster the false pretense that the report had been independent, (5) the LAPs entered into an improper relationship with Judge Zambrano during his first tenure as the presiding judge pursuant to which Judge Zambrano agreed “to quickly move the case along in their favor,” and (6) the LAPs then entered into a supplementary and equally improper relationship with Guerra pursuant to which Guerra agreed to move the case quickly and limit Chevron’s procedural options by not granting their motions on alleged essential errors in rulings [Guerra] was to write, in exchange for payment by the LAPs’ representatives of “approximately USD $1,000 per month for writing the court rulings Mr. Zambrano was supposed to write.” In addition, there is probably cause also to suspect that LAP lawyers and other representatives later bribed Judge Zambrano to obtain the result they wanted and, pursuant to the arrangement they struck with him, actually wrote the decision to which he signed his name after some cosmetic and inconsequential editing by Guerra.

What’s really noteworthy in the new decision is the discussion of Patton Boggs’s supposed role in the case. Patton Boggs, of course, was not even retained to represent the Lago Agrio plaintiffs until February 2010, just a year before the date of the Lago Agrio judgment. Before delving into this, I’d like to say that I am highly sympathetic to the Patton Boggs lawyers involved, who were probably communicating with each other and with their clients on the understanding that their emails would remain privileged. It’s shocking, actually, that Chevron has been as successful as it has been at piercing the privilege, and the upshot is that we have a look in to the decisionmaking on the LAPs’ side that was never meant to be made public. I suspect that if we could see the internal communications Chevron had with its lawyers we would similarly see things that Chevron would prefer the public not to see. So spare a thought for the Patton Boggs team.

The Fajardo Declaration

Judge Kaplan focused heavily on Patton Boggs’s role in defending some of the § 1782 applications Chevron had brought in the US, and in particular on its role in drafting the declaration of Pablo Fajardo that the LAPs submitted in the District of Colorado in an effort to delay or head off the production of documents by Stratus, the firm that Chevron then suspected was involved in ghostwriting the Cabrera report:

PB was heavily involved in drafting the Fajardo Declaration which, the the words of one PB partner [ellipsis] was intended to “cleanse any perceived impropriety related to the Cabrera Report.”

I don’t think Judge Kaplan’s conclusions rest on a conclusion that Patton Boggs did anything wrong, but because I think his opinion treats Patton Boggs somewhat unfairly, I want to address that question.

According to the testimony of the Patton Boggs lawyer, Eric Westenberger, the decision to have Fajardo rather than another witness, such as Donziger, sign the declaration was motivated by a belief that Chevron would not seek to depose Fajardo. The declaration that the LAPs ultimately filed

gave a bland description of the process by which the judicial inspections had been terminated, the global expert proposal adopted, and Cabrera in particular selected. But it failed to mention that Fajardo and Donziger had threatened the judge with a misconduct complaint unless the judge agreed to their demands and appointed Cabrera. And while it acknowledged that the LAPs had “delivered materials to Mr. Cabrera,” it did not mention the March 3, 2007 meeting at which the LAPs laid out the plan for Cabrera’s report and indicated that the work would be done by them. Nor did it reveal that Stratus and the LAPs’ counsel in fact had written all or most of Cabrera’s report. In other words, it omitted what [another LAP lawyer] said was “the most important part”—that Fajardo “sent documents that originated from Stratus.”

I think this is much closer to the line than Judge Kaplan seems to think it is. The affidavit did not, apparently, make statements that were outright false.3 It omitted key facts. But didn’t Chevron have an opportunity to take Fajardo’s deposition? There’s no doubt that the LAPs’ lawyers had a duty of candor to the court. But except in ex parte proceedings, the duty is not a duty to make all of the facts known to the court, whether favorable or unfavorable, but rather only to ensure that the facts that the lawyer does present are not, to the lawyer’s knowledge, false. See Model R. Prof’l Conduct 3.3. As a tactical matter it is, in my view, very often a bad idea to only tell half of the story in an affidavit or declaration, because in general the truth will out, at least in a US proceeding with opportunities to take the testimony of adverse witnesses, and it’s better to get the facts out there and tell your story than to wait for a brutal cross-examination to reveal them. But it seems to me that Patton Boggs’s mistake, if it was a mistake, was probably one of litigation strategy and not one of professional responsibility.

The Cleansing Reports

The evidence on Patton Boggs’s role in the cleansing reports seems similarly equivocal. On the one hand, Judge Kaplan acknowledges that the new experts “were instructed to use Cabrera’s data as a ‘starting point [ellipsis] to develop [their] own valuation[s].’” One expert testified that he was not told that Stratus and the LAPs had written the Cabrera report, but it’s unclear what this has to do with the validity or invalidity of that expert’s conclusions. Similarly, another expert admitted that he did not seek to verify Cabrera’s data independently. But Judge Kaplan does not tie this poor performance by the expert to Patton Boggs. Again, it is not really clear to me that Patton Boggs crossed a line here.

Chevron’s Efforts To Get Discovery In Ecuador

One of the bases of the judge’s decision to allow discovery from Patton Boggs was the Lago Agrio plaintiffs’ refusal to provide discovery from Ecuador. In a new twist—new to me, at least—Judge Kaplan explains that in October 2012, one of the LAPs, Octavio Ismael Cordova Huanca, had brought an action in Ecuador against his attorneys, including Fajardo, to bar them from turning over information in US discovery. Judge Kaplan rightly points out that the case was collusive insofar as neither side of the case wanted information to be produced. Here, I think the judge’s attitude is in line with the typical US judge’s reaction to foreign mechanisms such as blocking statutes that seem calculated to frustrate US discovery.

Judge Kaplan also points out, referring to earlier decisions, that Donziger himself has not been forthcoming in discovery. By way of example, of the 8,652 documents Donziger claimed were privileged, “not one [ellipsis] was written by or addressed to any of the Lago Agrio plaintiffs—the clients whose privilege supposedly [was] being asserted.” Yikes!

Chevron’s inability to get information from Ecuador or from Donziger gave added weight, in the judge’s view, to the subpoena to Patton Boggs, and this seems basically right to me.

The Bottom Line

The judge gave a long explanation of the principles that govern the attorney-client privilege and the work-product doctrine, and because these questions are pretty far removed from the Letters Blogatory scope of coverage, I’m not going to review that discussion here. The bottom line is that here, there were unlikely to be many attorney-client privileged documents, since as Patton Boggs itself recognized, the LAPs themselves lived in the “remote Ecuadoran jungle” and were probably not in touch too often with their US lawyers.4 The LAPs and Donziger, by refusing to produce responsive materials, had made it necessary to look to Patton Boggs. And perhaps most importantly, the crime-fraud exception to the ordinary rules of privilege applied in light of the judge’s findings about what had happened in Ecuador. I have pointed above to reasons why it’s not clear that Patton Boggs itself acted wrongly, but as the judge notes, the key to the crime-fraud analysis is not wrongdoing by the lawyer but wrongdoing by the client: “the loss of the privilege does not depend [ellipsis] upon proof that client a
nd attorney are involved in equal guilt. The attorney may be innocent, and still the guilty client must let the truth come out.”

The judge’s order contemplates further proceedings, e.g., production of a privilege log by Patton Boggs, and there may be an appeal of his decision. I will do my best to keep you posted.

  1. I collected links to my coverage of these issues in a recent post.
  2. The idea behind the “cleansing reports” was that the LAPs would hire another expert to submit a new report that would reach the same conclusion that Cabrera had reached but that would be free of the taint that attached to his report. According to Chevron—and Judge Kaplan—the new experts were instructed to rely on the Cabrera report but were not told that it had been written by the LAP team and Stratus Consulting.
  3. In a footnote, Judge Kaplan does point out that the Declaration characterizes Cabrera as “independent.” It seems to me this is the closest he comes to finding an affirmative misstatement in the declaration. The main part of the discussion focuses on the omissions and supposedly misleading impression the Declaration creates.
  4. Indeed, this lack of communication between lawyers and clients is one of the problems in representation of indigenous groups that Judith Kimerling has noted.

4 responses to “Lago Agrio: Judge Kaplan Orders Patton Boggs To Produce Documents”

  1. Douglass Cassel

    On March 15 Judge Kaplan of the Southern District of New York ordered Patton Boggs, the main US law firm representing the Lago Agrio plaintiffs, to turn over to Chevron the law firm’s emails and documents relating to specific instances of alleged fraud, bribery and extortion by plaintiffs in the Ecuadorian environmental litigation against Chevron.

    Finding “at least probable cause to believe that there was fraud or other criminal activity in the procurement of the [Ecuadorian] judgment,” Judge Kaplan ordered Patton Boggs to produce the documents, even if they include attorney work product. However, the firm may still claim privilege for attorney mental impressions or attorney-client communications. The judge will then evaluate whether those claims survive the “crime-fraud” exception to privilege.
    In a typically fair-minded post, Ted Folkman recites the judge’s damning findings, but is “highly sympathetic” to Patton Boggs.

    I have nothing against Patton Boggs. My past critiques of unethical conduct by plaintiffs’ lawyers in the Ecuadorian litigation expressly exempted Patton Boggs. But I think Ted is too hard on Judge Kaplan and too soft on the plaintiffs’ lawyers.

    The crux of our disagreement is the declaration filed by plaintiffs’ lead Ecuadorian lawyer, Pablo Fajardo, in at least 15 separate discovery proceedings in US courts. Fajardo, Judge Kaplan found, gave a “bland description” of the Ecuadorian litigation. In a failed effort to persuade a Denver federal court that “nothing amiss” tainted the report of the Ecuadorian court’s “independent” expert, Fajardo failed to mention that he and plaintiffs’ US lawyer Steven Donziger had threatened the Ecuadorian judge, and that they had arranged for their consultants to write “all or most” of the expert’s purported report, which they then portrayed as the work of the “independent” expert.
    From this and other evidence Judge Kaplan found probable cause to suspect that “at least some of those involved” in the Denver proceeding committed “mail and/or wire fraud and obstructed justice,” by formulating and filing a “seriously misleading account of what happened.”

    Ted objects that this treats Patton Boggs unfairly. In his view Fajardo’s affidavit was, apparently, not “outright false.” Fajardo merely “omitted key facts.” Ted argues that attorneys are ethically obliged to tell the truth, but not the whole truth. “Patton Boggs’s mistake, if it was a mistake,” he adds, “was probably one of litigation strategy and not one of professional responsibility.”

    I respectfully disagree in several respects. First, Judge Kaplan did not pin the probable fraud on Patton Boggs, but only on “at least some of those involved.” Although the judge found that Patton Boggs “worked with the [plaintiffs] to draft the Fajardo Declaration,” the judge left open the issue of “whether or not [Patton Boggs] knew … at the time” that the declaration was deceptive. The judge found no need to “determine for present purposes whether there is probable cause to suspect that [Patton Boggs] or any of its personnel was a culpable or knowing participant in any alleged fraud or crime.”

    In short, the judge was fair to Patton Boggs.

    But someone committed fraud. In Judge Kaplan’s apt phrase, the Fajardo declaration was not merely incomplete, but “seriously misleading.” And hence fraudulent as well: for purposes of mail or wire fraud, as Judge Kaplan noted, quoting Neder v. US, 527 U.S. 1 (1999), “the well-settled meaning of ‘fraud’ require[s] a misrepresentation or concealment of material facts.” To aver, as Fajardo did, that plaintiffs “delivered materials” to the court-appointed expert—without mentioning that the materials delivered were in fact the expert’s purported report—is both to misrepresent and to conceal material facts.

    Moreover, Fajardo characterized the court’s expert as “independent”—when in fact Judge Kaplan found probable cause to believe that the expert was “handpicked” by plaintiffs because they knew he would “play ball” with them, which he did, by eventually presenting as his own a report handed to him by plaintiffs. Ted calls this “the closest [the judge] comes to finding an affirmative misstatement.” But this was not a close call; Fajardo’s description of the court’s purported expert as “independent” was—even by Ted’s standard—“outright false.”

    In further defense of the ethics of the Fajardo declaration, Ted asks, “But didn’t Chevron have an opportunity to take Fajardo’s deposition?” The answer is “no.” As Judge Kaplan explained at length, the plaintiffs and their lawyers “are defying this Court’s order to produce information in the hands of their Ecuadorian lawyers and even their non-lawyer associates.”

    Apart from the Fajardo declaration, Ted finds “similarly equivocal” Patton Boggs’ role in generating the “cleansing reports” later filed by other experts in the Ecuadorian litigation, after the court-appointed expert’s fraud was revealed. But Ted does not make clear that Judge Kaplan reached a similar conclusion: “on the present record, there is insufficient factual basis to suspect that the cleansing reports themselves were fraudulent …”

    Again, Judge Kaplan was fair to Patton Boggs.

    Finally, I think Ted overlooks an important point in the findings of probable cause of fraud in the Fajardo declaration. The Lago Agrio plaintiffs filed that declaration in at least 15 US court proceedings. Ted has long argued that Chevron in effect assumed the risk that plaintiffs’ lawyers would commit fraud in the Ecuadorian litigation when Chevron asked, a decade ago, for the case to be tried in Ecuador. I have argued to the contrary. Regardless, what we now have is a judicial finding of probable cause of fraud by plaintiffs’ lawyers (not necessarily by Patton Boggs) before courts in this country. Surely Ted would not now argue that Chevron assumed that risk, too.

    1. Thanks, Doug, for the interesting and fair-minded comment. I think you mistake two of my points:

      1. I have never argued that Chevron, by seeking to have the case litigated in Ecuador, assumed the risk that the plaintiffs’ lawyers would commit fraud there. Instead, I have argued that Chevron may have assumed the risk that the Ecuadoran courts would not meet the minimum standards required for their judgments to be entitled to recognition and enforcement in the United States. I don’t think anyone ever can be said to assume the risk that an opponent will commit fraud.

      2. On the question of a Fajardo deposition, what I was asking was whether Chevron had had an opportunity to take Fajardo’s testimony in any of the § 1782 proceedings in which his declaration was filed, not whether Chevron has had an opportunity to take his testimony in Judge Kaplan’s court. It may be that the answer is no. It may be that Chevron never sought his deposition in any of the § 1782 cases. It may be that Chevron did seek his deposition and was refused permission. I don’t know the answer to these questions without taking a close look at lots of dockets. But it seems to me that Chevron knew or suspected, at the time it was engaged in its § 1782 campaign, that Fajardo’s declaration wasn’t the whole story, and I think a judge should have and perhaps would have granted leave to take Fajardo’s deposition in the circumstances, if Chevron had asked.

      Also, I would point out that you and I don’t disagree about a key point—Judge Kaplan didn’t pin the fraud on Patton Boggs, and it’s not really relevant to the crime/fraud analysis whether Patton Boggs was guilty of misconduct. As I wrote: “I have pointed above to reasons why it’s not clear that Patton Boggs itself acted wrongly, but as the judge notes, the key to the crime-fraud analysis is not wrongdoing by the lawyer but wrongdoing by the client: ‘the loss of the privilege does not depend … upon proof that client and attorney are involved in equal guilt. The attorney may be innocent, and still the guilty client must let the truth come out.’”

      You may be right that I have minimized the misleading nature of the Fajardo declaration, but the main point of my post was to express fraternal sympathy with Patton Boggs. The most scrupulously ethical lawyers in the world would be mighty unhappy, I think, to find that their litigation files were open to their opponent’s inspection, and to make a new point, the potential chill on the adversary system in high-profile cases is a real concern.

    2. I should add that it would be pretty unusual to take this kind of deposition in a § 1782 case—a “meta-deposition,” in a way—but then everything about this case is unusual.

  2. Doug Cassel

    On Ted’s first point, I heartily agree with his statement that, “I don’t think anyone ever can be said to assume the risk that an opponent will commit fraud.” Indeed, that is precisely what distinguishes this case from other forum non conveniens cases, where fraud in the foreign forum might be committed by third parties. Here the fraud was committed by Chevron’s “opponent.” To hold Chevron now estopped from challenging the Ecuadorian judgment, as Ted on occasion proposes, when in fact there is overwhelming evidence, not only that the Judgment was fraudulent, but that Chevron’s opponent committed massive fraud in order to procure the Judgment, is not consistent with the equitable principles that underlie the estoppel doctrine. To estop Chevron from challenging the Lago Agrio Judgment would enable plaintiffs’ counsel to profit from their own fraud. No court anywhere should countenance that.

    On Ted’s second point, the Fajardo deposition, it would be passing strange if plaintiffs’ counsel – having mightily resisted any discovery from Ecuador in the RICO case – would agree to it in the 1782 discovery proceedings. But just to be sure, I checked with Gibson Dunn, the law firm representing Chevron in the 1782 cases, and am informed that Chevron has repeatedly requested Fajardo’s deposition, only to be told that he refuses to appear. No surprise there.

    Undaunted, Chevron has noticed Fajardo’s deposition in the RICO case. (Perhaps Fajardo will have a change of heart?)

    Finally, I understand Ted’s “fraternal sympathy” with Patton Boggs. (I will be less sympathetic, if discovery reveals that Patton Boggs had culpable knowledge of the fraudulent content of the Fajardo declaration, at the time the firm worked with the plaintiffs to draft it and present it to federal judges in the US.)

    My concern, however, is that in his sympathy for Patton Boggs, Ted may have been unintentionally unfair to Judge Kaplan. Judge Kaplan’s lengthy opinion on the discovery requested from Patton Boggs was thorough and judicious. He detailed the prima facie evidence that fraud and other crimes were committed by Lago Agrio plaintiffs’ counsel; narrowed the discovery against Patton Boggs to those particular incidents; demonstrated that other means of obtaining the information had been systematically blocked by plaintiffs’ counsel; showed reason to anticipate that few attorney-client communications are likely to be found in the relevant Patton Boggs documents; and allowed Patton Boggs nonetheless to assert claims of privilege for any attorney-client and attorney mental impressions that may be found in the documents. In striking contrast to the judicial farce in Ecuador, Judge Kaplan’s opinion is well-reasoned, restrained and fair.

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