Lago Agrio: Stratus Consulting Turns On Donziger

Update: I have updated the post to include a statement from Craig Smyser, one of the Ecuadoran plaintiffs’ lawyers.

I had a nice post scheduled for next week explaining the recent settlement between Chevron and Stratus Consulting, and in particular to speculate on the importance of the cooperation clauses in the settlement agreement: Stratus agreed to make its witnesses available to Chevron “to testify in person, by deposition or by written statement, under oath, in any stage of the RICO Action, the BIT Arbitration, or the Related Actions, at the request of Chevron upon reasonable notice,” and to “[take] steps to obtain and produce to Chevron the complete, unredacted Stratus materials currently possessed by Stratus’s counsel at Silver & DeBosky.” Stratus also agreed to de-designate any discovery materials it had previously designated as confidential and not to assert any privilege in response to a discovery request from Chevron. “Interesting!” I thought. “I wonder what Chevron has up its sleeve.”

Marcus Junius Brutus
Et tu, Calmbacher Reyes the Huaorani people Burford Capital Stratus Consulting?
Well, now we know. According to a press release reported by Daniel Fisher, Stratus has joined the list of erstwhile Donziger allies that have turned on the man who was “once the toast of the environmental plaintiffs’ bar.” According to Stratus:

Chevron’s lawsuit alleged racketeering and fraud claims against Steven Donziger, the Lago Agrio plaintiffs, Stratus, and others relating to the long-running environmental trial against Chevron in Lago Agrio, Ecuador. That trial resulted in an approximately $19 billion judgment against Chevron. Prior to the judgment, Stratus had been retained by Donziger, on behalf of the Lago Agrio plaintiffs, to serve as an environmental consultant. Stratus’s environmental consulting work for Donziger was used in a report submitted to the Ecuadorian court by the supposedly “independent” court expert Richard Cabrera as part of a process that Stratus has learned was tainted by Donziger and the Lago Agrio plaintiffs representatives’ “behind the scenes activities.”

Stratus believes that the damages assessment in the Cabrera Report and the entire Cabrera process were fatally tainted and are not reliable. Stratus disavows the Cabrera Report, has agreed to cooperate fully and to provide testimony about the Ecuador litigation.

Stratus deeply regrets its involvement in the Ecuador litigation. We are delighted to have this matter behind us.

The Wow! SignalWow!

This is another feather in the Maestro’s cap. I cannot remember a case where one side has so effectively co-opted the other side’s experts and allies and even (in the case of the Huaorani) gotten to sit back and watch as some of its opponents turned on their own lawyers.

What is the significance of Stratus’s defection? Well, we have to wait and see whether Stratus really delivers the goods to Chevron, and it will be interesting to compare what Stratus says now with positions it or its witnesses took before. Along these lines, here is a statement from Craig Smyser, one of the LAPs’ attorneys:

Chevron gets testimony two ways: they pay for it or they intimidate people until they give in. Here, we are sorry to say, Chevron bullied Stratus until Stratus had no choice but to succumb: the firm was faced with financial extinction after Chevron engaged in the defamation of Stratus to agencies Stratus did business with – all of which is set out in Stratus’ suit against Chevron.

Stratus has testified, in this court, that it backs its science detailing the pollution and contamination of the Ecuadorian rain forest. Although the settlement agreement Chevron extracted from Stratus prohibits Stratus for a period of 20 years from any environmental consulting that might even involve Chevron and imposes a gag order on Stratus with respect to public statements about “the factual or scientific validity or accuracy of all or any part of the Cabrera report”, we are confident Stratus will testify truthfully about these topics.

Less than three months ago, Stratus filed papers in court that said in no uncertain terms that justice was done in the Ecuadorian litigation:

Chevron knows that based on scientific data collected during the Lago Agrio litigation, including data collected by Chevron, Stratus actually found that contamination was present at every single well site and station that was sampled, and that the areas contaminated by oilfield operations requiring cleanup included over 900 oilfield pits, 356 well sites, 22 oil processing stations, and additional areas of spilled oil-a huge amount of environmental damage costing immense sums to remediate.

We are confident Stratus will stand by the statements it made in court and to the public, including those on CBS’ 60 Minutes, detailing the science of Chevron’s pollution in the Ecuadorian rain forest.

But fundamentally, the material about Stratus goes to the question of whether the Lago Agrio plaintiffs committed fraud in Ecuador, not to the question of whether Ecuador’s courts were inadequate. On the one hand, this means it is possible to take the view (regular readers will know that I am inclined to this view) that the question of whether there was a fraud on the Ecuadoran court should be for the Ecuadoran court to decide, absent a showing that it is for some reason incompetent to decide it, particularly in light of the forum non conveniens dismissal early in the case. On the other hand, I can imagine that the new Stratus evidence, if sufficiently juicy, could be just the sort of thing that Chevron could take to the Ecuadoran court, perhaps with some chance of success. Or it could be sufficiently bad for the LAPs that one would want to say that it would be inequitable to estop Chevron from asserting a fraud Ecuadoran court, because it would show unclean hands. We will have to wait and see.

Photo credits: Marie-Lan Nguyen, The Ohio State University Radio Observatory and the North American AstroPhysical Observatory (NAAPO)

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.

5 thoughts on “Lago Agrio: Stratus Consulting Turns On Donziger

    1. Thanks, Observer. I am skipping lunch to work on a post about Beltman’s declaration. Whatever the consequences for the case, I think the consequences for him personally are going to be very bad.

  1. Looking at the two statements; Douglas Beltman states: “I am an Executive Vice president at Stratus Consulting Inc. (Stratus) where I have worked since I and others formed Stratus in October 1998,” and Ann Maest states: “I am a Managing Scientist at Stratus Consulting, Inc. (Stratus), where I have worked intermittently since 1993.”

    How can Ann be working in the company when it was not yet formed? Apparently, It was formed in 1998 and she claimed to have worked there since 1993.

Leave a Reply

Your email address will not be published. Required fields are marked *