A few days ago I reported on the settlement between Stratus Consulting and Chevron, and the Declaration of Douglas Beltman, one of the Stratus experts who aided the Lago Agrio plaintiffs in Ecuador. Chevron has done it again, filing a new settlement agreement with Burford Capital, the LAPs’ former litigation funder, and a new declaration from Christopher Bogart, Burford’s CEO. The declaration is notable for its attack on LAP law firm Patton Boggs LLP and lead lawyer on the case James E. Tyrrell Jr.. The basic claim is that Burford was willing to invest in the litigation because of its comfort with Patton Boggs and Tyrrell in particular.

Burford was concerned about the allegations being made regarding Cabrera during the diligence process. As set forth in our internal analysis to the Burford investment committee, we understood that Chevron was likely to argue that any judgment against it in the Lago Agrio Litigation was unenforceable based “on communications between plaintiffs and the neutral, court-appointed expert Cabrera that, in Chevron’s view, render Cabrera’s report tainted and undermine the soundness of any court judgment.” We were candid that these allegations “gave us some pause,” and we shared with Danziger and Patton Boggs our concerns.

Patton Boggs sought to alleviate Burford’s concerns about the Cabrera Report. Its Invictus memo stated that Chevron and Gibson Dunn, as counsel to Chevron, were “distort[ing]” reality with their allegations regarding the illegality of the contacts between Cabrera and the LAPs’ representatives: “Cleverly using the lens of U.S. norms to distort what transpired in Ecuador, Chevron has used its findings regarding Plaintiffs’ involvement with the Cabrera Report to create the impression that it is the victim of an injustice in Ecuador.”

Patton Boggs described as “especially frivolous” Chevron’s attempts to have the Lago Agrio Litigation dismissed on the basis of the “alleged procedural improprieties related to the preparation of the Cabrera Report.” And Patton Boggs asserted that “Chevron was free to meet with Mr. Cabrera just as plaintiffs did,” and that “no Ecuadorian law or rule” prohibited the contacts between the LAPs’ representatives and Cabrera.

Patton Boggs and Danziger also specifically assured us that the contacts that had occurred between the LAPs and Cabrera were both limited and permissible.

As we later learned, the representations that Patton Boggs made to us in Invictus and otherwise during our diligence process were false and misleading in several respects. [ellipsis]

Another point of interest: Donziger’s reaction when Burford refused to provide the second tranche of funding the parties had agreed, after Judge Kaplan issued his temporary restraining order and preliminary injunction in early 2011:

On February 1, 2011 , Chevron tiled the captioned action. Chevron also sought a temporary restraining order (“TRO”) and preliminary injunction to preclude the LAPs from taking any steps to enforce the Lago Agrio Judgment. The court issued such a TRO on February 9, 2011. The TRO provided that “Defendants, their officers, agents, servants, employees and attorneys and all other persons in active concert or participation with any of the foregoing be and they hereby are restrained [ellipsis] from funding, commencing, prosecuting, advancing in any way, or receiving benefit from, directly or indirectly, any action or proceeding for recognition or enforcement of any judgment” in the Lago Agrio Litigation. [ellipsis]

On February 15, 2011, the LAPs issued a “Funding Notice” requesting funding of the second tranche of the Funding Agreement.

On February 21,2011, Treca [one of the entitites Burford formed to fund the litigation] informed the LAPs that the Funding Notice issued by the LAPs was invalid because the TRO “bar[red the LAPs] from issuing a Funding Notice.” [ellipsis]

Treca also noted that the serious allegations of fraud and other misconduct then coming to light in the “appear to contravene directly the representations made to the Funder in the Funding Agreement,” among other violations of the Funding Agreement.

The LAPs responded with quite an extraordinary letter from Steven Danziger on March 14, 2011. To begin with, despite ignoring Burford’s suggestion to seek clarification of the TRO from the Court, the LAPs threatened Burford with a massive lawsuit unless it violated Judge Kaplan’s order, committed contempt of court, and continued funding despite the TRO being quite clear that “funding” was enjoined. Then, rather than proffering some sort of substantive explanation or justification for their conduct, the LAPs went on instead to assert that Burford could not have been deceived because all the information about the LAPs’ frauds had already been public at the time of the execution of the Funding Agreement (despite this action yielding discovery showing just the opposite to be true, and ignoring their prior representations that Chevron’s allegations were “lacking credibility” and “manipulation”).

The recent developments (which include a showdown between Donziger and Randy Mastro that I haven’t yet covered) remind me a little bit of a shock and awe campaign. Can the LAPs and Donziger pull a coherent and persuasive response together to counter all of this?

Photo credit: Marie-Lan Nguyen