Lago Agrio: Trial Update and Scorecard
Posted on November 4, 2013
There’s a fair amount to report since my last post about trial developments. As always, just a caveat that I’m only reporting on what I can glean from the docket, since I’m not in New York for the trial.
- Judge Kaplan Rejects Motions For Sanctions and to Strike Judge Guerra’s Testimony. Donziger and the LAPs had sought dismissal of the case altogether on the grounds that (in their view) by paying Guerra for his testimony, Chevron has corrupted the judicial process. At a minimum, they say, the testimony should be excluded. Judge Kaplan denied both motions in a short order, calling them frivolous. I think there’s a real issue of professional responsibility here for Chevron’s lawyers. Under Rule 3.4(b) of the Model Rules of Professional Responsibility, a lawyer cannot “offer an inducement to a witness that is prohibited by law.” No less an authority than Dean Chemerinsky has opined that while payments of the expenses reasonably necessary to keep a witness safe are permissible if there is a bona fide risk to the witness’s safety due to his testimony, payment of a salary is improper, and that payment of more than the reasonable value of physical evidence (not the value of the evidence to the lawyer) is improper. There seem to be grounds to mount a strong challenge here to the amounts Chevron’s lawyers have paid Judge Guerra, though Chevron has taken its own advice about the propriety of the payments to Guerra and has points to make about what it says is the threat to Judge Guerra’s safety. But I agree with Judge Kaplan that the answer is not to exclude the evidence. Donziger and the LAPs cite only a single unpublished decision from the District of New Jersey in support of exclusion. It seems to me the right course is to admit the evidence, allow the finder of fact to make a determination about credibility, and then raise the issues of professional responsibility in a bar discipline proceeding.
- Jeff Shinder Testifies. Shinder was a lawyer who had been retained by Donziger and who quit the case in disgust after realizing that the Cabrera report was not independent, as he had been led to believe. Shinder’s testimony generated some interesting coverage in the press, but I don’t really see the relevance of the testimony. As far as I can tell, Shinder testified about Shinder’s reaction to learning the truth about Cabrera, and who cares about that? (No disrespect to Shinder, who acted appropriately, I think). Donziger and the LAPs have moved to exclude the testimony.
- Chevron’s Unjust Enrichment Claim Rejected. Chevron had sought to bring a claim of unjust enrichment, and it has recently pointed to the seizure of certain Chevron trademarks in Ecuador as a basis for the claim. Judge Kaplan has pretty curtly rejected the claim. He found that the claim had no basis and that in any event he would refuse to revive it at such a late date as a matter of trial management.
- Maneuvering On The Unclean Hands Case. Donziger and the LAPs want to argue that Chevron is not entitled to equitable relief because Chevron has unclean hands. The gist of the claim seems to center on Diego Borja, who, the LAPs and Donziger say, was a dirty tricks guy for Chevron, and whom, they say, Chevron has paid for his silence. According to a recent Chevron filing, the LAPs took Borja’s deposition, but they have not designated him as a trial witness, nor have they offered any of his deposition testimony in evidence. According to Chevron, the LAPs mean to offer the testimony of Santiago Ernesto Escobar Escobar, who is to testify about statements Borja made. It should be obvious that there is a hearsay problem here, and unfortunately, the LAPs’ lawyers have said that they will oppose Chevron’s motions orally rather than in a brief, which makes it difficult to judge the issue. But if Chevron’s statement of the issues is roughly accurate, then it’s questionable whether the Borja story will be admissible.
- Has Chevron Shown That Donziger and the LAPs Acted Wrongfully In Ecuador? I think the answer is pretty clearly yes. There’s no dispute about the ghostwritten Cabrera report. Shinder’s reaction on learning of the ghostwriting may not be relevant, but it is, I think, the correct reaction. Chevron has also shown, I think, serious improprieties in the judicial inspections that Cabrera undertook. And according to a recent Chevron filing, it seems that Donziger and the LAPs are not going to offer testimony from Cabrera himself to make a case for his report. No one (except Donziger) now seriously contends that all was well with the Cabrera report, as far as I can tell.
- Has Chevron Shown That The Ecuadoran Courts Acted Wrongfully?
- The Remedy. (Warning: this is a 30,000-foot kind of paragraph that discusses general themes but not the underlying doctrines. So in other words, don’t hold me to this!) I have never been a fan of the remedy Chevron is seeking. I see two possible rationales for an injunction forbidding actions for recognition and enforcement in other jurisdictions: (1) the judgment was fraudulent, or (2) Chevron should not be exposed to a multiplicity of suits. As to the first, my basic, non-technical view is that if the judgment is as obviously fraudulent as Chevron claims, then we can trust the courts of other nations to see the truth of the matter and to refuse to recognize the judgment. Why should a US court take this out of the hands of the courts of other nations? Well, you may say, it will cost an arm and a leg to oppose the judgment in lots of jurisdictions at once. But that point is really only persuasive, it seems to me, if you have already concluded that the judgment is fraudulent. Suppose the judgment were unquestionably valid, yet Chevron refused to pay. Why should the judgment creditor, in such a case, not be entitled to pursue Chevron’s assets wherever they are located? Maybe, you could object, the creditor should be required to pursue the judgments in a single jurisdiction like the United States, if it were clear that Chevron had enough assets there to satisfy the judgment. But it seems to me that the judgment debtor shouldn’t be able to hold its assets in a jurisdiction where, for the sake of argument, the likelihood of recognition and enforcement is lower than in other jurisdictions. This is just an example of my general hostility to arguments about personal jurisdiction and forum non conveniens at the judgment enforcement stage of a dispute, which I’ve expressed in prior posts unrelated to the Lago Agrio case. It may be that the court won’t ever need to reach these questions, because there is a real question about the standing of a private plaintiff such as Chevron to obtain an injunction under RICO. (Yes, I know Chevron has common law claims such as fraud, but the fraud claim—which rests on “third-party reliance”—has its own quirks and problems).
Maybe. The question is whether Judge Kaplan credits Judge Guerra’s testimony. On the one hand, Judge Guerra clearly is not an honest person, and the judge would be within his rights simply to disregard his testimony altogether. Moreover, it’s not clear whether any of the evidence Chevron offers to corroborate Guerra’s story will be admissible, or if it is, whether the judge should credit it insofar as Judge Guerra himself is the source of most of it. And we haven’t even gotten yet to Chevron’s payments to Guerra, which provide additional grounds for impeaching his credibility. On the other hand, I wasn’t in the courtroom, and maybe Guerra came across as believable, contrite, and truthful. Just to put this issue in context: I’m interested in it mainly because of its implications for the Ecuadoran judgment in recognition and enforcement proceedings; but in the RICO case, I suppose it’s of interest mainly because bribing judges is another predicate wrongful act, to be treated just like the Cabrera report. But if I were the LAPs I would be concerned about the potentially preclusive consequences of any findings of fact on this point.
This and That
Two other items of note. First, the appeal in the Yaiguaje case was argued recently in Toronto. I hope to have a first-hand account of the argument for you soon. Second, folks should read the online symposium at Opinio Juris stemming from Michael Goldhaber’s paper on the power of investment treaty tribunals to “review” national court judgments. (I put the word “review” in quotes because part of the issue is a question whether tribunals really are reviewing judgments in the same sense as an appellate court does). Good stuff!