Lago Agrio: Deepak Gupta In The House

Deepak Gupta
To The Rescue!
If you spend your days reading and writing memoranda of law, you know a good one when you see it. And so when I read Steven Donziger’s latest brief in the RICO case last week, my first thought was that his lawyers had finally found their groove. But then I looked at the cover and saw that Donziger had actually gotten a new legal team! I assume (but I do not know) that the new member of the team, Deepak Gupta of Gupta/Beck, had a big hand in the new brief that’s both legally compelling and a pleasure to read. Enough with the effusive praise. What’s the brief about?

Readers may recall that before the RICO trial began, Chevron dropped its claim for damages, a move evidently aimed at avoiding a trial by jury. I’ve previously noted that there’s a serious question whether the court has jurisdiction of a RICO claim brought by a private party seeking only equitable relief. And I’ve basically let the question of jurisdiction lie there. The new Donziger brief, though, makes a very good argument for a broader jurisdictional problem: Chevron, Donziger says, is not seeking relief that could redress a legally cognizable harm it claims to have suffered, and the court therefore lacks jurisdiction under Article III.

At the risk of acting as a stenographer instead of as a critic, here are some highlights from the brief—did I mention I think the brief is pretty darn good?

Litigation Costs in Ecuador. Chevron claims it has incurred and will incur costs in litigation in Ecuador:

Neither the litigation costs already incurred nor those Chevron expects to incur in the future would be redressed by the relief it seeks. As for costs incurred, Chevron cannot recover them because it is not seeking damages. As for costs expected, Chevron has asked this Court for an order that—by its own terms—does not “enjoin or otherwise prohibit” the defendants from “filing or prosecuting any action for recognition or enforcement of the 2011 Judgment or any subsequent Judgment or Enforcement Judgment, or for prejudgment seizure or attachment of assets based upon the 2011 Judgment or any subsequent Judgment or Enforcement Judgment, in courts outside the United States.” Because Chevron repeatedly “makes clear that it is not seeking to enjoin the filing or litigation of foreign enforcement actions”—and because no domestic enforcement action has yet been brought—the costs Chevron incurs in enforcement proceedings will not be redressed by its requested relief. Put differently, although Chevron bemoans the “substantial costs” it “will be forced” to spend in those proceedings “unless Defendants are enjoined,” that money will be spent regardless of whether this Court grants the requested injunction.

The Costs of the § 1782 Campaign. I’m on record as a big fan, from a purely technical point of view, of Chevron’s § 1782 proceedings. Look at what Chevron accomplished! The company was on the rocks until it was able to obtain the Crude outtakes, and its § 1782 campaign led to Chevron’s successful efforts to flip the Ecuadoran’s experts and litigation funders. But should Chevron be able to count the costs of the § 1782 litigation as an injury?

[A] plaintiff cannot “manufacture standing” through “self-inflicted injuries”—and surely not by spending money to build its case. Clapper, 133 S. Ct. at 1151-52.

The Costs of the Argentine Embargo. I’ll go right to the brief on this one:

Chevron’s third asserted injury is even further afield: “Funds of Chevron’s Argentine subsidiaries were embargoed from November 2012 through June 2013, resulting in opportunity costs to the subsidiaries and depreciation of the embargoed funds.” This is obviously not an injury that would give Chevron standing because the embargo is no longer in effect and Chevron seeks only prospective relief.

Trademarks. Chevron argues that its Ecuadoran trademarks are subject to an embargo by the Ecuadoran court and that they will ultimately be transferred to another party.

Here, too, Chevron comes up short. What does Chevron mean when it says that the embargo “will ultimately” cause Chevron harm? Is it predicting that the Constitutional Tribunal of Ecuador will reject its due-process objections to the judgment—or that something else will happen? An alleged injury that “rest[s] on speculation about the decisions of independent actors” is not cognizable under Article III. Clapper, 133 S. Ct. at 1150.

There are a bunch more, but you get the drift. 1 Basically, Chevron, according to Donziger, is seeking a remedy for harms that cannot be compensated except with money (which it is not seeking), or that may or may not be harms depending on what the Ecuadoran courts decide.

This is not just a good argument on the merits: it’s tactically smart. Suppose Judge Kaplan issues detailed findings of fact that are favorable to Chevron. In the Second Circuit, the judge’s findings are entitled to deference—they are reviewed only for clear error. But the Second Circuit considers jurisdictional objections de novo. Now, it’s not clear to me whether Judge Kaplan’s findings of fact would be entitled to any preclusive effect in an American court if ultimately the Second Circuit determines that Judge Kaplan lacked jurisdiction:

The res judicata effects of a judgment entered by a court that lacked subject-matter jurisdiction have not been captured in any rule or clear statement of controlling policies. The approach to such judgments has instead sought to reconcile two competing perceptions. Res judicata effects have been resisted in order to serve the traditionally strong desire to confine courts within the proper limits of appointed competence. At the same time, it is recognized that the general values of res judicata not only apply but may apply with particular force when the only objection is that correct substantive rules have been administered by a fair procedure in a court that simply lacked subject-matter jurisdiction.

18A Wright & Miller § 4428. And of course the question becomes more complicated when we have foreign courts in mind. Although I’ve never been explicit about it, long-time readers may have the sense that I’m a believer in judicial modesty, and in general I think judges should decide as little as possible. So I would suggest that if Judge Kaplan buys the jurisdictional argument Donziger is now making, he ought not to make findings of fact at all. Whether the judge does buy the jurisdictional argument, or whether he would forego the opportunity to make findings of fact even if he does, is anyone’s guess. But surely it would be a blow to Chevron if after all the procedural wrangling, the waiver of jury claims, and so forth, it doesn’t get findings of fact that it can deploy in Canada, Argentina and elsewhere. That’s really the only point of the whole exercise, as far as I have been able to tell. And it would be a big win for Donziger, since, as I have argued, any judge’s findings of fact with regard at least to the Cabrera affair are likely not going to paint Donziger in a good light.

Photo credit: Gutpa/Beck

Notes:

  1. You might ask, what about a claim of irreparable harm in the event the LAPs seek enforcement of the judgment in courts around the world? As Donziger points out, Chevron’s briefs say: “Chevron does not, however, seek to prevent Defendants from filing or litigating enforcement actions outside the United States.”

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.

18 thoughts on “Lago Agrio: Deepak Gupta In The House

  1. Dear Ted,

    The author of Donziger’s latest brief indeed deserves a round of applause for punchy prose and for scoring points. But even talented writing cannot overcome the fundamental flaws in the brief’s central contention that Chevron lacks constitutional standing to sue Donziger.

    The brief relies pervasively on the Supreme Court’s decision last year in Clapper v. Amnesty International (as do the excerpts in your post). Clapper reiterated that Article III standing requires that the injury to the plaintiff must be “concrete, particularized, and actual or imminent; fairly traceable to the challenged action; and redressable by a favorable ruling.” As accurately summarized in Donziger’s brief, this amounts to a three-part test: injury, causation and redressability.

    The Donziger brief never explains the facts or issues in Clapper. If it had, the flawed analogy would have been apparent. Clapper was the latest in a line of cases in which plaintiffs seek to challenge an allegedly unconstitutional government surveillance program, but without any evidence that they have, in fact, been subjected to the surveillance. As in earlier cases, the Court ruled that mere speculation that, in the future, the plaintiffs would be surveilled, did not suffice to show “actual or imminent” injury.

    In contrast, Chevron has already suffered actual injury as a result of Donziger’s fraud. Consider just one of the injuries – the harm to Chevron’s reputation, caused by Donziger’s public campaign of false accusations against the company.

    The Donziger brief devotes a single paragraph to Chevron’s claim of reputational harm, dismissing it as “vague.” Yet the evidence is specific and clear. For example, Donziger’s lead scientist in charge of faking the Cabrera report, Douglas Beltman, testified that he was “pressured by Donziger” to make statements in press releases and media reports that were based on “unsupported assumptions provided to me by Donziger” and others. Beltman now “cannot stand behind any statements I made to the media concerning these matters.”

    Did the resulting propaganda harm Chevron’s reputation? You bet it did. For instance, Beltman appeared on the CBS program 60 Minutes on May 3, 2009. To a nationwide viewing audience, Beltman declared, “It’s a disgrace. They treated Ecuador like a trash heap.” The video and still imagery on the program showed viewers an oily mess. But that mess, Beltman now admits, reflected neither the oil operations of Chevron (which never operated in Ecuador) or of TexPet (acquired by Chevron only after it had ceased all operations in Ecuador). Instead, the mess was produced by Ecuador’s State oil company. Even Beltman concedes that “these images and my statements were misleading in the context in which they were presented.”

    So they were. Examples of such below-the-belt hits to the company’s reputation could be multiplied many times over; in fact, they continue to the present. Beltman’s testimony illustrates both the injury to Chevron and the causation by Donziger.

    What about the third element of Article III standing — redressability? The Donziger brief makes much of the fact that Chevron seeks neither money damages for past injuries, nor an injunction against future enforcement in foreign courts of the $9 billion Lago Agrio judgment. Instead, Chevron seeks, among other relief, an injunction barring Donziger from receiving any benefit or payment, “other than in constructive trust for plaintiff Chevron Corporation,” if the judgment is enforced.

    Chevron’s requested order could be worth a lot of money; evidence in the RICO trial showed that Donziger personally stands to receive hundreds of millions of dollars if the judgment is enforced. Of course, as the Donziger brief points out, someone else could still enforce the judgment. Alternatively, the judgment may never be enforced at all. Either way, the brief argues, the constructive trust order would not redress Chevron’s harm.

    But even if Chevron never recovers a dime from Donziger, the very issuance of the order should help to redress the injury to its reputation. No future 60 Minutes show (or other responsible media outlet) will be able to continue spreading Donziger’s misinformation without noting that a federal court found his claims so fraudulent as to require him to disgorge any resulting profits. In the real world, that is reputational redress.

    1. Thanks, Doug. Just a few thoughts. First—come on, you have to like a well-written brief like this. Second, there is something pleasing, as a matter of story-telling, about the possibility that Chevron, which until now has been the undisputed heavyweight champion of US civil procedure in the case, by strategically limiting and then limiting again the remedy it seeks, might have put itself out of court. I just think that makes a good story. Last, I think your final paragraph hits the nail on the head. You write: “But even if Chevron never recovers a dime from Donziger, the very issuance of the order should help to redress the injury to its reputation.” I think that’s really what the case might boil down to. Is a party entitled to seek findings of fact from a judge whose main or maybe only purpose is PR, or perhaps to influence foreign courts that might later hear recognition and enforcement cases? I mean, this isn’t a defamation case. It will be interesting to see how Chevron frames its response.

  2. I think Donzinger has done enough damage to the human rights/ environmental law movement. It would just be the topping on the cake if he managed to limit the concept of Article III standing even further.

    1. Andy, thanks for the comment. I have spoken to many people in the environmental law field who share your view of Donziger. He’s a complicated character—a mix of good intentions, moxie, hubris (who brings a film crew to litigation strategy meetings?), and, at least with regard to the Cabrera affair, questionable judgment.

      1. I am not a lawyer, but have been following this case for some time, and would like to make a point or two in response to what other readers have said. Whatever anyone’s opinion of Steven Donziger, his achievement in winning this case is nothing short of incredible. Whilst it could ultimately make him very wealthy, I do not believe that is his motivation—he has been fighting this case for twenty years, depriving himself of other work which would have been far more lucrative.

        To take on a corporation the size of Chevron, fight for twenty years to hold them accountable and WIN takes real tenacity. He is now being forced to fight them again on ridiculous RICO charges, and I have no doubt he will ultimately win again.

        The legal abuses by Chevron have been many, and using the RICO statute in this manner is just one example. Originally filed in 2011 for damages of $60 billion, to move the goal post by dropping damages claims on the eve of trial in order to avoid a jury is surely an abusive tactic. But what choice did they have? Their chances of winning a trial by jury were slim at best. However, the problem they now have is that (as Deepak Gupta’s excellent brief points out) without damages, their last standing falls away. This raises the question on whether the whole RICO circus was just a way to further sap the resources of the opposition and distract them from enforcing their judgement.

        Finally, since Doug Cassel has used Doug Beltman and Anne Maest to illustrate how he believes Donziger has committed fraud to harm Chevron, perhaps he could explain why they were never called as witnesses at the trial. Their absence spoke volumes. Chevron could certainly have used a credible witness, since the best they had to offer was a self confessed disgrace who admitted to taking bribes and offering bribes to fix cases. And yet, even though this man is now on Chevrons payroll, I have no doubt Kaplan will rule in Chevron’s favour. Incredible—you could not make it up.

        I am confident this case cannot survive appeal, particularly with the new legal team on board. However, the real problem is how long it will take to enforce the perfectly legitimate judgement against Chevron, or if it will happen at all. The fact that a corporation can place itself above the law in this way, through continual delay tactics, is something that should worry us all.

        1. Dear Mr. Lynn,

          In answer to your question, I do not know why Chevron did not call Beltman and Maest as witnesses. I can guess that the reasons were three-fold: (1) Judge Kaplan made clear that he wanted to keep the oral trial as short as necessary, so Chevron minimized its roster of oral witnesses, (2) Judge Kaplan also made clear that the written statements of numerous witnesses (including Beltman and Maest) would be taken into account without their having to testify orally, and (3) Chevron was content with their written statements, and saw no need to have them repeat orally what they had already said in writing. (In contrast, since Guerra’s credibility (absent corroboration) is questionable, Chevron may have thought it would be helpful for Judge Kaplan to observe Guerra’s demeanor at trial and thereby to assess his credibility.)

          You might also ask why Donziger did not call Beltman and Maest as witnesses. If they had anything to say that would be helpful to him, why did he not call them, especially since their written statements were already damning? If those statements, as Donziger’s team has alleged, were made under pressure from Chevron and untrue, why not call them and have them tell the judge that what they wrote was untrue? The answer, I believe, is because they testified truthfully in their written statements.

          Finally, as a lawyer, I find it remarkable that you, as a non-lawyer, are “confident this case cannot survive appeal.” Most lawyers would be less confident (either way). But there is no need to debate your confidence; time will tell how, first, Judge Kaplan rules, and, second, how any appeal turns out.

          1. I had the same thought about Peter’s surprising confidence, but I decided not to say anything about it because I think that many non-lawyers just hate it when lawyers claim that you have to be a lawyer to understand the law. “How un-American!,” they say.

            1. I have no objections to you being un-American (in fact it’s a positive), and am quite aware that you and Mr Cassel know a lot more about the law than I do. Therefore, if I learn anything from you through this, then I would regard that as a bonus.
              However, I believe there are reasons to be confident. Firstly, RICO is an entirely innappropriate statute for this litigation. Written to help convict crime bosses, such as the Mafia, to apply it in order to undermine a verdict issued from a court in another country is surely stretching the statute in a way that is not going to sit comfortably with the 2nd circuit.
              Then there is the question of jurisdiction. We see here why Chevron have used RICO. There probably is no other statute which is appropriate, because ruling on the validity of verdicts from courts in different countries is not the business of American courts. If a court in Ecuador tried to overrule the American supreme court, they would be laughed out of town. This is also going to cause problems for the 2nd circuit.
              Then there is the lack of remedy under RICO. I guess that what Chevron want is some sort of anti enforcement injunction, but the 2nd circuit have already reversed Kaplans first injunction, so why would they not do the same for any similar injunctions? So, finding for Chevron does nothing more than give them an argument that they can take abroad to try to defend against assett seizure. But the courts in other countries are not bound by it in any way, and the language coming out of the Canadian courts suggest they are unimpressed by Chevrons conduct so far.
              Finally there is the fact that Chevron do not appear to have proven that any fraud took place. Randy Mastro stated, with dramatic effect, that Donzigers audacity would have caused a Mafia boss to blush. Yet beneath the rhetoric there is no substance. Given that they have had unprecedented access to all of Donzigers private diaries, laptops, hours of video footage and an army of lawyers to sift through it all, I find it inconcievable that they would not have been able to build a really bulletproof case, if fraud had actually occurred. Instead their case hinges on a dodgy witness and misquotes, examples of which are given in Donzigers final brief (that’s the one before this one!).
              But for all that, you are right, and my confidence is probably misplaced. The law is complex, miscarriages of justice are frequent and Chevron are past masters at getting away with murder – literally.

              1. Dear Mr. Lynn,

                You state that Chevron’s lawyers “do not appear to have proven that any fraud took place.” I can only assume that you are not familiar with the massive evidence of fraud committed by plaintiffs’ counsel in the Lago Agrio case. Even before the RICO trial and its additional revelations, I summarized the evidence of fraud last July. If you wish to delve into the question, you may find my summary at http://business-humanrights.org/media/documents/cassel-summary-fraud-chevron-ecuador-lawsuit.pdf.

              2. Peter, my comment about lawyers and laymen was probably too snarky. Of course you’re entitled to comment. I do think that anyone with a lot of confidence about how this case will ultimately come out is probably overconfident. (That applies to Chevron partisans as well as, perhaps, to you).

  3. A great brief (and I love the typeset!). However, as a law review editor, I noticed myriad Bluebooking errors. Perhaps Gupta’s litigation boutique could do with hiring an under-paid and over-worked recent law school graduate.

      1. I’m no zealot, and I think time spent looking for the correct bluebook rule is more often than not time wasted. However, the point of good citation form is to enable readers to easily verify the legal authority you’re using to support your claims. The Bluebook errors I saw were more than superficial. For example, on page 19, he cites “Id. at 340” (presumably referring to Chevron’s brief) when the previous citation is to Clapper. Although the error might seem harmless, it’s a source of distraction.

  4. I remember proofreading corporate oil exploration agreements 25 years ago and wondering why attorneys who come from good homes would willingly participate in the wanton degradation of other people’s health. Well, here we are with a full page of astute legal appraisal and once again the exact same situation recurs, i.e., nobody really seems to dispute that the oil company is responsible for massive environmental degradation. Is this really about litigation or just social devolution? In a few years after TPP kicks in the corporations will likely have legal rights to seize Ecuador’s war chest due to their ‘non-compliance’ with Judge Hoffman’s edicts [another shonda fur der goyim]. Get real, dudes. What is the point of arguing legal advantage when the sludge is sitting there in the river for anyone to see? Don’t you see what a fiasco this all is? In the old days, we would let the good Judge Kaplan bathe in that sludge. Nowadays the worst he’ll get is a brisk rap on his knuckles by astute peers.

    1. Interesting comment, Mr. Ergot! You’re wrong, though, to say that “nobody really seems to dispute that the oil company is responsible for massive environmental degradation.” Chevron does indeed dispute that it is factually or legally responsible for the pollution that is still present.

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