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

  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.”