Lago Agrio: Chevron on Standing

Chevron has filed its opposition to Steven Donziger’s motion to dismiss for lack of subject-matter jurisdiction. It’s a creditable brief—it lacks the pizzaz of the Donziger brief covered in the prior post, but it’s well done.

Let’s focus on what Chevron says about the harm it is seeking to remedy.

On the one hand, Chevron has a good point to make about the relevant legal standard: a plaintiff shouldn’t have to prove that the future harm an injunction is meant to prevent is absolutely imminent or certain to occur. (And by the way, note the irony here: a big corporation arguing for a relaxed standard for showing injury for standing purposes, and a bunch of environmental activists arguing for a stricter standard!) Chevron also has a good point when it argues that the injury here, if there is an injury, is one that it, Chevron, rather than anyone else, will suffer. In many of the key standing cases, the plaintiff is able to show a harm, but the problem is that the plaintiff can’t show how his harm differs from the harm to be suffered by any other member of the public. The decision on this motion could come down to what the judge thinks about the legal standard and about standing generally rather than about the particular facts alleged.

But still, it’s striking to me that Chevron is forced to point to non-standard harms to justify the court’s intervention:

  • “Chevron has suffered injury in fact in the form of legal fees and further expenditures in connection with the § 1782 proceedings and enforcement actions, as well as lost management time and goodwill.”
  • “Chevron faces the real threat of responding to ongoing and contemplated enforcement actions in the United States and elsewhere, as well as the threat of future reputational harms, asset seizures, and disruption of business operations.”
  • “The corrupt judgment with which Defendants in the present continue to threaten Chevron and its subsidiaries totals $9 billion.”

I’m no expert on standing—I sense Professor David Shapiro nodding his head from afar in agreement—but it does seem to me that there is little connection between the past harms, all of which could be remedied by money, and the injunction Chevron seeks. I think Chevron does face a risk from future efforts to enforce the Lago Agrio judgment (though I think that the history of the litigation shows that it is highly unlikely that there will ever be an attempt to obtain recognition of the judgment in the United States), but Chevron does not seek to enjoin the filing of such actions. So the harm, I guess, is the risk that Chevron will lose. But Chevron says there is no risk it will lose, because the judgment is obviously fraudulent and any court would judge them unworthy of recognition. So here is the problem, as I see it. If the is a risk that the courts of Canada, say, could recognize the Ecuadoran judgment, then what does that say about the merits of the RICO claim? I don’t know if anyone else has taken this view, but there seems to me to be a bit of a problem in Chevron’s position: it faces a risk of harm only if the Ecuadoran judgment could be recognized, which would undermine the RICO action.

I don’t know how this is going to come out, but either way the decision is bound to be interesting.

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 2012), 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.

4 thoughts on “Lago Agrio: Chevron on Standing

  1. Dear Ted,

    You attribute to Chevron the position that “it faces a risk of harm only if the Ecuadorian judgment could be recognized.” That is not what I read Chevron’s brief to argue; nor is it true in fact.

    Take two examples. First is reputational harm. In a prior comment on your post on Donziger’s standing brief, I made the point that Chevron has suffered and will continue to suffer ongoing reputational harm from Donziger’s propaganda campaign. Chevron’s brief, too, invokes the reputational harm. And, as I noted in that comment, it Chevron’s winning the relief it seeks — including an order imposing a constructive trust on any profits Donziger earns from his scheme — will not assuage the reputational harm. Yet neither the harm, nor the reputational value of the requested relief, depends on any future enforcement action in Canada or anywhere else outside Ecuador. Ordering the constructive trust, by itself, gives Chevron reputational relief.

    Equally telling is that Donziger and his team have already extracted from the “independent” Ecuadorian courts an order turning over to them any damages Chevron wins from Ecuador in the currently pending BIT arbitration. In other words, thanks to their friends in Ecuador’s judiciary, plaintiffs stand to reap large sums, not if they win an enforcement proceeding in Canada or elsewhere, but if their ally (Ecuador) loses the arbitration (where Ecuador vigorously defends the legitimacy of Donziger’s Lago Agrio judgment). Again, by imposing a constructive trust on any funds Donziger thereby receives — not as a result of plaintiffs’ winning an enforcement action, but as a result of plaintiffs’ arguments losing before the arbiters — Chevron would earn real relief.

    You append to your conclusion that Chevron’s losing an enforcement action somewhere would “undermine the RICO action.” But the harms and the redress noted above — reputational harm and the harm due to turning over whatever Chevron may win in the arbitration to Donziger and team — would not undermine the RICO action. The Lago Agrio plaintiffs’ propaganda campaign rolls on, independently of any court actions. They accuse Judge Kaplan of bias. They have similarly tried to discredit the arbiters. They will similarly dismiss any future court that rules against them as mistaken or worse. They are fighting in the court of public opinion, where they hope to win, even if no court outside Ecuador ever credits their fraudulent Ecuadorian judgment.

    Similarly, if Chevron wins the arbitration and Ecuador’s courts require Ecuador’s government to turn over any damages won by Chevron to Donziger et al., the result will hardly undermine the validity and credibility of the RICO action. Such an order by Ecuadorian courts — that ironically makes Donziger et al. win by losing — will simply confirm what is already apparent: that Donziger and team are in bed with pliant Ecuadorian courts and with an Ecuadorian government eager to do (or at least appear to do) anything it can to support their cause.

    The bottom line for standing purposes, then, is that the remedy Chevron seeks will afford the company relief from the wrongs, past, present and expected, that Donziger’s crew seeks to inflict. Article III standing requires no more.

    1. Correction to mangled sentence: The middle sentence in the second paragraph of my above comment should read as follows: “And, as I noted in that comment, it is difficult to argue that Chevron’s winning the relief it seeks — including an order imposing a constructive trust on any profits Donziger earns from his scheme — will not assuage the reputational harm.”

    2. Thanks, Doug. I guess my point about “undermining” the RICO action is this: suppose the Canadian court enforces the judgment. By hypothesis, the Canadian courts are fabulous and would not enforce a judgment that was not entitled to recognition and enforcement. So if the gist of the RICO claim is that the Ecuadoran litigation is a fraud and a sham, then isn’t that claim undercut by a Canadian finding that rests on a determination that the Ecuadoran litigation was not a fraud and a sham? (This, by the way, is just the mirror of an argument I think we can expect Chevron to make if it wins the RICO case before the Canadian court makes a decision on recognition and enforcement. Won’t Chevron say that the RICO case outcome shows that the Canadian court cannot recognize and enforce the Ecuadoran judgment?)

      I quote Chevron’s claim about reputational harm in my post. The notion of reputational harm is just odd here, to me at least, because Chevron has not brought a defamation claim, and the defamation torts are the usual remedy for those seeking to remedy harm to reputation. (Of course, there would be challenges to a defamation claim, e.g., the litigation privilege, and probably a malice requirement). Could Chevron have brought a defamation claim that avoided a jury trial, i.e., that sought only an injunction? I don’t see how, but maybe I am missing something. (Off-the-cuff, I assume that you can’t avoid a jury trial by saying that you’re just seeking nominal damages, but I could be wrong about that). In any case, I still don’t get the force of the reputational harm point, because Chevron is not seeking to enjoin foreign recognition and enforcement proceedings, and if, say, the LAPs obtain recognition and enforcement in Canada, wouldn’t that be reason to think that the hit Chevron says it has taken to its reputation was justified? (Here again I assume that the Canadian courts can be relied on not to recognize and enforce fraudulent judgments).

      Last, I wasn’t attributing the view that Chevron “faces a risk of harm only if the Ecuadorian judgment could be recognized” to Chevron. That was my interpretation of where things stand, but obviously it’s not a view that Chevron would accept.

      Anyway, I think this is a complicated issue, and I’m not sure that what you’ve written is wrong.

      1. Dear Ted,

        Thanks for this reply. I agree entirely with your first paragraph.

        I haven’t looked at the libel question, but it strikes me as beside the point for the issue at hand — whether Chevron has constitutional standing to bring the RICO case. Since there was, is, and will continue to be reputational harm, that satisfies the harm prong for standing.

        I agree that a Canadian ruling against Chevron would not help the company’s reputation. But again, that is not the issue in regard to constitutional standing. The issue is whether the relief sought by Chevron in the RICO case would help to redress the harm to its reputation caused by Donziger. It would.

        Best wishes – doug

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