A First Look at the Donziger Decision

Many readers will already have read about Judge Kaplan’s findings of fact and conclusions of law, which found that Steven Donziger and the Lago Agrio plaintiffs violated the RICO statute and enjoined them from benefiting from the Ecuadoran judgment or from seeking recognition of it in the United States. Yesterday was quite clearly a big day for Chevron and a crushing, though not unexpected, defeat for Donziger.

I read about the decision while I was in court, waiting for the judge to take the bench. Right after court, I had to run and catch a plane, which gave me a good three hours to read the decision. Good timing, too, as I was on my way to a Florida law school to give a presentation on the use of § 1782 proceedings in the Lago Agrio case! The decision is long and detailed, and I don’t think anyone can be in a position to give a detailed analysis only one day after publication. Here, though, are my initial thoughts.

Judge Kaplan came to the right conclusion about the Cabrera report, which was, apparently, the original sin in the Lago Agrio case. There are lots of commentators who are less sympathetic to the LAPs than I have been, but even I have been saying for quite some time that it was evident that Donziger and his team had acted wrongfully by trying to conceal the true facts about the Cabrera report and it’s lack of independence. The broad outlines of this part of the story have been known for a long time, but Judge Kaplan does a very good job of marshaling the evidence and presenting it as a coherent whole.

On the issue of ghostwriting of the Zambrano judgment, I’ve previously expressed skepticism about Chevron’s position, mostly because its star witness, Judge Guerra, seemed to lack credibility. I also raised some technical objections to some of the evidence that Chevron claimed collaborated Judge Guerra’s testimony. But Judge Kaplan heard the testimony of all of the relevant witness and made careful findings about credibility (though he didn’t deal with the technical issues about the admissibility of some of the corroborating documents), and here I think it is fair to accept his findings. If you believe Judge Guerra’s testimony, and if you disbelieve Donziger’s and Zambrano’s testimony, then Chevron has proved its case on ghostwriting. I don’t see any reason to try to second-guess the fact-finder’s credibility determinations, since he, after all, heard the testimony in person and was well-placed to judge credibility.

I continue to question Judge Kaplan’s approach to the Ecuadoran judiciary. Judge Kaplan deployed the strongest weapon in the arsenal by holding that Ecuador’s judiciary was not impartial and did not provide due process. The effect, I think, is to deprive every Ecuadoran judgment of the possibility of recognition in the United States. And while the judge does marshal the evidence of President Correa’s favoritism towards the plaintiffs, there is no actual direct evidence that he told anyone how to rule in the case. And there is no evidence, as far as I can tell, of bribery or extortion in the Ecuadoran appellate courts. Indeed, the whole notion of a politically motivated decision seems at odds with a key part of Judge Guerra’s story, namely that he first solicited a bribe from Chevron before seeking one from the LAPs. As I’ve said before, this kind of simple graft hardly seems sufficient to indict the whole Ecuadoran judiciary as a political creature of the President.

There is plenty of room for a successful appeal, on issues ranging from Chevron’s standing to bring a RICO case for equitable relief to challenges to the judge’s findings of fact. So the next stop is the Second Circuit. Keep your eye on the recognition and enforcement proceedings in Canada and elsewhere–it will be interesting to see what use Chevron tries to make of Judge Kaplan’s findings.

As I said at the outset, these are initial thoughts, and I hope to have more once I get back to Boston and have some time to study the opinion. Comments from readers are welcome in the meantime!

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.

4 thoughts on “A First Look at the Donziger Decision

  1. Judge Kaplan pretty much had to hold that the entire Ecuadorian judiciary was corrupt and incapable of producing a just result, otherwise Chevron’s case would fall apart, given (1) the case was there, and not here, because Chevron assured the U.S. courts they would abide by the judgment, and thus they’ve waived anything but a full-fledged denial of due process claim by the whole judiciary there and (2) the Supreme Court of Ecuador has already affirmed the judgment, despite all the same allegations.

    Judge Kaplan’s de facto worldwide injunction, which precludes any of the defendants from recovering any proceeds regardless of the source, strikes me as similarly dubious. That’s a damages award, not an injunction. Chevron waived that, too, to avoid a jury trial.

    I don’t see other nation’s tribunals responding to this favorably: they would have to similarly hold that Ecaudor’s courts are wholly unreliable, and they’d have to ignore the decades of procedural games that were required to get here, starting from Chevron’s play to move the case to Ecaudor in the first place and ending with their last-minute waiver of a damages claim to avoid a jury trial.

    IMHO, the whole set up is internationally embarrassing. Call up a non-lawyer friend in another country and try to explain to them the whole case, from Chevron getting it kicked out of the US to forum shopping in the US again and then waiving damages and then the worldwide injunction on proceeds, and they’ll ask you why the U.S. thinks it gets the last word on everything.

    1. Thanks, Max. I agree with you that from a layman’s point of view the “boomerang” aspect of this case is puzzling. We had a really interesting discussion about this back in 2012 as part of the Letters Blogatory symposium on forum non conveniens and recognition of judgments.

  2. I thought it was telling that Kaplan’s opinion at one point cites the New York rules governing the conduct of lawyers and insinuate that Donziger had committed professional misconduct. I agree that the expert report is damning, but I don’t see the Second Circuit (or even SCOTUS) allowing this injunction to stand. Even if it does, Chevron is ultimately going to have to settle this case or see its assets threatened in countries with courts that are unsympathetic to the US courts’ equitable jurisdiction.

    Very interesting saga. Hardly seems like we’ve reached the halfway point too!

    1. Walker, thanks for the comment. I agree with you that there is a serious issue of professional misconduct here given the judge’s findings. I won’t hazard a guess on what the Second Circuit will do. Bear in mind that references to “Chevron’s” assets probably have to be made more precise in light of the attention courts in the US and Canada have paid to the corporate form in this case.

Leave a Reply

Your email address will not be published. Required fields are marked *