Chevron Wins. What Now?
Posted on March 17, 2014
In this, the first of a series of responses to the RICO judgment in Chevron v. Donziger by representatives of the protagonists, Chevron advocate Doug Cassel takes a victory lap and, in the last paragraph, holds out an olive branch.
Two starkly differing narratives compete to explain the Lago Agrio environmental lawsuit against Chevron in Ecuador. Lead plaintiffs’ attorney Steven Donziger and his team paint the case as one of a powerful oil company heartlessly polluting the habitat of Amazonian villagers, and then compounding the harm by resisting accountability.
In contrast, Chevron points to strong evidence that any continuing environmental harm in Lago Agrio is caused by the ongoing operations of Ecuador’s State oil company—the only company pumping oil in Lago Agrio in the last twenty years. Yet the Plaintiffs long ago pledged not to sue the State company, in return for the State’s support of their suit against Chevron (which has never operated in Lago Agrio). Chevron’s predecessor, Texaco, did operate in a joint venture with the State oil company, but that venture and Texaco’s operations ended in 1992, after which Texaco cleaned up its agreed share of pollution. In Chevron’s view, the Lago Agrio lawsuit against the company has no environmental or legal basis, and has survived only by means of systematic fraud orchestrated by Donziger.
Amid a myriad of conflicting claims by Donziger and Chevron, two main debates stand out. First, did Texaco cause continuing environmental damage in Lago Agrio? Second, in an effort to prove Texaco’s alleged responsibility, did Donziger and some of his colleagues commit fraud?
Only the second issue—not the first—was the subject of a separate lawsuit filed by Chevron against Donziger in New York under the Racketeer Influenced and Corrupt Organizations (“RICO”) Act. Last week federal Judge Lewis Kaplan, sitting without a jury, published a nearly 500-page opinion, in which he found that Donziger abused his control of the Lago Agrio litigation to carry out a systematic pattern of fraud, bribery, money laundering, extortion, witness tampering and obstruction of justice.
Observers who have not read the scientific evidence—which includes sworn admissions by the plaintiffs’ own experts renouncing their earlier claims of environmental harm, and explaining that those claims were based on unscientific assumptions fed to them by Donziger—may persist in believing the environmental strand in Donziger’s narrative. Judge Kaplan did not rule on the environmental issues. Explaining that they were not material to the RICO claims, the judge “assume[d]” that there is oil pollution in Lago Agrio and, “on that assumption,” that Texaco and perhaps Chevron “might” bear some responsibility. However, he added, “even if Donziger and his clients had a just cause—and the Court expresses no opinion on that—they were not entitled to corrupt the process to achieve their goal.”
By contrast, on the second issue—fraud—Kaplan’s opinion is devastating for Donziger. In several weeks of trial, Judge Kaplan heard 31 witnesses, and received written testimony by 37 more, together with thousands of exhibits. His opinion documents how Donziger habitually made knowingly false claims of dramatic environmental damage before courts, government officials, Chevron investors, and the public. Donziger even deceived those of his own co-counsel and funders who were not privy to his scheme. He and others in the know bribed and extorted Ecuadorian judicial officials, and then lied about it to courts and the public. In an effort to prevent Chevron from uncovering the truth, Donziger presented knowing falsehoods before federal judges in United States discovery proceedings.
Even in the RICO trial, Donziger repeatedly lied. Confronted with incriminating evidence, time and again he either evaded it altogether by saying nothing or asserting memory lapse, or he concocted lame, palpably unconvincing excuses. On point after depressing point, Judge Kaplan found that Donziger was not a credible witness.
Judge Kaplan aptly summarized the overriding lesson: “Justice is not served by inflicting injustice. The ends do not justify the means. There is no ‘Robin Hood’ defense to illegal and wrongful conduct. … The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador—and they knew it.”
In public statements Donziger attacks Kaplan’s ruling mainly on three grounds. First, he claims that Kaplan ruled contrary to the judgment of Ecuador’s highest court. That is yet another misleading claim. Ecuador’s National Court reviewed the Lago Agrio judgment in cassation—in which the court reviews only issues of law, not fact. The National Court explicitly declined to rule on the factual issues of whether Donziger committed fraud and other misconduct.
Second, Donziger accuses Kaplan of bias against the Lago Agrio plaintiffs and their lawyers. Donziger earlier leveled accusations of bias against federal Judge Jed Rakoff, who dismissed the original suit filed by Donziger in New York on grounds of forum non conveniens. Donziger’s PR agents also allege bias on the part of the international arbitral tribunal on the Lago Agrio case, which has repeatedly—and unanimously—ruled in favor of Chevron against Ecuador. Disagree with Donziger, and you, too, can be labeled as biased.
Fortunately, because Kaplan details the evidence and his reasoning, we are not left merely to take his word for it. We can read his opinion and judge for ourselves. And while one may disagree with this or that factual finding, the overall, cumulative weight of misconduct summarized in the opinion is overwhelming. Donziger’s conduct is blatantly unethical; his word consistently unreliable.
Finally, Donziger claims the RICO trial was unfair because Kaplan did not admit evidence of environmental damage. But environmental evidence is immaterial to the issue of attorney misconduct. Whether in a good cause or a bad one, lawyers may not commit fraud, bribery and extortion. Donziger did have an opportunity to present evidence of environmental harm where it was relevant—in the Ecuador trial—but he trashed that trial by fabricating evidence and by bribing, extorting and deceiving judicial officials.
The practical effect of Kaplan’s opinion partially vindicates Chevron’s decision to forego its claims for money damages, thereby avoiding a jury trial. Chevron requested (and won) exclusively equitable relief—an injunction against enforcing the Lago Agrio judgment in US courts, and a constructive trust on the hundreds of millions of dollars in fees Donziger contracted to reap personally if the judgment is enforced.
Whatever Chevron’s view of a jury trial, the company gained an important advantage in a bench trial. A jury trial would end in an unspecified or relatively general verdict. There would be no 500-page opinion, and no detailed findings on the evidence of misconduct. In contrast, Kaplan’s judicial opinion gives Chevron what even a favorable jury verdict could not deliver—specific, detailed, reasoned findings of fraud, bribery, extortion and other misconduct. The company can now seek to use those findings against efforts by Donziger and his colleagues to enforce their bogus judgment. (Already they are attempting to enforce the Lago Agrio judgment in Argentina, Brazil, Canada and Ecuador.)
Still, there remains a downside risk to Chevron’s decision to waive money damages. Federal courts of appeals are divided on whether private plaintiffs can pursue purely injunctive relief under RICO. Donziger will no doubt appeal on this issue (among others). If the Court of Appeals or Supreme Court rules that private plaintiffs cannot obtain injunctive relief under RICO, Chevron may lose on a point of law what it gained on findings of fact.
But even if Kaplan’s judgment were reversed on the RICO question (or some other issue of law), so long as the appellate courts do not disturb his findings of fact, those findings might retain persuasive value before enforcement courts (at least in rule of law countries).
As rightly lamented by one of Donziger’s former co-counsel and by Judge Kaplan, the most painful result of Donziger’s misconduct is that his clients still have no credible adjudication of their claims. Environmental harm was not material to the RICO ruling. Nor was it credibly addressed by the hopelessly compromised Ecuadorian rulings in the Lago Agrio case.
So the real victims of Donziger’s crime spree are two-fold. The Lago Agrio villagers now have their environmental claims tied up in judicially condemned fraud and misconduct by their attorneys. More generally, the human rights movement takes a hit to its credibility—its most valuable asset—whenever the good name of human rights is hijacked by corrupt lawyers.
The bottom line remains a need for the long-time litigators—the Lago Agrio plaintiffs, Chevron, and Ecuador, in genuine consultation with the indigenous and other communities of Lago Agrio—to agree on an independent and impartial mechanism, tasked to render a credible assessment of whether there is continuing harm to the environment and public health caused by oil pollution in Lago Agrio, and, if so, who is responsible (whether Texaco or the State oil company). Only then will the villagers of Lago Agrio finally receive the due process to which they are justly entitled. Spending further fortunes on protracted litigation on the Lago Agrio judgment, the RICO case and the international arbitration may be important to Donziger, Chevron and Ecuador, but will most likely spell only more delay for the most vulnerable parties in the case.