Chevron Wins. What Now?

In this, the first of a series of responses to the RICO judgment in Chevron v. Donziger by representatives or allies 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.

9 responses to “Chevron Wins. What Now?”

  1. Doug Cassel

    Dear Ted,

    Thanks for publishing this exchange of views. However, to clarify, I am not a “representative” of Chevron. I speak only for myself, not for the company. No one should assume that Chevron necessarily agrees with any of the statements in my posts, including this one. I have not discussed the content of this post with the company, and would not want readers to take the last paragraph of my post (in your words) as an “olive branch” from Chevron. I do not know whether the company would agree to my proposal (even if the other parties were to agree; and unfortunately, I also have no information to date to suggest that Ecuador or the plaintiffs’ lawyers would agree). Ever since my very first commentaries on the case two years ago, I have consistently urged a credible settlement, above all because I believe that to be in the interests of the residents of Lago Agrio.

    That said, as I have also repeatedly made clear, I believe that Chevron is right and Donziger is wrong on two central issues: (1) whether plaintiffs’ counsel committed serious and systematic wrongdoing in the Lago Agrio litigation, and (2) whether ongoing environmental damage attributable to Texaco — rather than to Ecuador’s own State oil company — has been proved. In my view, the evidence to date shows beyond any doubt that Donziger and certain of his colleagues committed grave misconduct in the litigation, and that there is as yet no credible evidence of current, ongoing environmental harm attributable to Texaco’s operations which ended 22 years ago.

    However, my proposal for settlement implicitly recognizes that further environmental analysis by a credible, impartial party, agreed to by all parties — in lieu of the fraudulent environmental evidence presented by Donziger — could perhaps reveal new information, and could in any event become the basis for a scientifically informed settlement. I urge all the principal parties to consider constructive ways to settle this otherwise seemingly never-ending litigation.

    1. Thanks for the clarification, Doug. I describe you as an advocate for Chevron, which I believe is accurate, and I suppose it would be accurate to say you are a former representative of Chevron on the Inter-American Convention issues.

      1. Aaron Page

        Are we sure readers aren’t being misled here? Doug Cassel seems to be reverting to his position that his only engagement with Chevron was to co-sign an amicus brief submitted by the company in response to an application for precautionary measures made by the Ecuadorian plaintiffs to the Inter-American Commission about two years ago. (The “proceeding” lasted about a week because the Ecuadorian courts almost immediately provided the assurances regarding undue influence that the plaintiffs had requested in the application.) He subsequently went on a campaign to malign the Ecuadorian plaintiffs with “open letters to the human rights community” and such, all the while protesting his independence and stating in “full disclosure” that he had “billed Chevron for my time on the [amicus] brief (but not for my time on this letter)” etc. Then last summer, in another letter, he revealed that in fact he had an ongoing “independent external consulting” relationship with Chevron. He declined to specify how much he was being paid and whether the relationship preceded his “open letters,” or whether the letters led (coincidentally, no doubt) to the consulting relationship. Now he is back to being a “former representative” – or at least has managed to get Ted Folkman to say so. I’m confused and would be curious to hear more full “full disclosure” from Professor Cassel.

        The nature of the relationship is meaningful not only for the usual reasons, but in particular as it relates to the substance of the Cassel/Chevron attacks on the plaintiffs. Without getting sucked too deep into the swamp of procedural and ethical problems with the way Kaplan handled his trial last fall (which will doom it at the Second Circuit, where, realistic observers have known from the beginning, the endgame of Chevron’s RICO gambit will play out), I can briefly summarize that Chevron’s “extortion” claim is a quixotic attempt to criminalize protected speech and petitioning activity, while the “bribery” claim is outright manufactured. (The only person who claims bribery happened is a “fact witness” whom Chevron improperly paid hundreds of thousands of dollars in cash and benefits (including no less than reunification with his family in the United States), and whose testimony has flagrant inconsistencies despite the fact that he was coached by Chevron lawyers on a daily basis, literally, for months.) That leaves the “fraud” claim, based on the fact that the Ecuadorian plaintiffs touted an expert they paid and worked with as “independent.” While Donziger candidly admitted some misgivings about how that expert was handled, it remains true that: 1) Chevron has never been able to point to any provision of Ecuadorian law that prohibited the plaintiffs’ conduct with the expert; 2) the issue was fully briefed to the Ecuadorian trial court, which did not find wrongdoing but struck the expert as a way of avoiding controversy, and this decision was affirmed on appeal and by the Ecuadorian Supreme Court; and 3) Chevron routinely touted its paid experts as “independent” to the public and the Ecuadorian court. Judge Kaplan, of course, expressly refused to consider any evidence of Chevron’s conduct. And now Professor Cassel shows up again as “independent,” espousing Chevron’s cause.

        I’d say we’re all confused. Perhaps Professor Cassel can be a bit clearer this time about the nature and history of his financial relationship with Chevron.

        1. Aaron, I took Doug to mean that he is not currently representing Chevron in any proceeding and that he does not speak for Chevron in this post.

          My own view is that it’s not particularly important to know the details of Doug’s arrangement with Chevron. I assume that he has some kind of financial arrangement with Chevron, but I also prefer to take his arguments (many of which I’ve disagreed with, as you know) on the merits. I do the same with Steven Donziger, Karen Hinton, etc., who also have or had financial interests in the case. And of course Ambassador Cely receives a salary from the government of Ecuador. I don’t know whether you have been compensated for your work on the case or not, but in general it seems to me to be kind of pointless to try to evaluate the arguments people make about the case, here or elsewhere, through the lens of their financial stake in the case, since it seems that nearly everyone who advocates for any of the parties has one.

          I do think that there is a live issue about whether law professors should accept paying consulting arrangements, and if so if they should have to disclose them. As I recall, Kevin Jon Heller has criticized Doug on these grounds. I’m not saying that’s not fair to do, and certainly it’s fair for you to raise the issue, but that kind of ad hominem meta-discussion seems less interesting to me than a discussion about the merits, at least for Letters Blogatory purposes. Maybe a forum devoted to academic integrity would take more interest in the issue you flag.

          1. Aaron Page

            I certainly agree that getting paid for advocacy is not improper, and if Cassel simply disclosed the facts of his consulting arrangement then your point would be well-taken. But I think it is off-the-mark because Cassel is purposely leveraging his credibility as an “independent” voice — insisting, for example, that “I speak only for myself, not for the company” — while keeping the audience in the dark about facts pertaining to his independence. As I noted, he spent over a year insisting that he was NOT being paid for his “open letters,” but rather propagating them solely for their moral urgency. Then he admitted to a consulting relationship, but characterized it as an “independent external” one. How it differs from any typical consulting relationship is unclear. Moreover, you, the editor of this site, are left to “assume that [Cassel] has some kind of financial arrangement with Chevron.” This seems unsatisfactory. Why doesn’t Cassel simply make the disclosure himself? Has he made it earlier in his posts on your site? (I genuinely don’t know.) In any event, the issue is not “academic integrity” in the abstract, but the minimum of “full disclosure” typically provided in the context of public advocacy that respects the audience and gives it the information it need to asses even “arguments on the merits.”

  2. Karen Hinton

    I’m weighing in here late to the discussion but I would like to discredit the repeated statement by Chevron and Mr. Cassel that Texaco cleaned its share of the oil sites under its 1995 remediation agreement with the Republic of Ecuador. Journalists have reported on and hundreds of people have seen crude and oil-laced water pulled from the soil of the oil pits that Texaco said it cleaned. Ecuador’s Inspector General in 2001 found that Texaco had only covered the oil pits with dirt. Even Chevron submitted to the Ecuador court contamination samples that show illegal levels of toxins at so-called remediated pits.

    It is unfortunate that the Republic of Ecuador approved the remediation in 1998 but it did so without the knowledge that Texaco had once again conducted the work on the cheap, just as it explored for oil in the first place, maximizing profits and minimizing safety.

    Texaco committed a fraud against the Republic of Ecuador. Not one reporter or blogger has ever investigated and written about this fraud, even though the remediation agreement is the centerpiece of Chevron’s defense to the contamination charges.

    Someone should be asking Chevron about the tests it submitted to the Ecuador court at Sacha 94, Sacha 51, Sacha 65, Sacha 57, Shushufindi 48, among many others. These and other tests found illegal levels of toxins at the so-called cleaned well sites.

    In addition, the agreement carved out the Ecuadorians’ claims. It only released Texaco from government claims.

    1. Doug Cassel

      Ms. Hinton’s effort to discredit the clean-up is not persuasive. Yes, journalists have seen “oil-laced water” pulled from the soil of pits at Lago Agrio — but whose pits: Texaco’s or Petroecuador’s? Consider, for example, the most highly publicized instance, namely Ecuadorian President Rafael Correa’s photo-op visit to Lago Agrio. As the Economist noted, “the tar pit into which Mr. Correa dipped his hand earlier this month is the responsibility of Petroecuador, a state company.”

      Hinton cites a 2001 report by Ecuador’s Inspector General. Yet she neglects to mention that inspectors from Ecuador’s Ministry of Energy and Mines testified in 2002 that the Inspector General’s report failed to use the contractually agreed remediation criteria, and addressed sites outside the concession area and sites that were not part of the remedial action plan. In fact, they concluded, Texaco “completed the full [remedial action plan] scope and more.”

      Hinton also asserts that Ecuador approved the clean-up without knowing what Texaco had done, and that Texaco defrauded Ecuador. In fact, Ecuador oversaw and inspected Texaco’s remediation at each pit and site in the clean-up. Ecuadorian officials signed interim reports describing exactly what work was being performed at each pit. Sampling at each pit was conducted by an Ecuador-approved laboratory, and the sampling results were provided to Ecuadorian officials. Ecuador and Petroecuador confirmed that the clean-up of each pit complied with the standards in the remedial action plan.

      Hinton’s reference to “illegal levels of toxins” tested at various sites is doubly dubious. As for “illegal,” I am advised that the tested levels met applicable standards, both during the clean-up and during the judicial inspections. As for “toxins,” the human health risk assessments in evidence at the trial showed no risk to human health in the area.

      Finally, Hinton asserts that the only claims covered by the 1998 release given to Texaco are claims by Ecuador’s government, not claims by local residents. She either does not know, or does not mention, that the international arbitral tribunal last year unanimously rejected that argument. The three arbiters ruled that the release covers all collective claims for environmental damage, no matter who brings them. The only claims not released are individual claims for personal harm.

      The tribunal left for future determination whether the Lago Agrio suit is for collective or individual harms. On my reading of the complaint and the judgment, however, the answer seems clear: it is a collective claim.

  3. Karen Hinton

    Mr. Cassel, All of the pits I named above Texaco agreed to clean. After they “cleaned” the pits, the well site closed or was closed already. PetroEcuador no longer drilled at those sites after the remediation, so it can’t be PE oil. And, the tests that showed illegal levels of toxins were Chevron’s tests, not ours, not the courts, not Cabrera’s. For example, Sacha 57, Pit 2, was on a Texaco-only site, meaning it built, operated and closed the well site. Chevron found TPH levels of 8,100. Other similar pits had even higher levels, as indicated by Chevron tests.

    There was a dispute about what level of toxins was legal or illegal under Ecuador’s laws, and the Ecuador court ruled it was 1,000 TPH, the legal limit for residential areas. All of the pits I named above are above 1,000 TPH. In the US, 1,000 TPH would be considered hazardous to human health. Most States have 100 TPH limits. And, while I could spend another 15 minutes answering each and every one of your comments to my comments, etc., let me end with two points:

    If the RAP wasn’t conducted properly — and Chevron’s own tests show that it was — then Texaco committed fraud against the Government and the RAP is invalid. Chevron’s only defense falls flat. And, while I disagree with your characterizations of the third-party carve out, it’s moot given that Texaco did not do what it said.

    What makes this so offensive and even sinister is that after Texaco and the Government announced the areas had been cleaned, people actually built homes near the covered pits, thinking they were clean when, in fact, they were not. Texaco had cleared out all of the vegetation, leaving a perfect spot for a home.

    Now if you think it’s OK to leave near pits with TPH levels of above 1,000 TPH, then there’s a lot of cheap land in the rainforest. Maybe you should buy some and build a vacation home near Sacha 57, Pit 2.

  4. Doug Cassel

    I don’t know when Ms. Hinton posted the above comments, but I only just saw them today. Perhaps the most useful response is to quote the following portion of my reply to Ambassador Cely’s response to my post:

    “This brings me to the main thrust of the Ambassador’s post, namely Ecuador’s claim that Chevron has dirty hands. Her lawyers, it seems, have drafted a point-by-point counter-memorial on Chevron’s sampling techniques. Their characterizations differ from my understandings. But rather than perpetuate this litigation-by-blog on sampling methodologies, by my batting the ball back, let us simply accept that the question is before the arbitrators, who will be in a position to resolve it on the basis of full briefing by both sides. I am content to accept their resolution.”

    “The important point is that the outcome on sampling—whatever it may be—will not render reliable the falsified evidence presented by plaintiffs’ counsel in the Lago Agrio litigation. Nor will it reveal the true extent of any ongoing environmental harm in Lago Agrio. Nor will it tell us which party—Texaco or the State oil company—is responsible for any ongoing harm.”

    “I am thus in partial agreement with Ambassador Cely’s statement that, “At some point, after the parties are finished attacking one another, it would be helpful to lower the rhetoric and study—and confirm—what we know: that massive, widespread contamination exists in the Oriente and that a large portion of that is the direct result of Texaco’s actions.” I agree that we should focus on the extent of ongoing contamination in the Oriente. I do not agree that we “know” whether a “large portion” of that is due to Texaco’s agreed portion of the clean-up, or how much is due to the State oil company. But there is no need for us to agree on these issues in advance. An honest and professionally capable study should supply credible answers.”

    “In short, the real issues were not credibly resolved by the fraudulent Lago Agrio proceeding. Until they are credibly resolved, justice promises to remain elusive.”

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