Lago Agrio: My Prediction
Posted on November 24, 2014
Readers, only one of you was
foolhardy brave enough to take a guess about the outcome of the Second Circuit RICO appeal. That’s okay. Here for what it is worth is my prediction. Before giving it, a word of explanation is in order. I am not using any particular methodology, and I am not going to give much explanation. Think of this post as my turn in a parlor game “for entertainment value only.” You’ve been warned.
- The court will accept Judge Kaplan’s factual finding that the Lago Agrio plaintiffs, through their representatives, sought to defraud the Ecuadoran first-instance court by presenting ghostwritten or otherwise fraudulent expert reports (Cabrera and Calmbacher, respectively). There’s no real question about the facts, and a view of Ecuadoran law that says that what Donziger did here is implausible.
- The judges will not want to accept Judge Kaplan’s factual finding that the Lago Agrio plaintiffs’ team ghost-wrote the judgment. His conclusion rested almost exclusively on the testimony of Judge Guerra, who one could well conclude is not a credible witness. His testimony did not have the ring of truth. On the other hand, the judges will be reluctant to reverse Judge Kaplan on this point, because he was the finder of fact and he heard the witness’s testimony. So I believe the judges will be looking for ways to avoid the consequences of Judge Kaplan’s factual findings without having to reverse them.
- There are a couple of ways to do this. One is jurisdictional: the court could hold that it lacked jurisdiction because private parties have no standing to bring claims under RICO that seek only equitable relief. Or the court could focus on the point of Ecuadoran law that both Donziger and the LAPs have raised on appeal: since the Ecuadoran appellate procedure was de novo, since the appellate court expressly did not base its opinion on the expert reports that were fraudulently submitted to the lower court, and since there is no evidence that the appellate court itself was corrupt, the court could hold that Judge Kaplan was wrong to focus on the first-instance judgment; whatever errors occurred in the first instance court were fixed by the de novo appellate proceeding.
- It’s hard to know which of these two alternatives will be more attractive. The first would allow the court to reverse without coming down to hard on Judge Kaplan. The RICO jurisdictional issue is an open issue on which judges can come out either way, so even if Judge Kaplan was wrong about RICO jurisdiction, he wasn’t dramatically or obviously wrong. It’s certainly easier for the court to take this path than to delve into Ecuadoran law. On the other hands, the judges may already have views about how the RICO question should come out, and if they think that private parties do have standing to bring such claims, then the easier option won’t be available to them. But if they do reach the Ecuadoran law question, I think the plaintiffs’ argument is pretty good.
- Assuming I’m on the right track about how the court will approach the case, what will it do? It seems to me that whether the decision turns on RICO jurisdiction or whether it turns on Judge Kaplan’s focus on the first-instance Ecuadoran decision, the result is that the injunction as a whole is vacated.
- If, contrary to the ideas I’ve set out above, the judges think that Chevron had standing and that Judge Kaplan was right to focus on the Ecuadoran first-instance proceeding, what’s the likely outcome? The LAPs have some arguments that whatever wrong Donziger did should not be attributable to them, but I’m not sure how persuasive those arguments are. So while I think the most reasonable outcome is that the injunction is vacated in its entirety, if the court does not follow the lines of reasoning I’ve suggested above, I think it is relatively unlikely to vacate the injunction as to the LAPs but keep it in place as to Donziger.
In summary, then, my prediction is that the injunction will be vacated. But if I am wrong I expect to be wrong wholesale; I don’t expect the judges to grant relief to the LAPs but not to Donziger.