Lago Agrio: My Prediction

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.

Here goes:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.

5 responses to “Lago Agrio: My Prediction”

  1. doug cassel

    Dear Ted,

    Interesting speculation. My own experience in decades of litigation, domestic and international, vindicates the wisdom of Yogi Berra, who reportedly advised, “Making predictions is hard, especially about the future.” So, for my part, I will refrain from predicting the Second Circuit decision until it is past.

    That said, you seem to buy the argument that the Ecuadorian appellate courts were untainted by the lower court ruling. I don’t. Not for a second. On that point, if you have not read the amicus brief filed by Keith Rosenn et al., I commend it to you.

    1. Take a chance, Doug! This exercise is, as they say, for entertainment value only, and don’t think anyone will hold you to your prediction.

      I’ve done this once before: I correctly predicted the outcome of the other major litigation I’ve followed closely, the Boston College case here in Massachusetts, though that was a much simpler and, to my mind anyway, easier case.

  2. George Humphrey

    I stumbled across your blog and have found it interesting to say the least. Kaplans finding of facts are damning and I just don’t see the court overturning his findings. The overwhelming volume of evidence of Donzigers misconduct has not only shocked this court but other Federal Courts around the country. Don’t underestimate that once a story is told and the fraud is shown to be pervasive, then all the parties who benefited from this type of conduct receive the broad brush. I believe the courts will frame a decision to protect Chevron, who they will perceive as the defrauded party, from this judgement. How they will go about it will be the interesting question, but they will frame it in such a way to preserve the findings and hold Donziger accountable.

    As for the the Ecuadorean judge Zambrano who supposedly wrote the decision. His credibility was absolutely shredded. For the case of his lifetime, he could not even quote the most basic of facts attributed to his decision made his testimony a disaster. That does not preclude the other jurist did not lie. But in weighing both testimonies, you have to point to the overwhelming conduct of Donziger and then question which testimony has the best chance of being credible. And its an easy conclusion here. Ghost written expert reports and a judge who cannot even explain the most mundane of details quoted in his landmark decision. So I disagree with you on this point. The only matter here is do you believe Zambrano wrote the decision and that he was not improperly influenced by Donziger. For me the facts are beyond just compelling. They are fairly conclusive for me.

    The courts will not over look Donzigers misconduct and all of those other American firms who associated with him in perpetrating this fraud. They’ll affirm the decision and probably retain RICO. Or they will remand and give the judge a hint as to how they want it framed to maintain the gist of his decision, which is Donziger and his clients will not be able to collect on this judgement in the United States.

    1. Thanks for the bold prediction, George! We will see.

  3. […] bravely or foolishly, I made a prediction about what the Second Circuit would do after the briefing was finished. I still think my prediction […]

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