Lago Agrio: Chevron Seeks Discovery From MCSquared

Update: I’ve made a minor correction in light of Mark Kantor’s helpful comment, printed below.

Remember MCSquared, the Republic of Ecuador’s US PR firm, which hired “ethically diverse” actors to protest at a Chevron meeting, and which initially failed to register as Ecuador’s agent under the Foreign Agent Registration Act. The MCSquared story was good comic relief, but it has now taken a more serious turn, as Chevron has brought an application for discovery under § 1782 seeking information from MCSquared for use in its BIT arbitration foreign enforcement proceedings and the Gibraltar case. Bonus: since MCSquared is located in New York, Judge Kaplan is presiding.

I am not sure if Chevron really believes what it has written, but based on discussions I’ve had over time with people in the Donziger camp and with people in the Ecuadoran camp, I think the basic suspicion that motivates Chevron’s request will prove to be unfounded if the discovery actually goes forward. Chevron claims to think that the discovery it seeks will show collusion between the Ecuadoran government and Donziger and the LAPs. I suppose there may have been collaboration a long time ago, but in recent years my sense is that those two parties want nothing to do with each other. There is certainly no love lost between Donziger and the Ecuadoran government. Remember that the LAPs actually brought a claim against Ecuador before the Inter-American Commission on Human Rights in 2012.

I also think that even if Chevron’s suspicion proved true, its theory of relevance is questionable. Chevron says that it wants to show collusion because the impartiality of Ecuador’s courts is at issue in the arbitration. Suppose the executive branch of the Ecuadoran government was colluding with the LAPs to generate some really bad PR in the United States, all of course after the entry of the Ecuadoran judgment. What does that have to do with the impartiality of the Ecuadoran courts at the relevant times? Indeed, since Ecuador hired MCSquared only in 2013, and since MCSquared is a US public relations firm, it’s unclear why one would think that any supposed collusion was aimed at the Ecuadoran judiciary at all or why one would expect MCSquared to have the super-secret communications between Ecuador and the LAPs in which they discuss their plan to corrupt the Ecuadoran courts.

In short, I expect this will turn out to be a tempest in a teapot. Chevron has certainly gotten some good atmospherics out of this story, though, and I assume Chevron will continue to pursue it for as long as the courts allow.

Note that while Judge Kaplan granted Chevron’s application ex parte, the real fight, if there is going to be a fight, will take place when MCSquared seeks to quash the subpoena or when Donziger or the LAPs or Ecuador intervene in the case for that purpose.

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 “Lago Agrio: Chevron Seeks Discovery From MCSquared

  1. Hi Ted,

    I have been following this issue in part because I have a strong interest in the impact of Sec. 1782 on international arbitrations, and therefore I looked at the Chevron petition and related submissions on Pacer. You wrote that Chevron’s “theory of relevance is questionable. Chevron says that it wants to show collusion because the impartiality of Ecuador’s courts is at issue in the arbitration.” The issue of Ecuadorean judicial independence is not an item stressed in the part of Chevron’s Sec. 1782 submissions relating to “relevance,” although it is stressed elsewhere in the submissions.

    The “foreign tribunals” for which Chevron is seeking assistance are the cases “brought by the LAPs in Brazil and Argentina to enforce the judgment (the “Enforcement Proceedings”) and Chevron’s ongoing cases in the Supreme Court of Gibraltar against (1) Russell DeLeon, a major funder of the LAPs, his funding vehicle Torvia Limited, and Amazonia Recovery Limited, an entity created to collect and distribute the proceeds of the judgment and (2) against Woodsford Litigation Funding Limited, another major funder of the LAPs (collectively, the “Gibraltar Proceedings”).”

    Chevron’s position in its submissions is that relevance is not an element of the Sec. 1782 analysis under applicable Federal caselaw. Regardless, Chevron makes several pages of relevance arguments in its Memorandum of Law in support of its petition (pps. 26-30) that the information being sought is relevant to (a) whether the Republic of Ecuador has promoted enforcement of the Ecuadorian judgment (allegedly relevant to the enforcement proceedings in Argentina and Brazil and a disputed issue in the two Gibraltar proceedings against third-party funders and “recovery vehicles” DeLeon, Amazonia Recovery, Torvia and Woodsford, as well as public statements by the Republic), (b) whether the Republic of Ecuador has provided financial support to the Lago Agrio plaintiffs in their enforcement proceedings (a disputed issue in those enforcement proceedings), and (c) whether the Republic of Ecuador is tampering with witnesses in the various proceedings (referring in part to a website allegedly organized by McSquared to publish names and addresses for “The Nation’s Traitors”, including local attorneys for Chevron in Ecuador and at least one witness in the RICO/Fraud case).

    The tampering allegation is supported by the following assertion which, if accurate, is deeply troubling regardless of how it may or may not affect a Sec. 1782 petition.

    ,“A series of seemingly separate but closely coordinated anti-Chevron websites and social media accounts appeared around the same time and circumstantial evidence indicates that MCSquared is behind these sites as well as the “Dirty Hand” sites. Indeed, President Correa has
    unintentionally corroborated this in defending the size of MCSquared’s contract by stating that the ROE did not pay “$1-$1.2 million for a website,” but for “a series of products.” Ex. 95 at 3 (emphases added). These websites, Twitter, and Facebook accounts include Apoya al Ecuador (Support Ecuador), Chevroff, Toxic Effect, La Mano Sucia (The Dirty Hand), and Los Vende Patria (The Nation’s Traitors).2

    All five websites share content and are directly connected to the
    ROE through the Justice for Ecuador website, to which MCSquared linked in two full-page, anti-Chevron advertisements it purchased in The Washington Post and the San Francisco Chronicle in August of2013. See Ex. 59 at 7; Ex. 106; Ex. 124. The advertisements stated, “Issued by the Government of Ecuador,” and linked to JusticeforEcuador.com. Ex. 106; Ex. 124. That website, in turn, was registered on the same day as the website for Toxic Effect, and the Justice for Ecuador’s “About” page links to Chevroffs Facebook page. Exs. 107-108; Ex. 97.

    2. The websites for Chevroff and Toxic Effect were both registered anonymously, within days of each other, through the same Panamanian entity. Exs. 96-97. The websites for The Dirty Hand, The Nation’s Traitors, and Apoya al Ecuador were similarly registered anonymously, to a single entity in Scottsdale, Arizona. Exs. 98–101.

    ****

    Days later, Correa announced that he would publicize the names of individual Ecuadorians who had worked for Chevron: “We are giving the names of people who are on Chevron’s side so that the Ecuadorian people will know when one of these pseudo-analysts is
    speaking, it is really Chevron’s attorney who is speaking.” Ex. 81 at 2. Correa called Chevron and anyone who would aid Chevron “traitors,” “criminals,” and “enem[ies] of the country” who are “conspir[ing] against the Government,” “giving ammunition to [Ecuador’s] international enemies,” and waging a “criminal campaign” against Ecuador. Ex. 49; Ex. 82; Ex. 83.

    Coinciding with Correa’s statements, “The Nation’s Traitors” (Los Vende Patria, http://www.losvendepatria.com) website published a “most wanted” style list of Ecuadorian attorneys and witnesses who “cooperated with American multi-national Chevron,” branding them traitors. Ex. 84.”

    Interestingly, Chevron has not asserted that the discovery in the Sec. 1782 submissions is being sought in support of the bilateral investment treaty arbitration against Ecuador, despite numerous rulings and interim awards in that arbitration ordering Ecuador to not assist with inter alia enforcement proceedings for the judgment.

    Do you have views on any of the foregoing?

    Regards,

    MK

    1. Mark, thank you for the detailed comment. You are right that the proceedings for which Chevron says it seeks the information are the foreign enforcement proceedings and the Gibraltar proceeding, not the BIT proceeding, so I will change the post accordingly.

      You are also right (or rather, Chevron is right) to say that relevance is not strictly speaking a necessary showing before one can have recourse to § 1782, or even one of the Intel factors, though I think it can play into the Intel factors in various ways (e.g., a foreign court may be less receptive to plainly irrelevant evidence; the burden imposed by a subpoena may be more “undue” if the evidence sought has little relevance).

      Some of the allegations you cite seem to me innocuous. For example: if you search a WHOIS database you will see that Letters Blogatory is registered “anonymously,” i.e., I paid a little extra to the registrar so that my name and more importantly my address and phone number will not appear in the public database. I think that’s fairly common. Maybe there is something nefarious going on with the anti-Chevron websites, and maybe not.

      But I suppose if I were to rephrase my main point, it would be this: Ecuador hired MCSquared in 2013. Why would we think MCSquared has any information about what was going on in the Ecuadoran courts at or before the time of the first-instance judgment? (Recall that at least to date, no one has offered any evidence that the Ecuadoran appellate court acted corruptly or was subject to political pressure in this case). And even if there was some sort of deal today between Ecuador and the LAPs to promote enforcement of the Ecuadoran judgment, so what? The question in an enforcement case is the fairness of the judicial proceedings, and the kind of evidence Chevron says it thinks may exist (and the allegations you cite) don’t seem to me to have much to do with that question. (Of course, I have some reason to think there is no collusion today, but that’s a different question).

      I don’t mean to carry any water for President Correa. His PR and his dealings with the press often seem heavy-handed. The MCSquared campaign was, ah, not well executed. But again, so what?

  2. Thanks, Ted. Just to note, it does not appear to me that Chevron is basing its Sec. 1782 argument on a claim that “MCSquared has any information about what was going on in the Ecuadoran courts at or before the time of the first-instance judgment.” From their papers, Chevron appear instead to be seeking discovery into whether the Republic of Ecuador has been providing support, financial or otherwise, for the Lago Agrio plaintiffs’ subsequent enforcement actions in Argentina and Brazil and whether the Republic has been tampering with witnesses for a variety of forums. Chevron also seek discovery about allegedly co-conspiratorial coordination with the third-party funders and recovery vehicles who are the defendants in the Gibraltar proceedings.

    The District Court will therefore be addressing post-Ecuadorian judgment issues, not first-instance judgment issues. But, I suspect Chevron will ask for Ecuador first-instance and appellate information too :-)

    You also wrote “The MCSquared campaign was, ah, not well executed. But again, so what?” Publishing the names and addresses of your opponents is an obvious effort to intimidate opponents, particularly in a country as violent as Ecuador. Back in 2012, Pres. Correa engaged in similar conduct, identifying name and address, and vocally attacking, the lawyer for the El Universo newspaper and Occidental Petroleum in a televised address (readers may recall the Inter-American Commission of Human Rights order that Ecuador suspend its criminal sentences against El Universo editors and directors arising out of articles critical of the President and his family, and subsequent IACHR actions in that situation).

    Those kinds of human rights abuses are just plain wrong. We should never shrug our shoulders at such conduct, no matter how we feel about the merits of the underlying environmental dispute.

    Regards,

    MK

    1. Mark, I didn’t mean “so what?” in the sense of “these aren’t bad things.” I meant “so what?” in the sense of “what does executive misconduct now have to do with the enforceability of the existing judgment, given that the grounds for asking a court to refuse to enforce it probably will relate to corruption or partiality in the courts at and before the time the judgment was rendered?” I agree with you that of course the government of Ecuador shouldn’t threaten lawyers.

Leave a Reply

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