Yesterday was a big day in the Lago Agrio case: oral argument in the Second Circuit. I was there, along with several other Chevronologists, partisans on both sides, and curious members of the public. One young lawyer I met had traveled from Chicago—by train!—just for the event. Happily, the judges didn’t disappoint. There was more drama than I expected.

I’m going to start this post with a couple of highlights from the argument. Then I’m going to give a fuller account of the argument, together with a Letters Blogatory backgrounder—it’s been a while since we’ve tried to pull some of the strands together.

First, the highlights:

• Judge Wesley suggested a retrial of the underlying lawsuit in New York. At first I thought he was being facetious, but he raised it agains and again with all of the parties. I think he was serious. The LAPs and Donziger said they were willing, Chevron not so much. An astute reader had raised this possibility here before, and I didn’t take it seriously because I had never heard of it being done and I didn’t imagine it could appeal to a court. Apparently I was wrong. And the more I think about it the more interesting it gets. The premise of Aguinda was that the United States was an inconvenient forum and Ecuador was a superior forum. According to Chevron, that turned out not to be true. There should be some adequate forum to hear the case, right? Since it can’t be Ecuador, according to Chevron, perhaps the United States has an obligation to revisit the forum non conveniens dismissal. This is a really interesting idea, though as I say, not one that the parties briefed or that has precedent behind it. (Actually, Judge Welsey observed that retrial is a remedy in England—I can’t confirm this yet).
• Judge Wesley had another surprise issue for the parties. He was very interested in the potential preclusive effect of the BIT arbitration. In the arbitration, as in the New York lawsuit, Chevron was arguing, in effect, that the Ecuadoran courts were unfair and unworthy of recognition. What if the BIT tribunal disagreed with Judge Kaplan? Why had Chevron brought the same claim twice in different forums? Would an Ecuadoran who is a beneficiary of the judgment but was not named as a defendant in the Chevron suit or in any event was not within the New Your court’s personal jursidiction have an argument that the BIT tribunal’s findings are conclusive if the tribunal rules in favor of Ecuador? The parties were unprepared for these questions, and I wonder whether there will be further briefing.
• A less dramatic point, but still important: Judge Wesley wanted to understand why Chevron hadn’t pursued its remedies under the Collusion Prosecution Act in Ecuador. There was no really good answer to this. Chevron’s lawyer, Ted Olson, suggested that based on Judge Kaplan’s finding, Chevron wouldn’t get a fair shake in Ecuador. But I think this fails to account for a few points, namely Chevron’s succesful use of the Ecuadoran courts in other recent cases, and the lack of a strong basis for asserting that not just the provincial court that entered the original judgment but the appellate courts that reviewed the matter were of poor quality. Without that, Chevron’s reluctance to try the CPA is not really explicable.

Now for the detail:

Contents

• What is the overall dispute about?
• What happened in the Ecuadoran courts?
• What happened in the District Court?
• What other litigation is pending?
• How did things look before the argument?
• What happened yesterday?

What is the overall dispute about?

Beginning in the 1960s, a subsidiary of Texaco, the American oil company, explored and drilled for oil in the Oriente region of Ecuador, in the northeast of the country. While parts of Ecuador are mountainous, the Oriente is in the lowlands, part of the Amazon rainforest and, especially at the time, undeveloped and still home to many of its indigenous inhabitants, including the Huaorani and the Cofán. Texaco was part of a joint venture with PetroEcuador, the Ecuadoran state-owned oil company. The joint venture lasted to 1992.

There’s no question but that the Texaco/PetroEcuador joint venture led to oil pollution in the Oriente. The scope of the pollution and its effects on the environment and on the inhabitants of the region are sharply disputed, as is the attribution of legal fault, but the fact that pollution and contamination occurred is not.

In 1993, Maria Aguinda and other residents of the Oriente brought a putative class action against Texaco in the Southern District of New York. Aguinda and the others pleaded a claim for relief that would be familiar to any American lawyer: Texaco, they claimed, had been negligent, had caused a public and private nuisance, had trespassed on their land by discharging oil onto it, and had violated customary international law, among other things. The Aguinda case resulted in dismissal under the doctrine of forum non conveniens, which the Second Circuit affirmed in 2002. Forum non conveniens, for the unintiated, is a doctrine, of somewhat uncertain provenance, under which a court will dismiss an action even though it has jurisdiction and even though it is a proper venue if (put very loosely) trial in the chosen forum would be seriously inconvenient and there is another, superior forum available.

Texaco’s victory at this stage in the case would come back to haunt it. One of the considerations in a forum non conveniens case, is the adequacy of the alternate forum. Here is what Texaco had to say about the Ecuadoran courts when it was trying to get the Aguinda case dismissed. I quote at some length because this is such a key point:

Ecuador’s Government is a constitutional democracy with executive, legislative, and judicial branches. Its judicial branch, headed by the Supreme Court, includes special purpose courts and lower courts, which use a Civil Code based on Roman law. Thus, Ecuadorian legal norms are similar to those in many European nations. Ecuador’s Constitution guarantees due process and equal protection, and its courts provide important procedural and substantive rights, as former Supreme Court Justices of Ecuador, jurists, and practicing lawyers informed the District Court in affidavits.

* * *

In response to the District Court’s January 31, 2000 Memorandum Order, the parties submitted evidence concerning the independence and impartiality of Ecuador’s judiciary following the short-lived coup in January 2000. That evidence further proves that Ecuador provides an adequate legal forum and that its judicial system is even stronger today than previously.

Ecuador reaffirmed its commitment to democracy following the failure of the January 21, 2000 military coup. Its democratic, constitutional government continues today, and its judiciary remains independent. Ecuador’s military is not interfering with the judiciary’s or government’s activities. The current Government of Ecuador has taken and continues to take “vigorous steps to further the independence and impartiality of the judiciary.”

* * *

Plaintiffs’ next argument is that Ecuador’s courts are corrupt, but “the argument that the alternative forum is too corrupt to be adequate ‘does not enjoy a particularly impressive track record.’” The most persuasive evidence that Ecuador can and does dispense independent and impartial justice in these cases is the record of corruption-free litigation against Texaco’s subsidiary and other companies. This record provides practical proof that litigants can and do obtain fair treatment and relief in Ecuador’s courts, including in cases relating to Consortium activities. The circumstances in Ecuador are not remotely like those that prevailed in Liberia when this Court decided Bridgeway Corp., which involved a “dysfunctional foreign legal system[].” The opposite is true in Ecuador.

These cases also have received substantial attention from the Ecuadorian government and media, environmental groups, human rights groups, indigenous organizations and other non-governmental organizations. This attention will continue regardless of forum. The public scrutiny these cases will receive in Ecuador and/or Peru will further assure a fair adjudication of plaintiffs’ claims.

I believe Texaco thought that if the litigation were dismissed in the United States the case would be over. At the time it was not clear that anyone had the will or the capacity to litigate a major environmental case in Ecuador on a contingent fee basis, or that third-party litigation funding might be available to support such an effort.

While the Aguinda case was pending, there were some important developments outside of court. First, in 1993, the Ecuadoran government made a deal with Texaco under which Texaco agreed to remediate certain sites in return for a release from the Ecuadoran government. Whether the release also extended to claims by individual Ecuadorans was later a point of contention. In any event, Texaco performed work under the remediation plan, and the Ecuadoran government effectively signed off on the work. The lawyers for the Ecuadorans, including Steven Donziger, one of the main protagonists in the story, apparently were against the remediation plan, though their motives were mixed. It’s clear that some of the sites on the list were not properly remediated, and points that the parties have disputed include: did Texaco (and later Chevron) conceal pollution to create the appearance of adequate remediation? Did Texaco/Chevron stop remediating due to political pressure from the plaintiffs? I address some of these points in my post on my visit to the Aguarico 4 site, one of the sites that was supposed to be remediated but that still (as of 2014 at least) was grossly polluted.

Second, in 2000, Ecuador suffered a coup d’etat that resulted in the military bringing Lucio Gutiérrez Borbúa to power. Gutiérrez adopted a program of neoliberal reforms at the insistence of Ecuador’s international creditors that resulted in the collapse of his government and, in 2006, the election of Rafael Correa Delgado, a left-wing, US-educated economist. One of Correa’s major initiatives was a reform of the judiciary. Whether this was a true reform of an ineffective or corrupt judiciary, or a political takeover of the judiciary, is a point of contention. I’m no expert in Ecuadoran political history, but my big-picture view is that when Texaco pushed to have the case in New York dismissed, it thought the Ecuadoran government was a friendly, right-leaning government (the government, after all, had signed off on the remediation completion), but after 2006, it was facing an unfriendly, left-leaning government.

Third, in 2001, Chevron acquired Texaco. The merger was a so-called “reverse triangular merger,” which if you have never taken a corporations law class in law school is probably gobbledygook to you. I’m not going to explain it here.

What Happened in the Ecuadoran Courts?

Defying the odds, the Ecuadoran plaintiffs went ahead with the litigation in Ecuador, specifically in a court in the provincial town of Lago Agrio. While they were represented by Ecuadoran counsel, they were also represented by Steven Donziger. The Ecuadoran case was sprawling, went on for years, and ended in a judgment of $19 billion, later reduced by half. The judgment was (purportedly) written by Judge Nicolas Zambrano Lozada. For our purposes there were two important things to note about the Ecuadoran proceedings.

First, the initial plan was to determine the truth of the claims about pollution through a judicial inspection process. Each side would conduct a “pre-inspection” using its experts, and then the parties, in the judge’s presence, would conduct the judicial inspection. The judicial inspections and pre-inspections are key to the case. On the one hand, Donziger and his team disliked the judicial inspection process because it seemed not to be producing the results they wanted. On the other hand, Donziger and the Republic of Ecuador itself asserted that Chevron was manipulating the pre-inspection process to help ensure favorable results by, for example, looking for “clean” areas in the pre-inspections and then offering those areas for inspection during the judicial inspections.

In any event, Donziger eventually persuaded the court to abandon the judicial inspection process and instead to appoint a single global expert who would be independent of the parties and who would report his results to the court. Here we come to what I consider the main point that Chevron was able to prove in the New York proceedings: the global expert, Richard Cabrera Vega, was in fact not independent at all, despite the protestations of Donzgier’s team. Indeed, the plaintiffs’ team wrote Cabrera’s report. (Donziger’s claim is that this was permissible under Ecuadoran law). The report’s true authors were from Stratus Consulting, the plaintiffs’ US environmental experts. They later disowned the report under heavy-duty litigation pressure from Chevron. (Chevron also proved a less significant instance of misleading the court: one of the plaintiffs’ experts, Charles Calmbacher, testified that the report the plaintiffs had submitted over his signature was not his report).

The second big point: Chevron has claimed that not only was the Cabrera report a fraud, but that Judge Zambrano’s judgment itself was a fraud, ghostwritten by the plaintiffs with the help of another judge, Alberto Guerra Bastidas, in return for a bribe. Now, Judge Zambrano hardly cut am impressive figure when he testified in New York. But Judge Guerra, who was Chevron’s star witness in the New York trial, lacked credibility in my eyes and the eyes of some other observers. Why believe a witness who admits to taking bribes and whom Chevron, in an ethically dubious move, has paid a lot of money and relocated in the United States? Moreover, Guerra’s story is that when he was soliciting bribes, his first choice was to ask Chevron for a bribe, which is difficult to square with Chevron’s basic story about a corrupt Ecuadoran judiciary politically in the bag for President Correa and out to get Chevron no matter what. Chevron’s attempts to corroborate the testimony were unconvincing to me; there is some evidence that the plaintiffs themselves were unaware of what the judgment would say before it was handed down; and newly disclosed forensic work, which Chevron disputes in part, casts more doubt on the ghostwriting claim. So although Judge Kaplan, the judge in the New York case, credited Judge Guerra’s testimony, I highly doubt I would have credited it had I been there to hear it.

Chevron appealed Judge Zambrano’s judgment to an intermediate appellate court, which affirmed the judgment in the main, although it cut the amount of damages in half. (Judge Zambrano had originally awarded approximately $9 billion in compensatory damages and imposed what amounted to a $9 billion punitive damages award on account of Chevron’s failure to apologize. The appellate court held that this was improper). Chevron then appealed to the Ecuadoran Supreme Court, which again affirmed. One point to note is that Ecuador follows the civil law, not the common law. Donziger’s team has argued that under Ecuadoran law the intermediate appellate court, following the civil law tradition, reviewed the evidence de novo, rather than simply taking the facts that Judge Zambrano had found and reviewing them against the record. This point will become important later, as we’ll see.

So as a result of the proceedings in Ecuador, the plaintiffs have a multi-billion dollar judgment against Chevron. But because Chevron has few if any assets in Ecuador, the Ecuadoran judgment, on its own, doesn’t do them much good. They must seek recognition and enforcement of the judgment in states where Chevron does have assets.

What happened in the District Court?

You might think the obvious choice for the plaintiffs would have been to seek recognition in the United States, where Chevron is based, and more specifically to seek recognition in a state like Delaware, where it is incorporated, or California, where it has its headquarters. But although the plaintiffs in my view did inadvertently seek recognition of the Ecuadoran judgment in the United States by arguing that the US court had to give preclusive effect to Judge Zambrano’s findings, that was a mistake on their part and they have made it pretty clear that they won’t ever seek recognition and enforcement of the judgment here. So the New York litigation did not arise out of the plaintiffs’ efforts to enforce the judgment, but rather out of Chevron’s attempt to avoid the consequences of Texaco’s calamitous decision to have the action tired in Ecuador rather than in New York in the first place.

Chevron was aided by its masterful use of the US judicial assistance statute, 28 U.S.C. § 1782, which allowed it to use the US courts to uncover lots of juicy evidence that it was able to use in its lawsuit against Donziger. For Donziger had made a decision just as foolish as Texaco’s decision about forum non conveniens: he had invited a film crew led by documentarian Joe Berlinger along for the ride in Ecuador. Chevron, turning back a First Amendment challenge, was able to compel Berlinger to turn over many hours of “outtakes” that had not made it into his acclaimed documentary about the case, Crude. Donziger has disputed the spin Chevron has put on the outtakes, but there’s no question that upon arrival they were highly damaging and that several US judges to whom the outtakes were presented were not amused. Donziger is shown, for example, meeting with Cabrera and the Stratus Consulting team and talking about planning Cabrera’s supposedly independent report. He is shown in a car on his way to confront the judge, giving some choice views about the Ecuadoran judiciary: “They’re all corrupt! It’s their birthright to be corrupt!” My favorite clip shows Donziger in the car, on the way to confront the judge. “We’re going to let him know what time it is,” Donziger says, like he was playing a scene in The Godfather.

With this evidence in hand, Chevron sued Donziger and some of the plaintiffs under the US RICO statute, the law aimed at racketeers, and under the common law. They also sought a declaration that the Ecuadoran judgment was not entitled to recognition or enforcement. And they sought and received a preliminary injunction enjoining Donziger and the plaintiffs from seeking to enforce the judgment anywhere in the world. The injunction was too much for the Second Circuit, which vacated it in a brief order. The court’s full opinion, when it came, went further, holding that Chevron couldn’t even seek a declaration about the judgment’s unenforceability until the plaintiffs sought to enforce it in the United States. (I’ve questioned the wisdom of the decision and suggested it should be read in light of the evidence that the plaintiffs never intend to seek recognition in the US, since otherwise the decision seems hard to square with the law of declaratory judgments).

The parties went on to litigate the RICO case. I won’t attempt to summarize all the twists and turns here. One point of interest, though, is the way that Chevron, no doubt bringing enormous litigation pressure to bear, was able to turn Donziger’s allies against him one by one: Stratus Consulting, the plaintiffs’ third-party funders, Burford Capital and James Russell DeLeon, and even their former lawyers, Patton Boggs. As the trial approached, Chevron, which had been seeking damages and had demanded a jury trial, realized that it had a pretty sympathetic judge in Judge Lewis Kaplan, and it dropped its claims for damages, which had the effect of removing from the case the issues that could have been tried to a jury and left Judge Kaplan with the unenviable job of preparing detailed findings of fact. The RICO trial resulted in extensive findings of fact in which Judge Kaplan decided—not to put too fine a point on it—that Donziger was a crook who had orchestrated a massive scheme to defraud Chevron by corruption and by taking advantage of the already-corrupt Ecuadoran court. This is the decision that is now on appeal and on which the Second Circuit heard arguments yesterday.

What other litigation is pending?

The RICO case is not the only show in town. There have been too many cases to count, but here are some of the more important ones that are still pending:

• The investment treaty arbitration. Chevron has brought a claim against the Republic of Ecuador under the US/Ecuador bilateral investment treaty. Such treaties are meant to protect foreign investors. Disputes under the treaty are heard by a tribunal of three arbitrators. Chevron’s basic claim is that Ecuador denied it fair and equitable treatment and that Ecuador should be required to indemnify Chevron in the event Chevron makes payments on the Ecuadoran judgment. The arbitrators have ordered Ecuador to suspend the effectiveness of the Ecuadoran judgment pending the outcome of the arbitration, but Ecuador has not done so. It is difficult to find fault with Ecuador on this, since although the Ecuadoran state has international responsibility for the decisions of its judiciary, in a system based on separation of powers the executive cannot simply order the judiciary to reverse itself in a particular case. The United States has been in this pickle before. The arbitrators recently handed Ecuador a win by determining that the release Ecuador granted to Texaco after Texaco’s remediation did not bar all of the claims the plaintiffs had brought against Chevron in the Ecuadoran proceedings.
• The Canadian enforcement proceeding. The plaintiffs brought an action in Ontario seeking recognition and enforcement of the Ecuadoran judgment. The Superior Court stayed the case, but the stay was reversed on appeal; Chevron then appealed to the Supreme Court of Canada. The case was argued and a decision is pending. Similar enforcement proceedings are pending in Latin America, though we have significantly less information about them.

How did things look before the argument?

Either bravely or foolishly, I made a prediction about what the Second Circuit would do after the briefing was finished. I still think my prediction was reasonable, but as we’ll see the judges threw a couple of curveballs that have the potential to really affect the course of the appeal. Intrepid reader Chad, while he didn’t make a formal prediction, did raise the idea of a retrial of the case in the United States. I pooh-poohed the idea as unprecedented, but as my summary of the key points showed, maybe Chad was on to something.

What happened yesterday?

So now the part you’ve been waiting for: how did the argument go? I’m not going to address the two key points I discussed at the outset again: here are some moments from the oral argument I found interesting.

First, I’ll set the scene. I was in the overflow room in the Thurgood Marshall courthouse in Foley Square. Many famililiar faces were in the crowd. I sat with Michael Goldhaber and Judith Kimerling. Because I was sitting with Michael, I couldn’t possibly sit with the Amazon Watch folks (Paul Paz y Miño and maybe others) who were there, as I’m not sure they’re on speaking terms. I saw Steven Donziger and Aaron Page come into the courthouse, but aside from saying hello and finally denying my long-outstanding request for an on-the-record interview, Donziger and I didn’t cross paths. In addition to the lawyers who were arguing the case—Deepak Gupta, Burt Neuborne, and Ted Olson—I saw Randy Mastro and Andrea Neuman. I heard Paul Barrett and Karen Hinton were there too (not together!) In short, most of the Chevronologists were present. Doug Cassel was, as far as I know, an exception.

Gupta argued first. He began with an arresting but ultimately question-begging point. Imagine that the court were being asked to pass judgment on an English or French judgment, in which English or French plaintiffs were claiming damages on account of pollution in England or France. Imagine that a US court had preemptively enjoined enforcement of such a judgment in the United States, before the judgment creditors even sought enforcement. Of course, we can’t realistically imagine this. The implied point is that we are treating little, unfamiliar Ecuador disrespectfully. I say Gupta’s point was question-begging because no one claims that the courts of the UK or of France are hopelessly corrupt.

Gupta and Judge Richard C. Wesley had a dialogue about the effect of the New York judgment recognition statute on the common law. Did the statute occupy the field, so that the whole law of recognition of judgments was taken over by the statute? Judge Wesley pointed to some New York precedent showing that the statute did not occupy the field. Gupta agreed that the statute doesn’t preempt the entire field, but he argued that when a foreign judgment comes within the scope of the statute, questions of enforceability are indeed governed by the statute. He pointed out that if this weren’t so, then Naranjo, which forbade judgment creditors to raise defenses to enforcement under the statute until the judgment creditor sought recognition under the statute, would be a dead letter. I tend towards Gupta’s view on this, because the claim of fraud Chevron makes under the common law overlaps substantially with some of the defenses available under the statute. The name you give to a defense shouldn’t control whether the defense is good.

Judge Barrington D. Parker joined the fray to discuss the connection of the case with New York. Many of the bad acts happened there, and so, he suggested, it’s natural that New York law should apply and that New York tort claims against the wrongdoers should be available. But Gupta objected that there will always be someone on the other side of a judgment, and that allowing this kind of tort claim is a backdoor way of allowing collateral attacks on foreign judgments.

So what is a judgment debtor to do, asked Judge Wesley? Wait for the judgment creditor to seek recognition in Saudi Arabia, or another country (by implication, another country with an unsatisfactory judiciary)? Well, yes, said Gupta, “the best remedy is to assert the defense in an enforcement proceeding.” If Chevron, as it claims, is confident that no court that observes the rule of law will enforce the judgment, then it should be comfortable putting that question to courts around the world. Judge Wesley: “But the Canadian court won’t be bound by Judge Kaplan’s findings of fact.” Gupta: “That’s right. Chevron wants you to give the Canadian court an amicus brief.”

Gupta made the point that recognition of foreign judgments, with exceptions, is not just part of the common law but part of the law of nations. Well, said Judge Parker, what are we to do with Judge Kaplan’s findings of fact? Which trumps? Our obligation to accord comity, or our response to the findings of fact that show fraud and that Donziger did not really challenge in his appeal? Gupta proposed a functional approach. “You should look at the harm alleged and the relief being sought. If the harm alleged is the foreign judgment itself, then you know that the judgment debtor is making an impermissible collateral attack,” and the rule of comity trumps. Of course, as a general matter, he said, one cannot be allowed to profit from one’s own fraud. But that general principle doesn’t overcome the rule against collateral attack on judgments.

Burt Neuborne, representing those LAPs not in default, was next. He had one main point to make, and he made it well: “We’re not Donziger.” The biggest bone of contention was the power of attorney each client signed, which, according to Judge Kaplan, had the effect of ratifying Donziger’s wrongful acts and rendering the plaintiffs liable on agency principles. Neuborne argued vigorously that the plaintiffs, while they did sign the document, were in the dark about what Donziger had done and couldn’t possibly have known enough to supervise him, so it was perverse (he said) to hold them liable on an agency theory.

Another point of interest in Neuborne’s argument had to do with the claims pleaded against his clients. There was no RICO claim, only a common law claim, and according to Neuborne, leaving vicarious liability aside, there simply is no common law cause of action against innocent judgment creditors, even if their lawyer acted wrongfully.

I was very pleased that Neuborne raised one of my pet issues: judicial estoppel on account of Texaco’s representations to the court about the Ecuadoran judiciary. Neuborne put it thus: the only thing that changed between the FNC dismissal and the Lago Agrio judgment is the political climate in the country. Ecuador went from a judiciary appointed by a military junta to a judiciary appointed by a highly popular, though leftist, government. Allow me to quote myself briefly on this point:

But my big-picture view is that Chevron thought it was getting a small-time, unsophisticated, perhaps corrupt right-wing court system, and due to the intervening political changes in Ecuador, what it ended up with was a small-time, unsophisticated, perhaps corrupt left-wing court system, which to my mind is hardly grounds for much outrage. In the Letters Blogatory symposium on forum non conveniens and recognition of judgments, I put it this way: “I think it is fair to say that in seeking an FNC dismissal, Chevron took a calculated risk that the political winds in Ecuador would continue to blow its way. It does seem to me to be inequitable not to require parties in the position Chevron found itself at the FNC stage to bear the risk they took.”

Then it was Ted Olson’s turn. Olson began by reciting some of the key factual findings and pointing out, correctly, that Donziger had not challenged them on appeal. This is a strong point for Chevron unless one of Donziger’s technical legal arguments carries the day. I think, though, that Gupta did the only smart thing here, since a frontal attack on the findings of fact would be more or less doomed to failure in light of the high standard of review, and since Gupta could at least put his version of the facts before the court in his brief, even if not actually asserting that anything Judge Kaplan found was clearly erroneous. But Chevron’s case seemed much stronger on the facts than on the law to me. (It’s not just I who feel that way: Judge Parker commented that he found Gupta’s legal arguments “sound,” but that “we have detailed findings that you haven’t taken on. The fraud evidence is compelling”). For example, Judge Wesley asked what was wrong with Donziger’s view that a judgment debtor should wait until an attempt at enforcement before raising defenses to enforcement. Olson claimed Chevron would be harmed by having to defend multiple enforcement proceedings throughout the United States. Really? This seems very unlikely to me. Presumably a plaintiff will seek recognition in one state. If the judgment is federal, it can be registered anywhere in the United States. If it is a state court judgment, it is entitled to full faith and credit throughout the United States. If multiple actions are pending at once, there are mechanisms (stays, consolidation in federal cases, etc.) to deal with the problem of parallel proceedings. If that’s the harm, well, it’s not very much.

What about the Collusion Prosection Act? The argument about exhaustion was waived in the district court, according to Olson, and the remedy was futile anyway because the Ecuadoran courts were “shot through with fraud.” As I’ve already noted, I question whether Chevron really made a case for top-to-bottom corruption in the Ecuadoran courts.

Olson angered Judge Wesley when the judge asked about Texaco’s representations about Ecuador, made in connection with the forum non conveniens motion. Olson launched into a defense of the idea that Chevron and Texaco are distinct entities and that Chevron could not be held to account. Judge Wesley, red in the face and his voice rising, cut him off, asserting that the rules of corporate successor liability in reverse triangular mergers had nothing to do with the obligation of candor when you’re making representations to a federal judge. Olson took the hint and quickly retreated from this position.

I asked Chevron, by the way, about its position on a retrial. Here’s what spokesman Morgan Crinklaw said:

It is extraordinary for a judgment creditor to seek a new judgment. Judgment creditors want enforcement of their enforceable judgments, and judgment debtors generally would want a retrial. The fact that Donziger and the Lago Agrio Plaintiffs are claiming they want a new trial is very telling. If they had a legitimate judgment obtained through a legitimate court process, then why not hold onto the current judgment as presently ordered and argue that the process was legitimate? Donziger and his clients have always had the opportunity to come to the United States and seek enforcement of the Ecuadorian judgment and have passed on it. The notion that they now want a new trial in the United States is telling

This ignores the history of the case, I think. The plaintiffs originally wanted trial in the United States. If Chevron now says no fair trial in Ecuador is possible after previously saying the case had to be tried in Ecuador, are there really grounds for complaint about a retrial?

In short, a very interesting hearing with a lot to chew on. I won’t be surprised if the court directs further briefing on the new issues Judge Wesley raised. Stay tuned!