Lago Agrio: Post-Argument Briefs

Steven Donziger and the LAPs have filed post-argument briefs with the Second Circuit.

As we have come to expect, Donziger’s new brief is very well-written. It begins by addressing one of the points that Judge Wesley raised at oral argument: what should the court make of the fact that Chevron had brought two proceedings, the RICO case and the BIT arbitration, that raised many of the same issues? I like to think of this issue as the reverse Invictus. Chevronologists will understand why. Donziger took the opportunity to outline the evidence in the arbitration tending to disprove the allegation that the Lago Agrio judgment itself was ghostwritten, namely the Racich report. I think this is the kind of concern Judge Wesley had in mind. My only real problem with the argument is that in a sense it rewrites history, insfoar as Donziger’s main Second Circuit brief doesn’t really assert that any of Judge Kaplan’s findings of fact were clearly erroneous. As I commented at the time:

I was struck by the lack of connection between the fact section of the brief and the argument section. The brief gives a long and pretty compelling narration of the history of the case, including Donziger’s take on Chevron’s supposed litigation misdeeds in Ecuador and in the United States. I’ll discuss the narrative in a bit. But the grounds for reversal have little to do with the facts …

Next, Donziger points out that Chevron has plenty of other remedies, including one I have harped on from time to time, a remedy under the Collusion Prosecution Act in Ecuador. He points also to a remedy from the Constitutional Court of Ecuador, which has the power to nullify the judgment (unfortunately, the link in the brief to the Constitutional Court’s announcement that it would hear Chevron’s petition seems to be borken). And he points to Chevron’s defenses to actions for recognition and enforcement. The last point is a nod to Naranjo, which held that a judgment debtor can’t bring a preemptive action for a declaratory judgment regarding the enforceability of a foreign judgment but must instead wait for the judgment creditor to seek recognition and then raise defenses under the UFCMJRA. But if the reason for raising the existence of other remedies is to show that Chevron shouldn’t have prevailed in its claim for an injunction (because the existence of an adequate remedy at law is a defense to an equitable suit for an injunction), then I wonder whether a defense is a “remedy” in the appropriate sense. I raise the point without answering it, because I’m not sure of the answer.

Last, Donziger addressed Marshall v. Holmes, 141 U.S. 589 (1891), which is not cited in the main briefs but which Chevron raised at oral argument. Chevron argued that under Marshall it could have a cause of action to collaterally attack a foreign judgment. Donziger suggested that the case—a diversity case arising under Louisiana law—turned on an unusual Louisiana statute permitting such a collateral attack, and he noted the lack of such a statute in New York. There was some discussion of whether such a claim is in rem or in personam. I have to say I find the distinction Chevron tries to draw on this point and that Donziger attacks entirely unpersuasive, which I suppose means that I agree with Donziger on this point.

In their new brief, the LAPs go further than Donziger on the issue of parallel proceedings and suggest that the US courts ought to abstain from proceeding pending the results of the arbitration. I am not sure how persuasive this is, as the RICO case has already gone to judgment, and in fact, it got there first. I’m not sure whether the LAPs ever asked for abstention before the judgment, but if not, it’s not clear to me that they should be able to seek it now.

The LAPs also make a novel suggestion about what the court should do if it affirms the injunction. They say that in that case:

The Court should condition its affirmance on Chevron’s willingness to submit to an accelerated judicial verification proceeding before a genuinely neutral magistrate designed to reassure the Court that the voluminous record before the Sucumbíos court contained sufficient untainted evidence of widespread pollution to validate the decision of the Provincial Court of Sucumbíos to issue a de novo judgment requiring Chevron to remediate the ravaged land.

Huh? To me, this seems beyond the pale for what a US appellate court can be expected to do. The LAPs suggest such a remedy is akin to a court’s power to order a remittitur, but I don’t see that the well-established rules about remittitur justify such an extraordinary remedy.

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.

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