Lago Agrio: Supreme Court Denies Donziger’s Petition For Cert.

Yesterday the Supreme Court denied the petition for a writ of certiorari filed by Steven Donziger and several Lago Agrio plaintiffs, seeking review of the Second Circuit decision affirming Judge Kaplan’s judgment in the Chevron RICO case. Barring any unexpected surprises, and barring any ancillary proceedings in aid of cases pending elsewhere, this brings the main Lago Agrio case to a close in the United States. Judge Kaplan’s injunction will remain in place.

Although I’ve sometimes criticized the PR coming from Donziger and his allies, I have to say I like his chutzpadik statement following the Court’s decision:

The refusal by the Supreme Court to address the fact Chevron fabricated evidence to cover up its massive pollution in Ecuador is a grave mistake and a sad reflection on the U.S. judiciary in the eyes of the world. … [T]he Supreme Court has missed the last chance for U.S. courts to salvage their international reputation when it comes to their disgraceful conduct related to the Ecuadorian villagers’ fight for justice.

You have to admire the framing: it’s not Donziger and the LAPs whose last chance passed them by, it’s the Court!

The latest decision has no immediate effect on other proceedings, for example the enforcement proceedings in Canada, though it does leave open the question of the preclusive effect of Judge Kaplan’s findings. It’s possible that now that the US proceedings are concluded, we will see some professional responsibility cases—I can imagine a bar complaint being brought against Donziger in light of what Judge Kaplan found, and I can also imagine a complaint being brought against Chevron’s lawyers on account of their payments to Guerra (though in such cases an ethics opinion from a recognized scholar tends to go a long way towards defusing a bar complaint).

5 responses to “Lago Agrio: Supreme Court Denies Donziger’s Petition For Cert.”

  1. Alejandro Manevich

    Ted, preclusive effect is the $9B question. This raises a novel (to my knowledge) question in Canadian law: how to deal with two final, but inconsistent, foreign judgments. Beals v Saldanha, the key 2003 SCC precedent, set out the test for recognition AND enforcement of a foreign judgment. The first of these tends to be ignored in favour of the second, though, partly because the terms get used interchangeably. But they are quite distinct: a court can recognize, i.e. give preclusive effect to, a foreign judgment without enforcing it, i.e. issuing an order that the foreign judgment be enforceable as if it were a domestic judgment. Obviously enforcement entails recognition, but the reverse is not true. Also, enforcement requires bringing legal proceedings in Canada for that particular purpose, whereas recognition does not.

    So what happens in the Ontario Lago Agrio judgment enforcement proceedings when Chevron raises the US judgment in its defence, pitting the two foreign judgments against each other? I have no idea, but I’m certainly eager to find out!

    1. Alex, thanks for this comment. I don’t think the conflict is between the US judgment and the Ecuadorian judgment. I think the potential conflict is between the US judgment and the forthcoming arbitration award, which might take a different view on the corruption. Then we would indeed face a difficult problem!

  2. Ted, it is sad, indeed, that the Supreme Court will not answer the comity questions.

    Should US courts really be allowed to question foreign judgements, even if there is no attempt to collect the foreign judgement in the US?

    Should US courts really be allowed to issue advisory opinions with preclusive effect to sovereign courts of other countries?

    And did there really occur a domestic damage to Chevron US within the USA? The LAPs do not target Chevron US. They target foreign subsidiaries that are legally independent from Chevron US. So is a damage to a legally independent, foreign subsidiary really a damage to Chevron US? To come to that conclusion one has to pierce the corporate veil of the subsidiary.

    Another problem in my view is that Chevron US was the claimant in the US RICO action, but not its subsidiaries. The constructive trust was instituted in the favor of Chevron US, but not in the favor of its subsidiaries that took no part in the US proceedings. So, what happens if the LAPs are successful in the enforcement proceedings in Canada against Chevron Canada? Can the constructive trust claim reimbursement for that, too? I do not believe that Judge Kaplan had the power to institute a constructive trust in the favor of a foreign subsidiary that is legally independent from Chevron US and that was not party to the US proceedings.

    1. Philipp, thanks for this thoughtful comment. Here are some thoughts on your points.

      I think you might have expected too much from the Supreme Court: if it had taken the case, it likely would have taken it to decide whether a private party has standing to bring a claim for purely equitable relief under RICO, not to decide broader points about comity.
      I don’t think the decision is advisory—certainly it’s not advisory in the technical sense. Your rhetorical question about the preclusive effect of the judgment in other countries is, as Alex Manevich put it in an earlier comment, the “$9B question,” but it’s really a question of Canadian law. So if a Canadian court ultimately gives preclusive effect to Judge Kaplan’s findings of fact, perhaps the criticism would be more usefully directed to its decision rather than to Judge Kaplan’s decision.
      You raise a good and interesting point about whether Chevron stood to suffer injuries in the United States in light of the LAPs’ disavowal of any intention to seek recognition of the Ecuadoran judgment here. This is a timely question in light of RJR Nabisco. But this kind of argument cuts both ways. The Ecuadoran judgment runs against the US entity, but the LAPs are seeking recognition and enforcement in Canada against the Canadian indirect subsidiary, which is not the judgment debtor. So on the flip side of your argument one could ask why the LAPs aren’t seeking recognition here, and one could also say that it’s the LAPs, not Chevron, that is trying to pierce the corporate veil.
      The overarching concern, I think, is that Judge Kaplan was purporting to act as a kind of world “super-court.” I understand the motivation for this concern. I think that with respect at least to Donziger himself, the concern is misplaced, since it seems right that a US court could determine that it is inequitable given the findings of fact for Donziger, whose domicile is here, to profit from the Ecuadoran judgment. The issue is sharper with respect to the LAPs. As I recall, the injunction only runs against the two representatives of the LAPs whom the judge found were within the court’s personal jurisdiction. So perhaps that concern is not too pressing. In any case, as a doctrinal matter, assuming the correctness of the personal jurisdiction (which could very well be wrong, although I don’t recall it being a focus of the appeal), I can’t see anything wrong with an injunction directed at those two individuals.

  3. […] followed the Lago Agrio case to its bitter end in the United States, and kept you up-to-date on the progress of the case in Canada, […]

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