Tag Archives: privilege

Case of the Day: In re Chevron Corp.

Our case of the day, In re Chevron Corp. (3d Cir. 2011), is the Third Circuit’s contribution to the dozens of Lago Agrio-related judicial assistance proceedings around the country. I won’t rehash the background to the Lago Agrio case again, except to say that the Third Circuit evidentally shares my sense of the irony involved in Chevron’s course of action:

Chevron’s responses to what it plainly regarded as unpalatable proceedings in Ecuador did not stop with it taking steps in that country, as it obviously, and ironically in view of its contentions on its forum non conveniens application that resulted in the dismissal of the Southern District of New York litigation, had lost faith in the Ecuadorian courts.

The case involved Chevron’s efforts to obtain discovery from UBR, a New Jersey environmental firm that the Ecuadoran plaintiffs had hired. UBR allegedly employed one of the consultants who participated in the creation of the court-appointed expert’s report in the Ecuadoran litigation, and documents with the UBR logo appeared in the court-appointed expert’s report. Chevron argued that this was evidence of the court-appointed expert’s bias.

The Ecuadoran plaintiffs made an interesting argument of statutory construction. The statute permits discovery “for use in a proceeding” in a foreign tribunal. Since the purpose of the discovery was to attack the proceedings in the foreign tribunal and indeed to attack the foreign tribunal’s impartiality itself, the discovery was not “for use in a proceeding.” But this argument foundered when it ran up against Chevron’s stated intention to use the evidence it obtained to show, in the Lago Agrio proceeding, that the plaintiffs had committed a fraud on the Ecuadoran court. And of course the use of the evidence in the BIT arbitration to show that the Lago Agrio lawsuit was fraudulent would come within the scope of the statute.

The court found that the Intel factors favored Chevron. UBR was not a party to the proceedings in Ecuador; the Ecuadoran plaintiffs had not shown that the tribunals in Ecuador would not be receptive to the evidence (merely arguing that the Ecuadoran court would not allow the same discovery to be taken under its own aegis is not the same as arguing that the Ecuadoran court would not consider the evidence if obtained by other means, such as the judicial assistance statute); and there was no evidence of undue burdensomeness or intrusiveness.

Finally, the court held that any privilege or work-product protection was waived when UBR submitted documents to the court-appointed expert. It was clear from the affidavit of UBR’s own lawyer that there was no expectation of confidentiality once documents were produced, and under ordinary principles, disclosure of the documents waived the privilege that might otherwise have been applicable. The court did, however, vacate the district court’s decision to the extent it found that the crime-fraud exception to the privilege applied to require disclosure of communications between the UBR consultant that the Ecuador plaintiffs employed and the court-appointed expert or the plaintiffs’ lawyer. The apparent conflict of interest was sufficient to require the lower court to conduct an in camera review of the documents, but insufficient, without more, to establish that the exception to the privilege applied.

Digest for January 31, 2011

Gucci America v. Guess?, Inc., 271 F.R.D. 58 (S.D.N.Y. 2010). In a trademark infringement case, the plaintiff, an American affiliate of an Italian manufacturer, sought a protective order to prevent disclosures of communications between its in-house counsel and the Italian firm’s counsel. The court held that U.S. law rather than Italian law governed the issue under the “touch base” approach used in prior S.D.N.Y. cases. The opinion also has a discussion of the limitations of document discovery under the Italian civil code.

Ethypharm S.A. France v. Abbott Labs., 271 F.R.D. 82 (D. Del. 2010). In an antitrust case brought by a French pharmaceutical company against a U.S. firm, the French firm sought to take depositions, including a Rule 30(b)(6) deposition, from employees of a French subsidiary of the U.S. defendant under the Federal Rules of Civil Procedure rather than via the Hague Evidence Convention. The plaintiff argued that the defendant’s control over the French subsidiary warranted subjecting the subsidiary to ordinary U.S. pretrial discovery. The defendant argued that even if discovery under the Rules of Civil Procedure was proper, the witnesses the plaintiff sought to depose were not subject to the court’s subpoena power and were not employees of the defendant itself, so as to require the defendant to produce them for deposition pursuant to a mere notice. The court agreed that the individual witnesses were not subject to its subpoena power and thus that it could not compel them to testify pursuant to the Rules of Civil Procedure. But it permitted the plaintiff to take a Rule 30(b)(6) deposition of the French subsidiary by notice.

Case of the Day: In re Application of Chevron Corp.

From the Blogatory Lago Agrio desk, and from my home base here in Massachusetts, comes today’s case of the day, In re Application of Chevron Corp., Civ. A. No. 10-MC-30022 (D. Mass. 2010). We reviewed the background of the epic Ecuadoran environmental litigation in the January 14 post on Chevron Corp. v. Berlinger. Bonifaz, once the lead lawyer for the Ecuadoran plaintiffs, lives in Massachusetts, which accounts for the Massachusetts proceeding.

Judge Neiman proceeded with a healthy amount of skepticism towards the hyperbole on both sides of the case:

[Chevron and its executives] have asked this court to draw inferences that the Ecuador Plaintiffs and the Republic have engaged in improper collusion, fraud and manipulation of the judicial, legislative and political processes in Ecuador, all the while claiming that they themselves are free of any responsibility, whether civil or criminal, for the pollution of the Ecuadorian rain forest or the failure to remediate that pollution in accord with a prior settlement entered into between TexPet and the Republic. In response, the Ecuador Plaintiffs claim that Chevron and the Individual Applicants “have no intention of slowing down their novel § 1782 cottage industry that their lawyers have created.” “The process,” the Ecuador Plaintiffs assert, “is simply too effective at directing the limited resources of the Ecuadorian Plaintiffs—members of the indigenous communities of the Ecuadorian basin—and at serving as a deterrent to any consultant or lawyer who dares take up their seventeen year plight.”

The only party that played it straight, according to the judge, was the Republic of Ecuador itself:

For its part, the Republic, eschewing hyperbole, has taken a more measured approach, one that facilitates the court’s reliance on the Republic’s representations made in partial opposition to the two applications.

The court found that the applications satisfied the statutory requirements of the judicial assistance statute, and it exercised its discretion under the multi-factor test of Intel v. Advanced Micro Devices to grant the applications for discovery with respect to the Lagio Agrio suit itself and the Ecuadoran criminal prosecutions. Bonifaz was not a party to either proceeding; Bonifaz might have exculpatory evidence; and the executives facing the criminal charges were not attempting to evade fact-gathering restrictions in Ecuador.

But while Chevron’s application for discovery for use in the BIT arbitration also, in the court’s view, met the statutory requirements of § 1782, the court refused, it is discretion, to grant that portion of the application.  While some courts have held that the target of the discovery requests has the burden to show that the foreign tribunal would be unreceptive to the discovery sought, Judge Neiman, following the lead another Massachusetts judge had taken in a 2008 case, held that both parties should provide at least some proof of the foreign tribunal’s receptivity to the discovery sought. He found that neither party had offered adequate evidence on this point and that it was not even clear that the evidence sought was relevant to the limited issues pending in the arbitration.

The court limited the scope of the discovery that could be taken from Bonifaz, and it held, as have several other courts hearing Lago Agrio-related  § 1782 applications, that Chevron and the other applicants had failed to show that the crime-fraud exception to the attorney-client privilege applied.

No doubt we haven’t seen the last of Lago Agrio here at Letters Blogatory!